A Central Washington farmer allegedly bilked taxpayers by collecting more than a half million dollars in crop insurance while hiding how much wheat he was really selling, according to U.S. attorneys.

Prosecutors have charged Rick T. Gray with bank fraud, wire fraud, mail fraud, unjust enrichment and violating the False Claims Act. Gray's false statements netted him at least $540,028, prosecutors allege.

Gray faces a fine triple the loss to taxpayers, prosecutors said. He also could be fined for violating the Financial Institutions Reform and Recovery Enforcement Act.

Efforts to reach Gray for comment were unsuccessful.

A complaint filed Sept. 29 in the U.S. District Court for Eastern Washington alleges Gray falsely reported in 2015 that he sold his entire wheat crop of 21,411 bushels for about $130,000 to Horse Heaven Grain.

Prosecutors allege Gray also sold more than 35,000 bushels to three other granaries for at least $184,744.

Gray also filed claims and received USDA-backed insurance payments totaling $478,806. He also had $61,222 applied to unpaid premiums.

He would not have been eligible for payments if he had fully reported his crop, according to the complaint.

Besides filing a false claim, Gray allegedly tried to defraud Columbia State Bank, a creditor, according to the complaint.

Gray had two crop insurance policies. In March, before the harvest, he transferred the rights of one policy from Gray Farms & Cattle Co. to the bank.

After the harvest, in September, Gray submitted a document postdated Jan. 1 to make the policy's beneficiary Gray Land & Livestock LLC, another company he controlled, according to the complaint.

In 2016, Gray reported he sold his entire insured wheat crop to Horse Heaven Grain and Mid Columbia Producers. Prosecutors allege he didn't report 26,000 bushels in storage and 17,000 bushels sold to Tri Cities Granary.

Gray's insurance claim was denied because he did not provide a complete harvest report. Gray's insurer reported him to the USDA, according to court records.

Once the scheme was uncovered, Gray Land & Livestock of Prosser filed for bankruptcy in 2019. The company owed Columbia State Bank $3.5 million, according to court records. Gray's allegedly fraudulent scheme denied the federally insured bank full and timely payments, according to the complaint. 

Gray Land & Livestock and Gray Farms & Cattle collected a total of $300,381 in crop insurance in 2013 and $729,753 in 2014, according to court reports. The complaint does not allege any wrongdoing during those years.

Through his companies, Gray had the largest number of insured wheat acres in Klickitat County in 2014, 2015 and 2016, according to the USDA’s Farm Services Agency.

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