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This week on MORNING EDITION, we're going to be traveling into farm country and visiting a number of crime scenes: a wheat field in Georgia, a soybean field in Iowa, a cotton crop in west Texas and a tomato farm in Tennessee. The felons at these crime scenes are a small group of farmers who falsely claim that weather ruined their crops so that they can collect the insurance. The USDA says they cheated the Treasury and insurance companies out of $160 million last year. An NPR investigation reveals this crime is growing in size and complexity while some insurance companies look the other way. NPR's John Burnett has the first of three reports: Fraud Down on the Farm.

JOHN BURNETT reporting:

Interviews with 50 individuals in eight states, investigators, prosecutors, farmers, watchdogs and government regulators reveal a culture of cheating that has grown up among a small group of farmers who exploit the nation's crop insurance program, a government program tailor made for fraud. To understand how it's done, come down to the fertile valleys on the border of North Carolina and Tennessee, where the federal government has just wrapped up the largest case of crop insurance fraud ever uncovered. Gretchen Shappert is US attorney for the western district of North Carolina.

Ms. GRETCHEN SHAPPERT (US Attorney): The Warren farms investigation is literally the mother of all crop fraud investigations. It was a result of a perfect storm of individuals who were involved in fraud.

BURNETT: Robert and Vicki Warren are among eight people who pled guilty to swindling the government and insurance companies out of more than $9 million in bogus insurance claims from 1997 to 2003. The Warrens were among the largest tomato growers east of the Mississippi. At one point, they owned 26 farms in three states, including one run by Bobby Chambers.

Mr. BOBBY CHAMBERS (Farmer): Well, we grow different kind of produce, tomatoes, green beans, cucumbers, just a little of everything.

BURNETT: Bobby Chambers is a beefy baby-faced 42-year-old lifelong farmer who runs a spread that borders the Nolachucky River in Cocke County, Tennessee. According to trial records, he helped the Warrens stage a hailstorm to make it look like their tomatoes had been destroyed so they could collect the insurance money. Chambers say on his boss' orders, he bought a bag of cocktail ice and a disposable camera and created a foul weather tableau.

Mr. CHAMBERS: The way we did it, we was down taking pictures, you know, like, at this row. And then we just stood behind it and throw that ice over the top, and, to me, it looked like a hailstorm.

BURNETT: To complete the scene of devastation, they then picked up wooden stakes and attacked the unsuspecting vegetables.

Mr. CHAMBERS: They had one who makes--he beat over 16,000 of them. He'd just go through there, like, knock the leaves off of them. It looked like--it made it look like where the hail had beat it up.

BURNETT: To understand the crime, you need to know who the players are. The farmer buys an insurance policy that provides partial coverage, usually 50 to 60 percent, for the crop he expects to raise. The insurance agent sells him the policy. The loss adjuster is dispatched to inspect the field if the farmer claims a disaster. If the disaster is confirmed, the crop insurance company sends the farmer a check and the US Treasury, which guarantees the riskiest farm policies, often reimburses the insurance company. And there's one more player, the federal prosecutor in this case, Richard Edwards who blew the whistle when the farmers and the agent and the adjuster were all in cahoots.

Mr. RICHARD EDWARDS (Federal Prosecutor): The thing that was so interesting to us about this case was that all of the classic methods, you know--and the mind of man knows no limits; it's ingenuity to commit crime--seem to show up in one case.

BURNETT: Edwards, along with investigators with the USDA, spent three years unraveling and prosecuting the Warren case. They found tens of thousands of falsified documents, false planting dates, false farming history, overstated acreage, fake shipping manifests, yield records shifted between fields, hidden production, front producers as well as the photographs of the cocktail ice hailstorm. The fake weather disaster was poorly executed. There was scant evidence a million and a half tomato plants had ever been planted as the Warrens claimed, but Edwards says when the loss adjuster came out, he approved it anyway.

Mr. EDWARDS: Bobby Chambers' testimony was it was a drive-by adjusting, that they were only there a few minutes. They looked like they didn't want to get their shoes dirty.

BURNETT: Even the USDA was unwittingly complicit in the scheme. The government is so generous with crop insurance that it subsidizes farmers' premiums. Edwards says the USDA paid the Warrens more than $2 million to help them insure their tomatoes.

Mr. EDWARDS: Which I analogize to every year, a bank gets robbed and they notice that the bank robber is using an old getaway car and they ask, `Would you like a car loan so you have a nicer getaway car next year when you come to rob us,' because the government is subsidizing the farmers their ability to defraud us for the coming season.

BURNETT: Bobby Chambers testified for the government and got two years probation for his role in the scheme. The adjuster and the insurance agent have both been convicted but not sentenced yet. Robert and Vicki Warren each received some six years in federal prison.

Mr. SHAWN DEVEREAUX(ph) (Attorney): You know, it's fine for the government to issue sentencing memorandum and make Robert Warren appear to be the Saddam Hussein of crop insurance, but he's not.

BURNETT: Shawn Devereaux, the attorney for Robert Warren, says while his client admitted guilt, it's the whole system that's corrupt.

Mr. DEVEREAUX: He basically was approached by people selling insurance and told, `This is an easy thing to do. Don't worry. You know, this is the government's money, not the insurance company's money.'

BURNETT: The federal indictment, in fact, states that the Virginia-based insurance agent coached the Warrens in detail about how to perpetrate the fraud. What's more, the adjuster testified that his superviser at the insurance company, Fireman's Fund AgriBusiness, one of the largest in the country, instructed him to lie on the crop damage forms for the Warrens. A spokesman for Fireman's Fund said neither the adjuster nor his superviser work for the company anymore. Michael Hand is in charge of compliance at the federal agency in Washington that administers crop insurance.

Mr. MICHAEL HAND: Any time you have cases like the R.V. Warrens or anything, that's something that was out of control and should have never happened. So we don't like to see those kinds of cases. Unfortunately, I have a number of cases like that active and settled at this point that exceed a million dollars.

BURNETT: Prosecutor Edwards did not know anything about the obscure world of crop insurance before he worked on the Warren case. Now he's something of an expert and he says he's surprised at how easy it is to flimflam the program.

Mr. EDWARDS: The American taxpayers are getting defrauded out of millions and millions and millions of dollars. The Warrens are in no way unique.

BURNETT: Everyone interviewed for this series agreed that the overwhelming majority of the 788,000 American farmers who buy crop insurance are honest. USDA officials estimate about 5 percent of indemnities paid out each year go to phony claims, about the same proportion found in other types of insurance. The difference is the farm crooks are increasingly brazen. According to the USDA Inspector General's Office, the money they're stealing usually comes out of the US Treasury and powerful political forces have resisted reform. John Burnett, NPR News.

INSKEEP: Tomorrow, we examine how the crop insurance program became so vulnerable to fraud.

Today, you can find crime scene photos of a sort, pictures of the Warrens' tomato fraud crime scene at npr.org.

This is NPR News.

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