MORE GUILTY PLEAS
Northern District of Texas
1100 Commerce St.,
Dallas, Texas 75242-1699
DALLAS, TX, Jul 12, 2001 - United States Attorney Richard
H. Stephens announced today that Keith Johnson, age 50, Michael
John Massey, age 43, and Gaines Hunter Price, age 46, all from
Roscoe, Texas, pled guilty today in Lubbock, Texas before U.S.
District Judge Sam R. Cummings, to charges they each made and
presented false claims to the U.S. Department of Agriculture's
Federal Crop Insurance Corporation and Risk Management Agency.
Specifically, all three Nolan County farmers/producers acknowledged
submitting false crop insurance loss claims in 1999 for cotton,
wheat and grain sorghum. These fraudulent claims were subsequently
paid and reimbursed under the Federal Crop Insurance Corporation's
crop insurance program. Thereafter, these Nolan County producers
fraudulently applied for separate crop disaster payments. In
the aggregate, these producers submitted over $540,000 in false
claims, of which over $440,000 was paid prior to discovering the
fraudulent nature of such claims.
Today's guilty pleas stem from the March 8, 2001 guilty plea
of Darren Randell Jeffrey, age 36, of McCaulley, Texas. Jeffrey
was employed as a crop loss adjuster for Fireman's Fund Insurance
Company. Jeffrey pled guilty to charges he falsified appraisals
used to support more than $700,000 of fraudulent crop insurance
loss claims and $350,000 in crop disaster program payment claims
filed in 1999 by six Nolan County, Texas farmers/producers for
cotton, wheat and grain sorghum including Johnson, Massey and
The three guilty pleas were the result of an extensive federal
grand jury investigation led by the U.S. Attorney's Office and
the U.S. Department of Agriculture's Office of Inspector General
and Risk Management Agency. Court records reflected that Johnson,
Massey and Price failed to plant those fields for which they made
crop insurance and crop disaster claims, and that Jeffrey falsified
numerous appraisals related to the claims. The producers obtained
their crop insurance through the Hargrove Insurance Company of
Sweetwater, Texas, which insured them through Fireman's Fund Insurance
Company. All producers submitted their initial crop insurance
loss claims through Fireman's Fund's loss claim office located
in the same building and adjacent to Hargrove Insurance. Once
Fireman's Fund paid the fraudulent claims, it was reimbursed through
a reinsurance program offered by the Federal Crop Insurance Corporation,
which program was administered by the Risk Management Agency.
Fireman's Fund sent the indemnity checks to Hargrove Insurance
for distribution to the Nolan County producers.
As a result of today's guilty
pleas, Johnson, Massey and Price could each be imprisoned up to
five years and fined up to $250,000.00. A sentencing date has
not yet been set by the Court.
U.S. Attorney Stephens praised the U.S. Department of Agriculture's
Office of Inspector General and Risk Management Agency for their
thorough work in the case, which included conducting numerous
interviews with Nolan County producers and individuals involved
in the cotton and grain sorghum industries.
Stephens once again thanked the many Nolan County producers
who cooperated with authorities in this investigation by engaging
in candid interviews about fellow Nolan County producers and by
not turning a "blind eye" to this widespread scheme
to defraud. "Schemes like this have become more prevalent.
We need people like the many Nolan County farmers who cooperated
with us to identify those who would take advantage of the system."
Stephens noted that this investigation will continue and that
he expects additional convictions.
The Dallas office of the U.S. Department of Agriculture's
Office of Inspector General investigated the case. Assistant
U.S. Attorney Bill Mateja, of the Lubbock, Texas division of the
United States Attorney's Office, is prosecuting the case.