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United States Attorney
Northern District of Texas
1100 Commerce St., 3rd Fl.
Dallas, Texas 75242-1699
Contact: 214-659-8707

DALLAS, TX, Jul 12, 2001 - United States Attorney Richard H. Stephens announced today that Keith Johnson, age 50, Michael John Massey, age 43, and Gaines Hunter Price, age 46, all from Roscoe, Texas, pled guilty today in Lubbock, Texas before U.S. District Judge Sam R. Cummings, to charges they each made and presented false claims to the U.S. Department of Agriculture's Federal Crop Insurance Corporation and Risk Management Agency. Specifically, all three Nolan County farmers/producers acknowledged submitting false crop insurance loss claims in 1999 for cotton, wheat and grain sorghum. These fraudulent claims were subsequently paid and reimbursed under the Federal Crop Insurance Corporation's crop insurance program. Thereafter, these Nolan County producers fraudulently applied for separate crop disaster payments. In the aggregate, these producers submitted over $540,000 in false claims, of which over $440,000 was paid prior to discovering the fraudulent nature of such claims.

Today's guilty pleas stem from the March 8, 2001 guilty plea of Darren Randell Jeffrey, age 36, of McCaulley, Texas. Jeffrey was employed as a crop loss adjuster for Fireman's Fund Insurance Company. Jeffrey pled guilty to charges he falsified appraisals used to support more than $700,000 of fraudulent crop insurance loss claims and $350,000 in crop disaster program payment claims filed in 1999 by six Nolan County, Texas farmers/producers for cotton, wheat and grain sorghum including Johnson, Massey and Price.

The three guilty pleas were the result of an extensive federal grand jury investigation led by the U.S. Attorney's Office and the U.S. Department of Agriculture's Office of Inspector General and Risk Management Agency. Court records reflected that Johnson, Massey and Price failed to plant those fields for which they made crop insurance and crop disaster claims, and that Jeffrey falsified numerous appraisals related to the claims. The producers obtained their crop insurance through the Hargrove Insurance Company of Sweetwater, Texas, which insured them through Fireman's Fund Insurance Company. All producers submitted their initial crop insurance loss claims through Fireman's Fund's loss claim office located in the same building and adjacent to Hargrove Insurance. Once Fireman's Fund paid the fraudulent claims, it was reimbursed through a reinsurance program offered by the Federal Crop Insurance Corporation, which program was administered by the Risk Management Agency. Fireman's Fund sent the indemnity checks to Hargrove Insurance for distribution to the Nolan County producers.

As a result of today's guilty pleas, Johnson, Massey and Price could each be imprisoned up to five years and fined up to $250,000.00. A sentencing date has not yet been set by the Court.

U.S. Attorney Stephens praised the U.S. Department of Agriculture's Office of Inspector General and Risk Management Agency for their thorough work in the case, which included conducting numerous interviews with Nolan County producers and individuals involved in the cotton and grain sorghum industries.

Stephens once again thanked the many Nolan County producers who cooperated with authorities in this investigation by engaging in candid interviews about fellow Nolan County producers and by not turning a "blind eye" to this widespread scheme to defraud. "Schemes like this have become more prevalent. We need people like the many Nolan County farmers who cooperated with us to identify those who would take advantage of the system." Stephens noted that this investigation will continue and that he expects additional convictions.

The Dallas office of the U.S. Department of Agriculture's Office of Inspector General investigated the case. Assistant U.S. Attorney Bill Mateja, of the Lubbock, Texas division of the United States Attorney's Office, is prosecuting the case.