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Published May 18, 2009, 04:00 AM

USDA appeals officer denies Huber arguments

FARGO, N.D. — The U.S. Department of Agriculture has denied another appeal by Duane Huber, his family and two others in which the Farm Service Agency says should pay back farm program payments they received fraudulently from 1995 through 2000.

By: Mikkel Pates, Agweek

FARGO, N.D. — The U.S. Department of Agriculture has denied another appeal by Duane Huber, his family and two others in which the Farm Service Agency says should pay back farm program payments they received fraudulently from 1995 through 2000.

This appeal involves refunds of farm program payments involving what the government called “sham” farms, led by Huber of Wimbledon, N.D. These penalties go beyond a 2002 criminal conviction, in which Huber served 60 months in federal prison in Duluth, Minn., and forfeited $3.9 million.

Huber’s was the largest case of its kind in North Dakota history, and was one of the largest nationwide.

Since the criminal case, USDA’s Farm Service Agency since 2007 has been pursuing the Hubers and two others for refunds of the farm programs. This has since gone through various levels, including mediation, and now to a USDA National Appeals Division hearing officer.

Doug Johnson, a son-in-law of Duane Huber, who has helped him with the legal issues, says the family hasn’t decided whether to ask for a review of the latest NAD decision, or whether there may be further legal avenues.

Upheld decision

Ronald Stubblefield, an NAD hearing officer, in a May 8 determination, upheld FSA’s earlier adverse decision against Huber on Dec. 17, 2007. His report recently was posted on a NAD website. Many names in the case were replaced with “XXXXX,” but the report clearly is about the Huber appeal because of references to the state as well as other details.

Stubblefield says he agrees with the FSA that Huber and had engaged with other parties to circumvent individual payment limitations for FSA programs involving farms.

He disagrees with Hubers’ various contentions — that the earlier jury decision not to seek restitution should prevent further penalties, that the FSA decisions should be barred by a statute of limitations, or that the appellants “could have legitimately accomplished the same results if they had merely formed other business entities.”

“What appellants might have done does not excuse what they actually did,” Stubblefield says.

The officer says Huber argued there “is no measurable standard for what constitutes ‘actively engaged in farming’ and ‘active personal management’” and that the issue might be “unconstitutionally vague.” While the officer says the constitutionality is beyond his purview, he says, “I do not find this vagueness argument persuasive.”

The FSA determined that the various parties’ “contributions to the various farming operations were not commensurate with the interests shown on” Farm Operating Plans filed with the agency. The agency concluded the parties were therefore ineligible for farm program benefits

There ‘was no scheme’

Huber claimed there “was no scheme” and that the third parties were “separate and distinct producers providing equipment, labor and management in appropriate shares.

Stubblefield says none of the third parties participated in the latest appeal.

A face-to-face hearing was originally scheduled for Feb. 3, but, at Huber’s request, was changed to a record review. Filings and responses were closed on April 24.

“I conclude FSA did not err in finding appellants and third parties ineligible for program payments for specific years, based on the conclusion that they engaged in a scheme to avoid program payment limitations,” Stubblefield says.

One of the appellants in the case is Huber’s son, Steven Huber, filed one of FOP reports in July 1996, saying he was farming 844.1 acres and providing 100 percent of the capital and 100 percent of the active personal management. Subsequent forms were filed in 1997, 1998 and 1999, and Steven Huber received program payments for each of those years, according to the NAD report. Other third parties had similar situations.

Stubblefield says the “clear weight of evidence show” that Huber had “organized a scheme, involving himself” and the others. He had “enlisted” the others “to falsely list themselves as farm operators with FSA, to circumvent USDA payment limitations, and hired his own operator for the various farms. The party who signed the FOP received all farm income, program payments and crop insurance proceeds, putting those monies into a farm account. Then, the party paid all proceeds to appellant 2 by checks with various notations indicating they were payments for services or goods provided.

“In return, each party received a fixed yearly payment from appellant 2, between $3,000 and $9,000, and was repaid any increase in the amount of income taxes,” Stubblefield says.

In some cases, a third party couldn’t write a check without Huber’s permission.

Stubblefield says while Steve Huber was dismissed from the criminal case, which requires a standard of proof “beyond a reasonable doubt,” the administrative case requires only a “prepond-

erance of evidence.”