One key to Constant’s success in fooling buyers about his crops was the use of an outside organization to certify that his products were organically grown, even though most were not. He found an outside company that did not employ a very robust certification process. As a result, Constant was able to obtain certification of the farm products as “organically grown” without much difficulty. He was eventually caught and prosecuted. He pled guilty to selling more than $140 million in grain he falsely represented was organic. According to evidence at sentencing, constant’s scheme also affected the organic meat market. His grain was mostly used as animal feed, primarily for chickens and cattle. That livestock was then sold as organic meat or products. Constant’s fraud caused thousands of consumers across the country to pay premium prices for what they thought were organically raised meats. A federal court sentenced him in 2019 to 10 years in prison. At least five other farmers, who knowingly participated in passing off inorganic crops as organic, were likewise convicted. Constant took his own life in 2019 before serving his sentence. In a remarkably similar scheme, a South Dakota organic grain broker succeeded in passing off grain as organic over six years, from 2012 to 2018. Kent Anderson bought conventionally grown grain and fraudulently sold it as organic at a substantial profit. According to federal court documents, he allegedly amassed about $71 million in proceeds. He pled guilty in 2020 and was sentenced to 51 months in prison. Crop Insurance Fraud – A Network of Crooked Farmers, Agents, Adjusters and Inspectors Robert Carl Stokes, a crop insurance agent in North Carolina, devised a complicated crop insurance fraud scheme that resulted in at least $100million in false crop insurance claims and payments from 2003 through 2008. Stokes’ scheme involved farmers, other insurance agents, warehouse workers, and insurance adjusters. Directly linked with Stokes was his business partner, Mark Pridgen, who served as a middleman and sold crop insurance directly to farmers (although he had no license). (Per Parker, “The Great Organic Food Fraud,” New Yorker Magazine, Nov. 8, 2021.) As one writer explained, “Stokes demolished the standard checks and balances of crop insurance by greasing palms at all levels of the system.” (Per Bennett, “Evil Grain: The Wild Tale of History’s Biggest Crop Insurance Scam” AgWeb Farm Journal, Sep. 14, 2020.) The general framework for the scam involved assisting a farmer in insuring his tobacco crop and reporting that the crop was damaged or the yield was less than expected due to an insured event, even though the crop was healthy and abundant. For every pound of tobacco reported as lost, the farmer would get a payment. Stokes would split the insurance benefit with the farmer. Then, the farmer would hide the portion of the crop that exceeded the reported yield from the inspectors and later sell it on the black market in someone else’s name, pocketing still more money. Stokes also ensured that tax authorities could not detect illicit income. He started a check-cashing business that worked around currency transaction reports so the funds could remain hidden. This scheme netted Stokes and his co-conspirators more than $100 million over five years. Stokes was finally caught when a business associate turned him in and assisted investigators by going undercover in the fraud operation. One of the prosecutors, Josh Howard, talked about the case afterward: “Crop insurance fraud never surprises me,” Howard said, “but this case was bigger than anything I’d ever handled or even heard of. There were just so many people involved at so many levels, and the warehouses were involved neck-deep.”(Bennett, “Evil Grain,” supra.) Stokes pled guilty to various counts of fraud and money laundering in 2009. He was sentenced to 30 months in prison, followed by 16 months of house arrest, and ordered to pay $16 million in restitution. After serving his sentence, he died in 2016 at age 64. Forty other participants pleaded guilty or reached plea agreements. Cattle Fraud – George Young and His Cattle Ponzi Scheme One of America’s largest cattle fraud schemes was carried out by Missouri cattleman George L. Young from Grant City, Mo., and Kathleen McConnell of Kansas City, Mo. They offered to purchase and sell cattle for their clients and to provide care and feeding, promising high profits. Although they did purchase thousands of head of cattle, early on, they began using investor funds to pay off prior investors, thus implementing a “Ponzi Scheme.” They also borrowed from several different banks, effectively pledging the same cattle several times. When the fraud was uncovered by one of the lenders in 2001, the books showed that Young and McConnell were caring for Counselor’s Corner — Continued on page 20 “If your customer runs an operation in which he has partners or investors and your customer is promising to deliver high returns, something else may be going on.” 19
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