DOJ, Farmer Settle at $1.2M in Fraud

Michigan Farmer to Pay $1.2 Million Settlement in Crop Insurance, Benefits Fraud

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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The U.S. Department of Justice reached a $1.2 million settlement with Michigan farmer Gaylord Lincoln, in connection with allegations he committed crop insurance and federal farm benefit payments fraud. (DTN file photo)

LINCOLN, Neb. (DTN) -- A Michigan farmer accused of running a so-called straw-farm operation to allegedly commit crop insurance and federal farm benefit payments fraud has agreed to a $1.2 million settlement with the U.S. government, according to a news release from the U.S. Department of Justice.

U.S. attorneys last week had asked a federal court to expedite the case against Springport, Michigan, farmer Gaylord Lincoln and G. Lincoln Farms LLC out of concern the farmer was allegedly continuing the scam even as the court case was pending.

The DOJ said the settlement amount was negotiated "based on the defendants' ability to pay."

U.S. attorneys had asked the U.S. District Court for the District of Western Michigan to expedite the case, alleging Lincoln was attempting to sell assets to his grandson to avoid paying more than $19 million in debts owed to the federal government.

In December 2021, the U.S. filed a complaint alleging Lincoln violated the False Claims Act by maintaining a "scheme to fraudulently obtain more federal farm benefit program payments than he was entitled to receive," according to the U.S. attorney's office. Lincoln farms in four south-central Michigan counties.

The lawsuit alleged Lincoln financed a network of so-called "straw lessees" to help circumvent USDA benefits limits set on farms from 2010 to 2019.

U.S. attorneys alleged Lincoln was on track to sell assets to his grandson, 20-year-old Carter Gibbs, by November, and the government attempted to expedite the case to assure money owed as a result of the alleged fraud could be recovered.

Lincoln allegedly created a way to get around contract ceilings, according to the original complaint.

The alleged straw operators took out land leases on farmland, including some new and previously leased or owned by Lincoln. The complaint said Lincoln provided money for the leases.

In March 2022, Warsaw, Indiana-based crop insurance company Silveus Insurance Group Inc. CEO James Silveus agreed to a voluntary exclusion from federal programs through March 1, 2023.

The company reached a settlement with the U.S. attorney's office in western Michigan, agreeing to pay $500,000 to resolve allegations the company violated federal law by submitting fraudulent crop insurance claims for Lincoln.

Silveus Insurance Group Inc. also agreed to a one-year monitoring period with USDA's Risk Management Agency.

U.S. Attorney Mark Totten said in a news release that federal programs for farmers rely on "farmers to tell the truth and play by the rules."

Shantel R. Robinson, special agent-in-charge at USDA's Office of Inspector General, said the agency stands "committed" to combating crop insurance fraud.

"Fraudulent activity within the crop insurance program undermines its intent and misdirects taxpayer dollars from where they were intended," she said in a news release.

The government alleged in the original complaint that Lincoln used so-called straw operators who leased various parts of the farm. They each would claim to be producers enrolling in various crop insurance and other farm programs.

"To do so, Lincoln parsed his substantial farmland holdings to a group of straw operators who, at Lincoln's direction, knowingly submitted false and fraudulent documents to enroll in USDA programs," the lawsuit alleges.

"By falsely claiming Lincoln's crops as their own, these straw lessees fraudulently obtained USDA benefit payments that they funneled to Lincoln for his personal benefit. Lincoln also directed his network of straw farming operators to falsify documents and fraudulently obtain crop insurance policies that were partially subsidized by the federal government."

The complaint said Lincoln's alleged scheme allowed him to obtain crop insurance premiums funded by the federal government and other payments through farm programs "to which he was not entitled."

Read more on DTN:

"US Wants Crops Fraud Case Expedited,"…

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Todd Neeley

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