Agent added to Tri-City-area conspiracy case [Tri-City Herald, Kennewick, Wash.]

April 27--Insurance agent Fred F. Ackerman of Kennewick is accused of participating in a conspiracy with Tri-City-area potato growers and packers to defraud the Federal Crop Insurance Corp. of more than $9.5 million in insurance payments.

He has pleaded innocent in Eastern Washington U.S. District Court to one count of conspiracy, nine counts of false application, one count of mail fraud and one count of false statements.

A trial for Ackerman and seven others indicted earlier in the case is set for Oct. 22. The trial date was rescheduled after Ackerman was added to the case.

Also named in the case are Jeffrey J. Gordon of Pasco, Lynn J. Olsen II of Pasco, Mark G. Peterson of Richland and Blake T. Bennett of Pasco, plus the companies they owned or had ties to, Olsen Ag, Poco and Tri-City Produce.

According to court documents, Olsen, Peterson and Gordon grew norkotah russet potatoes -- a variety not typically suited for processing -- and entered into contracts to sell the potatoes to Peterson, Bennett and Tri-Cities Produce for processing. Peterson acted sometimes as a farmer and sometimes as a buyer, according to the indictment.

The contracts required the potatoes to have a starch content unlikely for norkotah russets and to be up to 90 percent bruise-free, according to the indictment.

When the potatoes failed to meet those requirements, the contract allegedly required the growers to sell the potatoes for a fraction of their fresh-pack market value. The contracts did not include a price for the potatoes if they had met the requirements for processing, according to the indictment.

"The norkotah russet potatoes failed to meet the contract requirements each and every time the purported processing contracts were entered into," the indictment said. "Yet the conspirators continued to enter into these virtually identical purported processing contracts year after year."

The indictment alleges the contracts were designed to manufacture false revenue losses for the growers, who then submitted insurance claims seeking to recoup the losses from selling at bargain basement prices. In some cases, the loss was blamed on heat, according to the indictment.

The defendants are accused of sharing the insurance payments among themselves. In one case, Gordon received an insurance check for $195,333 for a contract he signed with Tri-Cities Produce through Bennett and a week later transferred the same amount to Poco, owned or operated by Peterson and Olsen, according to the indictment.

Although the crop insurance was provided by private companies, those companies in turn were backed by the Federal Crop Insurance Corp., an agency of the U.S. Department of Agriculture.

Ackerman and Olsen developed the processing contracts and Ackerman assisted the farmers with submitting insurance claims, according to the indictment.

Ackerman told an agent with the Department of Agriculture Office of Inspector General that he did not provide information related to any specific loss claims of his clients to crop insurance loss adjusters, according to the indictment. He had provided that information on multiple occasions, according to the indictment.

The case has been assigned to Judge Edward Shea.

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