RALEIGH, N.C. - A measure championed by U.S. Sen. Kay Hagan adds $5 million in new funding to the 2013 farm bill to help root out crop insurance fraud.
The Senate approved Hagan's amendment Thursday by a vote of 94-0. The money will boost the U.S. Department of Agriculture's Risk Management Agency, which is responsible for policing the $120 billion taxpayer-supported program that insures farmers against losses from weather and pests.
The North Carolina Democrat introduced the measure after The Associated Press reported in February that federal investigators unraveled a massive scheme by insurance agents, claims adjusters, brokers and farmers in eastern North Carolina to steal about $100 million. Forty-one defendants have either pleaded guilty or reached plea agreements after profiting from false claims on losses of tobacco, soybeans, wheat and corn.
"After the largest-ever crop insurance fraud ring was uncovered this year in North Carolina, many North Carolina farmers approached me with concerns that these bad actors, combined with federal budget woes, could mean the end of federal crop insurance," Hagan said Thursday. "I introduced this amendment to support fraud prevention to make sure these honest farmers don't pay the price for the actions of just a few."
The federal crop insurance program was created during the Dust Bowl of the 1930s as a way to keep farmers from going bankrupt because of a bad growing season. USDA pays about 15 private insurers to sell and manage the policies, but taxpayers are on the hook for most of the losses. Payouts for 2012 have topped $15.6 billion - a figure that is still growing as new claims are filed.
Many of the dozens of defendants sentenced so far on fraud-related charges in North Carolina have received years in federal prison, agreeing to pay a total of $42 million in restitution and more than $900,000 in fines. That's still less than half the amount federal prosecutors say was bilked from taxpayers.
"By equipping the Risk Management Agency with the funds they need, we can more effectively combat fraud and abuse that wastes taxpayer dollars and jeopardizes critical support for North Carolina farmers," Hagan said.