VIEWPOINTS: Crop Insurance Fraud

Bary Zalma
Barry Zalma is an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud for both insurers and policyholders.

Farmers, by nature, are hard-working, honest, and the salt of the earth. They simply do not have time to commit crimes.

However, the government of the United States has created a government-supported insurance program that is as ancient as Sumeria when insurance policies were scratched on clay tablets. The gigantic fund of money available from the U.S. Government has tempted a few honest farmers to fund their retirement with crop insurance fraud. Crop insurance fraud is a serious temptation to farmers whose earnings are insufficient to cover their costs of doing business. Crop insurance fraud cases are rare, not because fraud with regard to crops is rare, but that prosecution is rare. The few cases referred to below indicate that there is a lack of funding for investigation, trial and conviction of crop insurance fraud.

In one 1994 case, the government presented evidence that a farming company,McClatchy Planting, sold 7,059.88 bushels of soybean but reported to a crop insurance agent that it had produced only 5,149.6 bushels of soybean. Thus, McClatchy received insurance money to which he was not entitled and his conviction for crop insurance fraud was sustained. U.S. v. McClatchy, 249 F.3d 348 (5th Cir. 2001) The case was prosecuted because crop insurance fraud was just one of multiple charges brought against McClatchy.

An investigation in 2015, led by the United States Department of Agriculture OIG, brought to justice two brothers who were defrauding USDA’s crop insurance program. The brothers carried out a fraudulent scheme over several years that involved intentionally destroying and damaging their potato crops, so that they could collect federal crop insurance indemnities and disaster benefits totaling over $4.3 million. The brothers were sentenced to a combined 6.5 years in prison and were ordered to pay almost $1 million in restitution. This successful case was based on innovative and arduous investigative work by the OIG team.

Another farmer tempted by the apparently unlimited funds was Kevin W. Struss, 63, of Wakeeney, Kansas. Struss was sentenced February 10, 2020 to 30 months in Federal prison for federal crop insurance fraud and bankruptcy fraud. In addition, he was ordered to pay $604,303 in restitution.

Struss made false statements in which he under-reported his total 2015 corn crop by approximately 23,524 bushels, and his total sorghum/milo crop by 31,208 bushels. He also pleaded guilty to one count of bankruptcy fraud.

Daniel Arvin, another farmer, pleaded guilty in federal court in Lexington, Kentucky to a conspiracy charge after admitting he claimed damage to his tobacco crop and then sold thousands of pounds of leaf he claimed had been destroyed, under his mother’s name. Arvin’s case is one of more than half a dozen prosecuted in the region over the last two years as part of a larger investigation. It includes the case of Debra Muse, whose conduct prosecutors said caused the government to make $5.9 million in crop-loss payments in just two years.

Muse, who sold crop insurance and worked at a tobacco warehouse in Mount Sterling, found dozens of farmers received false documentation to support insurance claims. Muse pleaded guilty in April 2018 to taking part in false crop-loss claims and generating fake paperwork to help justify those claims. She was sentenced to five years in prison and ordered her to pay $1.6 million in restitution.

In Arvin’s case, he admitted to paying an insurance adjuster $10,000 to certify his fraudulent crop loss. Arvin’s plea was the second in as many months in the crop-fraud case. Ruben Sauceda, who raised tobacco in Fayette, Scott, Bourbon and Jessamine counties, also pleaded guilty to a conspiracy charge. Sauceda received $410,959 from the claims, according to his plea agreement.  

James Truman Wiggins, Jr.¸68, of LaGrange, North Carolina was sentenced to serve 25 months of imprisonment to be followed by 5 years of supervised release. In addition, the court ordered Wigginsto pay restitution in the amount of $5,669,891.00 and excluded him from participating in any federal crop insurance programs for 5 years. The court also ordered forfeiture in the amount of $5,600,433.00. Wiggins pleaded guilty to conspiracy to commit various offenses against the United States, false statements to the Federal Crop Insurance Corporation, material false statements to the Farm Service Agency, aggravated identity theft, and conspiracy to commit money laundering.

Wiggins and other persons worked together to defraud the United States of America, through the filing of false federal crop insurance claims and false federal crop disaster relief claims, to structure transactions to evade reporting requirements, and to engage in various financial transactions to conceal the fraud. The conspirators owned and rented farmland in Lenoir, Wayne, and Greene Counties, and produced, among other crops, tobacco, corn, wheat, and soybeans. Between 2007 and 2011, Wiggins and his conspirators collectively filed false claims in excess of $5.6 million. The conspirators, among other things, paid farming expenses and outstanding loan balances with the proceeds from their criminal conduct. [

Crop insurance fraud is a small, but serious, type of insurance fraud that is part of the estimated $80 to $300 billion a year taken from insurers and government funded insurers. Unlike fraud against insurers the money paid to crop insurance fraudsters is taken from the U.S. Treasury and is funded by everyone who pays taxes. The government should take this crime more seriously.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Mr. Zalma is the author of the following books from and Full Court Press: The Insurance Law Deskbook; California Insurance Law Deskbook; Zalma on Property and Casualty Insurance; Insurance Law Deskbook; and Insurance Bad Faith and Punitive Damages.

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