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Feds indict North Dakota farmer for crop insurance fraud

The U.S. Attorney’s office has indicted Kent Pfaff, a Washburn, North Dakota, area farmer for federal crop insurance fraud.

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BISMARCK, North Dakota — Kent Pfaff, a farmer in the Washburn-Falkirk areas of North Dakota, is scheduled to be arraigned in Bismarck North Dakota, on March 3, 2022, on federal crop insurance fraud.

U.S. Attorney Nicholas W. Chase filed a five-page criminal indictment against Pfaff on Feb. 2, 2022. He will appear before Magistrate Judge Clare R. Hochhalter, at 10 a.m. Thursday, in the federal courthouse in Bismarck. In the hearing, delayed from Feb. 24, Pfaff will be represented by Gary R. Leistico, of St. Cloud, Minnesota. Pfaff has made no plea in the case.

Pfaff and his wife, Rhonda, live in the Washburn, North Dakota, area. A 2016 story in the Bismarck Tribune said they farmed with sons, Stephen and Zachary, and family friend Chris Stork.

The government, meanwhile, has not indicated the financial size of the case. The farm is known as one of the region’s largest, with tens of thousands of acres.

In the indictment, Chase said Pfaff gave false statements to influence the U.S. Department of Agriculture’s Risk Management Agency, which handles crop insurance through the Federal Crop Insurance Corp.

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Between Jan. 1, 2017, and June 1, 2022, Pfaff, “falsely represented, and caused another to falsely represent information to RMA/FCIC to shift production from different crop fields to manufacture and inflate crop insurance indemnities to which he was not entitled,” the government alleges.

‘Shifting production’

“Shifting production is a fraud scheme where a person will overreport production from one or more fields and underreport production from one or more different fields to manufacture or inflate claims to which they are not entitled,” Chase wrote in the indictment.

Chase said that between Dec. 1, 2019, and June 1, 2020, Pfaff knowingly provided false information to Sheldon Crop Insurance Agency, FMH Ag Risk Insurance Co, and Farmers Mutual Hail Insurance Company of Iowa, and to a Farmers Mutual Hail insurance adjuster.

Chase listed specific situations in the indictment:

  • In 2019, two witnesses identified only initials — as “B.B. and E.B” — worked for Pfaff as “custom combiners.” They harvested crops on Pfaff’s farmlands. E.B. logged production totals from each field belonging to Pfaff, using grain cart scales and a notepad. On Jan. 2, 2020, E.B. sent Pfaff an email spreadsheet with B.B’s 2019 grain cart harvest data for Pfaff’s operation. On Jan. 3, 2020, Pfaff submitted a Notice of Damage or Loss form with FMH Ag Risk Insurance Company. In the claim, Pfaff said his soybeans were damaged by “Cold Wet Weather,” with a damage date of Oct. 10, 2019. Pfaff didn’t include the harvest records that E.B. had provided.
  • On April 17, 2020, Pfaff  “knowingly listed and affirmed” false information on wheat, corn and soybeans, both in “Production to Count” and “Production Per Acre.” In one example, Pfaff harvested 529 bushels of soybeans from 138.35 acres in one “unit” in McLean County, North Dakota, for “production per acre value of 3.82 bushels.” That understated the yield, which increased the insurance indemnity, Chase wrote. Meanwhile, in the same production summary, Pfaff listed 16.6 acres of “unharvested soybeans” had produced 395.1 bushels, or 23.8 bushels per acre. In another unit, Pfaff said he harvested 408.2 bushels of soybeans from 81.94 acres, yielding an average of 4.98 bushels per acre — an extremely low yield that increased insurance indemnity payments. But in the same production summary, Pfaff reported 11.8 acres of “unharvested soybeans” in the unit had produced 250 bushels, or 21.2 bushels per acre.
  • In another farm unit in McLean County, Pfaff said he’d harvested 1,184.3 bushels of soybeans from 297.6 acres, for an average of 3.98 bushels per acre, and reported this for insurance compensation. In the same report, Pfaff reported that 7.11 acres of “unharvested soybeans” produced a total of 153.8 bushels of soybeans for an average production of 21.6 bushels per acre. On April 17, 2020, Pfaff certified production summaries for two nearby units. On one, in McLean County, he harvested 19,829.8 bushels of corn from a 125 acre parcel, for a yield of 158.4 bushels per acre. A mile away, in Sheridan County, Pfaff reported he’d harvested 4,352 .7 bushels of corn from of 173.7 acres, for a yield of 25 bushels per acre. The summaries were sent to FMH Ag Risk Insurance Company, in the names of Steven Pfaff, a son, and Christopher Stork, an employee. Meanwhile, B.B.’s electronic spreadsheet, mailed to Kent Pfaff on Jan. 2, 2020, and the production statement to the insurance company were described simply as “different.”
Mikkel Pates is an agricultural journalist, creating print, online and television stories for Agweek magazine and Agweek TV.
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