Posted: Thursday, February 10, 2011 11:00 AM
Four accused in $9.6 million crop insurance case
Four Eastern Washington potato farmers and processors pleaded innocent Feb. 7 to federal conspiracy charges alleging that they illegally received nearly $9.6 million in crop insurance payments.
A grand jury Jan. 11 indicted Lynn J. Olsen II of Pasco, Wash., Mark G. Peterson of Richland, Wash., Blake T. Bennett of Pasco, Jeffrey J. Gordon of Pasco, Olsen Ag, Inc., Poco LLC and Tri-Cities Produce Inc., according to the indictment filed in the U.S. District Court of Eastern Washington.
Yakima, Wash., attorney Rick Smith, representing Gordon, said his client is innocent of the charges.
"We don't know what it was that spurred the government to make this investigation," Smith told the Capital Press, noting that Gordon's documentation was previously approved by the government agency and an insurance agent.
No trial date has been set, Smith said, although he anticipated a date would be set within 10 days.
Olsen, Peterson and Bennett could not be reached for comment.
According to the indictment, Gordon, Olsen and Peterson and their companies allegedly entered into contracts with Peterson and Bennett, the president of Tri-Cities Produce, during years they had Adjusted Gross Revenue Insurance and Multi-Peril Crop Insurance coverage.
AGRI policies protect farmers against low revenue due to natural disasters and market fluctuations. MPCI policies protect farmers against losses caused by weather, disease or wildlife.
They allegedly sold Norkotah Russet potatoes to the buyers for processing rather than fresh pack, even though the variety is not usually suitable for processing. The contracts called for "exceedingly high" requirements even for potatoes typically used in processing, according to the indictment.
"It would be highly unlikely that Norkotah Russet potatoes could have ever met these requirements," the indictment states.
After the potatoes failed to meet the standards of the contracts, the buyers would allegedly pay the farmers only a fraction of the fresh pack market value. The farmers allegedly received crop insurance payments "to which they were not entitled," according to the indictment, totaling roughly $9.57 million.
The indictment also alleges that "on at least one occasion" the defendants shared crop insurance proceeds.
The events in the indictment allegedly happened during a span of five years, from 2001 to 2006. In addition to conspiracy, the indictment alleges false application and mail fraud.
Tom Rice, spokesman for the U.S. Attorney's Eastern District Office in Spokane, declined to comment further.