Another Kentucky Farmer Admits Crop Insurance Fraud

LEXINGTON, Ky. — Another Central Kentucky farmer has pleaded guilty in a crop insurance fraud scheme that a federal prosecutor has called “pervasive and severe” in that region.

Daniel Arvin pleaded guilty on Dec. 19 in federal court in Lexington to a conspiracy charge after admitting he claimed damage to his tobacco crop and then sold thousands of pounds of leaf under his mother’s name, the Lexington Herald Leader reports. Arvin’s case is one of more than half a dozen prosecuted in the region over the last two years as part of a larger investigation. It includes the case of Debra Muse, whose conduct prosecutors said caused the government to make $5.9 million in crop-loss payments in just two years.

The investigation of Muse, who sold crop insurance and worked at a tobacco warehouse in Mount Sterling, found dozens of farmers received false documentation to support insurance claims, Assistant U.S. Attorney Kathryn M. Anderson said in a memo.

Muse pleaded guilty in April 2018 to taking part in false crop-loss claims and generating fake paperwork to help justify those claims. U.S. District Judge Joseph Hood sentenced Muse to five years in prison and ordered her to pay $1.6 million in restitution.

In Arvin’s case, he admitted to paying an insurance adjuster $10,000 to certify his fraudulent crop loss, according to the plea agreement. Arvin, who farmed in Montgomery and Clark counties, faces up to five years in prison and is scheduled to be sentenced in August.

Arvin’s plea was the second in as many months in the crop-fraud case. In late November, Ruben Sauceda, who raised tobacco in Fayette, Scott, Bourbon and Jessamine counties, pleaded guilty to a conspiracy charge.

Sauceda admitted he schemed with an insurance agent and an adjuster to file false claims that included fake photographs.

Sauceda received $410,959 from the claims, according to his plea agreement. The government is seeking to recover that amount from Sauceda in addition to a potential prison sentence.

The agent in both Arvin and Sauceda’s cases was identified in court documents only by the initials M.M.

A federal grand jury indicted an agent named Michael McNew in November for allegedly taking kickbacks to help farmers file false crop-loss claims.

McNew pleaded not guilty and is scheduled for trial next August.

The adjuster in Sauceda’s case was identified as T.S. and in Arvin’s case as T.W.

“Like any other government benefit program, people find a way to abuse and unjustly benefit from the system designed to help those that need it,” Anderson said.