Colorado Farmers Must Pay $6.5M for Defrauding Federal Crop Insurance Programs

Two Colorado Farmers must pay more than $6.5 Million for defrauding federal crop insurance programs, according to U.S. Attorney Cole Finegan.

Finegan’s office announced that Patrick Esch and Ed Dean Jagers of Springfield, Colorado, agreed to pay the sum to resolve allegations that they defrauded federal crop insurance programs by tampering with rain gauges.

The farmers reportedly concocted a scheme to defraud these insurance programs by making it appear that there was less precipitation in their area than there actually was, including tampering rain gauges in southeast Colorado between July 2016 and June 2017 to prevent them from accurately measuring rainfall.

Some of the gauges that were tampered with belonged to the National Oceanic and Atmospheric Administration and were operated by the National Weather Service. The two used various means and methods to tamper with the gauges. Esch covered gauges in southeastern Colorado with agricultural equipment, and filled gauges with silicone to prevent them from collecting moisture, cutting wires on the gauges, or detaching and then tipping over the bucket that collected precipitation.

Jagers was reported to typical use an agricultural disc blade to cover up a rain gauge in Lamar, Colorado. This tampering created false records making it appear that less rain had fallen than was the case.

The government investigated Esch and Jagers using civil tools, including the False Claims Act, which imposes civil penalties for certain types of fraud on the federal government, and the Financial Institutions Reform, Recovery, and Enforcement Act, which imposes civil penalties for a variety of misconduct, including knowingly making any false statement or report for the purpose of influencing in any way the action of the Federal Crop Insurance Corporation.

The U.S. alleges that this conduct violated both statutes. Esch and Jagers have agreed to pay a combined $3.5 million to settle the civil allegations.

The United States also indicted Esch and Jagers criminally for their roles in the conspiracy. Both pled guilty and were sentenced to pay a combined $3.1 million in restitution. Esch was also sentenced to be imprisoned for a term of two months. Jagers was sentenced to be imprisoned for a term of six months.

The claims resolved in the civil settlements are allegations. In agreeing to settle, Esch and Jagers did not admit liability except to the extent admitted in their guilty pleas.

The investigations into this crop insurance fraud scheme were a coordinated effort by the U.S. Attorney’s Office for the District of Colorado, the U.S. Department of Agriculture, Office of Inspector General, the U.S. Department of Commerce, Office of Inspector General and the FBI.