U.S. Attorney Cole Finegan announced farmers Patrick Esch and Ed Dean Jagers of Springfield, CO, have agreed to pay over $6.5 million to resolve allegations of defrauding federal crop insurance programs.
The scheme involved tampering with rain gauges to falsify precipitation data, which prosecutors said resulted in lower rainfall totals in southeast Colorado between July 2016 and June 2017. Esch obscured rain gauges in southeastern Colorado using agricultural equipment and employed additional tampering methods, including filling them with silicone to hinder moisture collection, cutting gauge wires or tipping over the precipitation collection bucket. Jagers often utilized an agricultural disc blade to conceal a rain gauge in Lamar, CO.
According to the Department of Justice, the government investigated Esch and Jagers using civil measures, notably invoking the False Claims Act, which levies civil penalties for specific forms of fraud against the federal government. In addition, they invoked the Financial Institutions Reform, Recovery and Enforcement Act, which imposes civil penalties for various misconduct, including knowingly providing false information to influence the actions of the Federal Crop Insurance Corporation. The U.S. contends their actions violated both statutes.
“Hardworking farmers and ranchers depend on USDA crop insurance programs, and we will not allow these programs to be abused,” Finegan said in a statement. “This case also shows the full measure of justice that can be achieved when our office uses both civil and criminal tools to protect vital government programs.”
Esch and Jagers each pleaded guilty and were sentenced to pay over $3.1 million in restitution. Esch was sentenced to two months in prison, and Jagers six months. While Esch and Jagers did not admit liability in the settlements, these actions serve as a deterrent against future misconduct in federal crop insurance programs.
“We continue to vigorously investigate those individuals who seek to compromise the integrity of National Weather Service equipment and data in an effort to defraud the Federal Government,” said Jeffrey Lysaght, special agent in charge, U.S. Department of Commerce, Office of Inspector General. “We greatly appreciate the cooperation and effort of the United States Attorney’s Office and our law enforcement partners in ensuring justice is served in this matter.”
The civil settlements additionally address qui tam allegations against Esch and Jagers, which were filed in federal court by a private party. The qui tam provisions of the False Claims Act permit a private individual, known as a “relator,” to initiate legal action on behalf of the U.S. and receive a portion of any financial recovery. In this instance, the relator passed away and their estate is set to receive approximately $500,000. — Charles Wallace, WLJ contributing editor
