Prosecutors in Kentucky have announced the indictment of a tobacco warehouse manager for his role in a significant crop insurance fraud scheme. Thomas H. Kirkpatrick, who manages the Farmers Tobacco Warehouse in Danville, is accused of conspiring with several farmers to create false documentation. This paperwork allowed the farmers to misrepresent their crop expenses and claim inflated insurance payouts.
According to the indictment, the goal of the conspiracy was to make it look like the farmers had purchased tobacco from the warehouse, even though they had actually produced it themselves. The farmers then submitted these false claims to their insurance adjusters to reduce their reported production to the Federal Crop Insurance Corporation (FCIC). This manipulation led to higher insurance payments than the farmers were entitled to receive.
The federal crop insurance system typically involves private insurance companies, known as approved insurance providers (AIPs), that sell policies through agents. These AIPs are backed by the FCIC, which reinsures them.
One of the farmers involved, David Hunt, recently pleaded guilty to conspiracy to commit money laundering. Two other farmers have also admitted guilt and are awaiting sentencing. If convicted, Kirkpatrick faces a potential sentence of up to 20 years in prison and may have to forfeit some of his assets.
This indictment is part of a broader federal investigation that has already led to the arrests and convictions of around two dozen individuals, including farmers, warehouse workers, and an insurance adjuster. Notably, Michael McNew, a former insurance agent, was sentenced to seven years in prison and ordered to pay $10 million in restitution for his part in the fraud.
The investigation highlights ongoing issues within the crop insurance system, raising concerns about the integrity of claims and the potential for abuse in agricultural insurance practices.