Potato contract in Mid-Columbia lawsuit delayed [Tri-City Herald (Kennewick, Wash.)]

Oct. 23--The trial of four Mid-Columbia potato farmers and processors and a Kennewick insurance agent accused of conspiring to defraud the Federal Crop Insurance Corp. of more than $9.5 million in insurance payments has been postponed.

All five of those accused of in the conspiracy have pleaded innocent in Eastern Washington U.S. District Court.

The trial, which was set to begin Wednesday, was delayed to April 15 because one defendant's attorney recently had family members die, said Joe Harrington, first assistant to the U.S. Attorney.

Attorney Sal Mendoza Jr.'s sister Ilda L. Islas of Prosser, and his niece, Alejandra Islas, 14, were killed in a head-on collision Saturday on Highway 22 about a half-mile west of Prosser.

Mendoza represents insurance agent Fred. F. Ackerman, who is accused of developing processing contracts with Lynn J. Olsen II of Pasco and helping the farmers submit false submit insurance claims, according to the indictment.

Also indicted are Olsen, Jeffrey J. Gordon of Pasco, Mark G. Peterson of Richland and Blake T. Bennett of Pasco, and the companies they owned or had ties to, Olsen Ag, Poco and Tri-Cities Produce.

Olsen, Peterson and Gordon grew Norkotah Russet potatoes -- a variety not normally used for processing -- and entered into contracts to sell the potatoes to Peterson, Bennett and Tri-Cities Produce for processing between 2001-06, according to court documents. 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 that variety and to be at least 80 percent bruise-free, according to the indictment.

When the potatoes did not meet the "exceedingly high" requirements, the contract allegedly required the growers to sell the potatoes for a fraction of their fresh-pack market value, according to the indictment.

<p>"The Norkotah Russet potatoes failed to meet the contract requirements each and every time the purported processing contracts were entered into," the indictment stated. "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 submitted insurance claims to recoup the losses from selling at bargain basement prices.

The defendants are accused of splitting the insurance payments.

The crop insurance was provided by private companies, but the companies were backed by the Federal Crop Insurance Corp., an agency of the U.S. Department of Agriculture.

-- Kristi Pihl: 582-1512; [email protected]

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