Crop insurance agent sentenced to 60 months for fraud
The agent admitted to urging and assisting farmers to file false tobacco crop insurance claims with the FCIC.
This story is reprinted with permission from FC&S Legal, the industry’s only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe.
Debra Muse, 63, of Wallingford, Kentucky, has been sentenced to 60 months in federal prison by U.S. District Judge Joseph M. Hood for conspiracy to commit crop insurance fraud and crop insurance fraud.
Muse also was ordered to pay $1,656,275 in restitution.
Falsified tobacco production reports
Muse pleaded guilty on April 16, 2018 and admitted to urging and assisting farmers to file false tobacco crop insurance claims with the Federal Crop Insurance Corporation (FCIC) with the intent to help the farmers obtain crop insurance proceeds to which they were not entitled. These crop insurance claims contained falsified reports of tobacco production, prosecutors said.
Related: Kentucky farmer indicted for crop insurance fraud
Muse, a crop insurance agent and employee at Clay’s Tobacco Warehouse during the period in question, admitted that she created multiple false documents, including Clay’s Tobacco Warehouse sale bills and shipping reports, to help farmers hide their crop production from their insurance adjusters and falsify the quality of the tobacco.
Inflated payments
These documents, which misrepresented the volume and quality of the farmers’ crop production, led to inflated payments from the farmers’ crop insurers, which were reinsured by the federal government, according to prosecutors.
Judge Hood found that, as a result of Muse’s fraud, she caused the federal government to pay out $5,917,515 in crop insurance indemnity payments to agricultural producers to which they were not entitled. The agricultural producers included Muse’s clients and the clients of other insurance agents, who used falsified documents Muse created in filing their own fraudulent insurance claims.
Criminal conduct
“Protecting limited public resources and the integrity of our public insurance programs are priorities for our office and the Department of Justice,” stated Robert M. Duncan, Jr., U.S. Attorney for the Eastern District of Kentucky. “The defendant’s participation in this unlawful scheme to falsify documents resulted in significant losses to the FCIC. Her participation was instrumental to the scheme’s success and her criminal conduct harmed the integrity of the crop insurance system. We will continue to prioritize similar efforts to prosecute those who prey on public programs and appropriate taxpayer funds.”
Under federal law, Muse must serve 85% of her prison sentence; upon her release, she will be under the supervision of the U.S. Probation Office for five years.
Related: How you can combat insurance agent fraud
Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. Email him at smeyerowitz@meyerowitzcommunications.com.