Illinois Farm Settles Case

OMAHA (DTN) --- A central Illinois farm family has agreed to pay $5.364 million in an out-of-court settlement with the federal government, which alleged the family had manipulated statutory caps on farm-program payments from 2002 through 2008.

The family at the center of the case said they settled with the federal government to end a relentless investigation even though they worked on their farm's business structure with agricultural attorneys and consulted USDA employees.

The federal government had alleged that Dowson Farms of Divernon, Ill., violated the False Claims Act by creating "sham entities," according to the U.S. Attorney's Office in Central Illinois. As a result, Dowson Farms' and its principal owners collected farm subsidies they were not entitled to collect, according to the U.S. attorney's office. The principal owners included John J. Dowson, John C. Dowson, Darrel Thoma, Amy D. Thoma, and Melissa D. Vorreyer.

The U.S. Attorney's Office stated the settlement was reached out of court with the Dowsons before any legal action was initiated. Moreover, the $5.364 million payment back to the federal government "is neither an admission of liability by the Dowsons nor a concession by the United States that its claims were not well founded."

According to the Environmental Working Group website, the Dowsons and their farming operations were among the largest recipients of farm-program payments going back to 1995 when such records were first made public.

In a statement, the Dowson family stated that the farming operation had incurred legal expenses over the past five years associated with an investigation by the federal government and had "complied with dozens of request fomented by the government." The Dowsons opted to settle "to bring this seemingly, never-ending inquiry, to a close." The statement added, "The family members have strenuously disputed the government's allegations from the beginning inquiry, and still do so, and today's settlement explicitly acknowledges that the Dowsons have made no admission of any wrongdoing or liability."

Still, the U.S. Attorney's Office in Central Illinois alleged that the Dowsons violated the old three-entity rule that was in effect during the life of the 2002 farm bill. Under the 2002 farm bill, no person could receive payments from more than three entities in which the person held substantial beneficial interest.

The federal government had alleged that the Dowsons evaded annual payment caps for programs such as Direct Payments and Counter-Cyclical Payments. The Dowsons allegedly created multiple limited partnerships for the apparent purpose of concealing the interests of John Dowson, his son, Chris Dowson, and John's son-in-law, Darrel Thoma, in the entities' farming operations, the news release stated.

"For the multiple limited partnerships established by the Dowsons, on paper, 98% of the purported ownership was held by various employees, including farm hands and other straw men, while the Dowsons retained only a 2% interest."

The federal government asserted that the limited partners contributed nothing to establish their ownership interest and none had any authority to conduct business on behalf of their respective partnership. Instead, the Dowsons controlled the partnerships' finances and commodity sales. The use of these limited partnerships had the effect of evading payment limitations.

In the family's statement, Dowson Farms noted that before signing up for any farm programs, the farming operation sought advice from respected agricultural legal attorneys in Illinois. Once a proposed entity structure was drafted, the Dowsons took it upon themselves to present their business structure to the USDA county executive director before enrolling in any farm programs. Due to the size of their operation, the Dowsons also wanted approval from USDA officials on the state level as well. "The entire proposed structure was openly shared and discussed. From there, the application forms were completed and approved by the county committee," the Dowson statement added.

The Dowson statement added that despite their efforts, a multi-year investigation took place "that has now cost millions of dollars and disrupted the lives of countless employees, business partners and other associates of the Dowson family."

The statement added that the federal government pursued the case and there was no end other than to settle. "It was time to bring this government invasion to an end," stated John Dowson. "We did all that we could to ensure that we complied with the complex rules and regulations with every program we participated in, but the federal government has unlimited resources and we simply decided to bring a final conclusion to this, so that we can focus on farming for our landlords, employees and business partners."

According to the U.S. Attorney's news release, the settlement avoids delay, uncertainty and the costs of protracted litigation that likely would have resulted from the federal government's claims.

"We are pleased with this favorable resolution of the government's claims of misuse of farm subsidy programs," stated U.S. Attorney Jim Lewis. "These programs are designed to help farmers withstand market price volatility and the intrinsic risks associated with farming from year to year. Any attempt to exploit the system to take more than one's fair share is an improper use of government funds that erodes the public confidence in such programs and threatens their continued viability."

The Dowson farm website: http://www.dowsonfarms.com

Chris Clayton can be reached at chris.clayton@dtn.com

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