Probe of crop-insurance fraud nets indictment of Ky. agent who worked in tobacco warehouse

"A crop-insurance agent defrauded taxpayers of $169,000 by helping farmers inflate tobacco crop losses and collect insurance money and then helping them sell their burley at market, according to a federal indictment," reports Greg Kocher of the Lexington Herald-Leader. The indictment is the result of a federal investigation of crop-insurance fraud that was revealed in December 2015.

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Crop-insurance agent Debra Muse was also a seasonal worker at Clay's Tobacco Warehouse in Mount Sterling, Ky. Part of her job there was to record tobacco purchases, sales and shipment. The alleged scam worked like this: As an agent, Muse obtained crop insurance for the farmers. As a warehouse worker, she didn't record the sale of some tobacco. The farmers filed false insurance claims saying the tobacco had been lost to bad weather, then collected insurance payouts.

The indictment says that the co-conspiring farmers (who are not named or charged in the indictment) "profited under the scheme because they were paid twice for each pound of tobacco: once through the false crop-insurance claim, and also through the sale of the unreported hidden tobacco." The indictment says that "Muse profited by collecting the original insurance commission and by retaining and expanding the business of her crop insurance clients and securing business for her employer, Clay’s Tobacco Warehouse," Kocher reports. According to the indictment, she caused three different growers to be awarded payments for $6,144; $23,651; and $139,456 for claims. The burden of paying out these claims is mostly on taxpayers.