Johnson brothers ask for leniency in insurance fraud sentencing

FARGO, N.D. -- Two North Dakota farming brothers convicted of crop insurance fraud are asking a federal judge for leniency based on character and family responsibilities, while federal lawyers are asking for the maximum sentences.

Aaron Scott Johnson of Northwood, N.D., and his brother, Derek Johnson, formerly of Northwood and now of Vancouver, British Columbia, were convicted of crop insurance fraud on Dec. 11, 2014, and are scheduled for a sentencing hearing March 9 in Fargo, N.D., before U.S. District Judge Ralph R. Erickson.

The case is unusual because, although there are often allegations of fraud in crop insurance, there are few criminal cases and few convictions.

Aaron and Derek, in separate but related cases, were convicted of conspiracy and lying to the U.S. Department of Agriculture and to law enforcement regarding an insurance fraud scheme that spanned several years. The brothers were found to have applied heat, frozen potatoes and Rid-X, a sewer-cleaning enzyme, to their stored potatoes in 2006 to make them spoil, so they could be paid crop insurance indemnities.

Deterrent for others

Federal judges interpret the guidelines differently in each case. Aaron's sentencing guideline is for 3.8 to 4.75 years in federal prison, because of factors including a prior conviction. Prosecutors are asking for seven years in prison each because of their "multiple offenses and obstructions of justice," and as a deterrent for "these defendants and others from engaging in similar conduct."

Prosecutor Nick Chase, in his brief filed March 4, requested stiffer penalties than the base levels, in part, because of Aaron's "bragging to many people how he was outsmarting the USDA farm programs," and how he attempted to recruit others into the fraud scheme.

"Where there should have been shame, there was arrogance -- bragging about accomplishments and explicitly encouraging at least one other farmer to join them in their fraud scheme," Chase says.

In the brief, Chase says the brothers' fraud in 2006 alone caused more than $1 million in losses to USDA, and that repeated frauds make federal crop insurance contracts void, so they should not have received any federal indemnities or subsidy help.

Aaron's public defender Somah Yarney, in a brief filed March 2, asks for no imprisonment, but if prison is unavoidable, she requests no more than one year in prison and another year of home confinement.

Yarney says if Aaron, 50, would serve the recommended four to five years in prison, he might have trouble paying his restitution.

Yarney describes Aaron as a "very respected" member of the Northwood community, even while acknowledging he had a prior conviction on crop insurance fraud from 1995 and made restitution. In his brief, Chase notes Aaron twice violated probation by failing to make payments.

Similarly, Derek's public defender, Benjamin Thomas of Fargo, in a brief filed March 2, asks that the court cut Derek's sentence in half from the federal sentencing guidelines, based on no prior convictions and a "praise-worthy" professional background. He says much of the evidence in the trial "pertained to Aaron only."

Derek was alleged to have "managed" Leo Borgen, a hired man who blew the whistle on the fraud, saying he participated in applying chemicals to potatoes. Borgen was a key witness in the trial and is separately imprisoned because of a conviction on gross sexual imposition.

Thomas says Derek was already punished for the conviction because he'll "likely never be able to return to Canada where his wife and children live," and where he's lived and owned a construction company for eight years.