Criminals who defraud the federal government cost taxpayers hundreds of millions of dollars every year. The Department of Agriculture bares a portion of this burden.
Illegal activities – from selling SNAP benefits to taking credit for a crop that was never planted – eat into the USDA’s bank account.
We’ve put together a special section on our website devoted to the topic at Market-to-market.org slash justice.
Colleen Bradford Krantz opens our three part series “Justice in Agriculture.“
In early 2005, a data analytics center hired by the federal government contacted investigator Don Doles with some unusual findings. He never suspected the information would kick off the biggest case of his career.
Within months, Doles would be placing hidden cameras and rushing for his pistol to save his life.
Doles wasn’t an ATF or FBI agent. He was in a job most might assume is a bit less dramatic: agricultural investigator with the USDA Office of Inspector General.
The information given to Doles sent him after a North Carolina crop insurance agent and a network of more than 50 people who had defrauded the federal crop insurance program of an estimated $100 million.
Don Doles, former OIG-USDA Investigator: “They don’t play. I mean it’s a lot of money. So farmers, especially these organized groups, don’t take well to local people turning them in. And so they can get violent…. I’ve had contracts out on me before.”
Doles, who retired after 29 years of agricultural investigative work, estimates the percentage of USDA cases involving wrongdoing are in line with those of other federal programs.
Don Doles, Former OIG-USDA Investigator: “Most farmers are honest people and they just want to be…left alone. Funny thing is that … very little farming goes on without some sort of federal involvement now. Most of them try to do what’s right.”
Market to Market analyzed data from annual reports from the USDA Office of Inspector General and found a rough relationship between a drop in net farm income and an increase in the number of federal investigations and convictions.
By 2002, net farm income had dipped to the lowest point since the 1980s Farm Crisis. Within a few years, Doles and other investigators would be on the tail of Robert “Carl” Stokes, a Wilson, North Carolina crop insurance agent. Stokes had brought together a group of area farmers who underreported their harvest to the government and quietly sold the hidden portions to complicit buyers.
Stokes’ company, The Hallmart Agency, came to the attention of federal investigators after number crunchers noticed an unusually high frequency of payouts. Doles called a friend at the Risk Management Agency, which oversees privately contracted federal crop insurance, and asked what he knew about Hallmart. His RMA contact said a man had reached out to him just the day before saying he had information to share.
Don Doles, Former OIG-USDA Investigator: “The next day, I caught a plane, flew up and met with him in the parking lot of a church and he laid out what was going on. And it was dead on. He provided us with 10 names of farmers he knew were involved and we went back and pulled the records and, sure enough, it was clear they were cheating the program.”
Understanding the dangers of going undercover, the man hesitated to get more deeply involved.
Don Doles, Former OIG-USDA Investigator: “He felt he was in danger because there were so many farmers that were involved. It turned out that the 10 or so names he gave us was just the tip of the iceberg.”
A Wilson-area farmer, who said he was unaware of the insurance fraud scheme at the time, believes the man’s fears were justified.
Freddy Daniels, Producer, Wilson, North Carolina: “I would hate to think I had to rat on a neighbor. That’s why I don’t like to know anything at all; because it’s a good way to wake up dead one morning.”
By 2006, the man had changed his mind and agreed to work undercover. Doles and his team then asked the informant to infiltrate Stokes’ crop insurance crew.
Don Doles, Former OIG-USDA Investigator: “We would put a microphone and a small recorder in his pocket and later on we used a camera – it looked like a button…Well he went down to the place called Liberty Warehouse and the owner there said, ‘Yeah, I’ll provide you with these false invoices for your tobacco sale, but you gotta pay me.’”
For Doles and a fellow investigator, one arrest took a sudden violent turn.
Don Doles, Former OIG-USDA Investigator: “Well, we got there and he took off for his cab of his truck. Well, I am right behind him and we get to the truck cab and he’s reaching into the center console and, when he did, I put the pistol up behind his ear and I said, ‘If you reach in there, I’ll kill you right where you sit.’”
Shortly after Stokes’ arrest, the informant died of natural causes, never knowing the web of convictions would involve 57 people in multiple states.
Robert Higdon, Jr., U.S. Attorney, Eastern District of North Carolina: “In order to carry it out, it required people willing to break the law at a number of levels.”
Stokes, who served nearly two years in prison, lost his home and his insurance business. He died in 2016. While Stokes’ wife didn’t defend his actions, she did say local farmers weren’t a “bunch of lambs” being led to slaughter.
Todd Glover, a Wilson farmer, was surprised about some of the producers who were involved.
Todd Glover, producer, Wilson, N.C.: “The farmers were struggling to make money and things were really tight back then, like they are today… And I think that caused some people to do things that they normally wouldn’t do.”
Robert Higdon, Jr., U.S. Attorney, Eastern District of North Carolina: “Every farmer in every country where this occurred, whether they know it or not, was victimized because their insurance premiums went up.”
Don Doles, Former OIG-USDA Investigator: “Honest farmers were screaming, ‘Yo, you gotta do something. You’ve got to stop this. They are killing us. They are running the rent up on us and we can’t stay in business.’”
Next week, we look at a case where the courts ruled in favor of a farmer.
By Colleen Bradford Krantz, [email protected]