Nov. 14--An insurance agent took cash kickbacks as part of a scheme with farmers to file false claims of crop damage, a federal grand jury has charged.
The grand jury in Lexington indicted Michael McNew on one charge of conspiracy to commit mail fraud and wire fraud and five counts of wire fraud. Those five charges accuse him of sending false applications and reports to insurance companies.
McNew allegedly worked with others to defraud the federal government, which backs insurance policies for farmers, and ARMtech Insurance Services, a private company.
McNew submitted crop-insurance applications for farmers raising tobacco, corn and soybeans that had false information and submitted loss claims that lied about the amount of damage, according to the indictment.
In one case, McNew submitted a claim for a farmer on damage to a crop that was never actually planted, and in another he filed a claim for a farmer using a photograph of someone else's field, the indictment alleged.
McNew allegedly helped farmers take out insurance policies in the names of other people who were not aware of the scam.
The indictment lists the initials of several people involved in the scheme with McNew, including two adjusters.
Some initials match those of farmers who have pleaded guilty in an investigation of crop fraud in Central Kentucky, including Keith Foley, who farmed in Bourbon and Jessamine counties, and Ronnie Jolly, who had crops in Montgomery, Bourbon, Scott, Bath and Fleming counties.
Foley admitted claiming to grow less tobacco than he really did so he could insurance payments based on the lower yield.
The indictment against Foley listed a person identified as M.M. being involved in the fraud as an insurance adjuster in 2012 and then as an agent in 2014.
Jolly also under-reported his production to qualify for insurance payments.
In one case, he told an insurance company he grew only 20,007 pounds of tobacco in 2015, when in reality he delivered an additional 62,091 pound to Clay's Tobacco Warehouse in Mount Sterling and sold it under the names of his children, according to the court record.
The fraud in Jolly's case totaled $2.6 million, according to a court document.
M.M. was Jolly's insurance agent, the indictment said.
Foley and Jolly have not been sentenced.
The charges against McNew carry a top sentence of 20 years. He is scheduled for an initial court appearance Nov. 25.
Court documents indicate the investigation of crop-insurance fraud in Central Kentucky began with a tip to an agency in the U.S. Department of Agriculture that a Nicholas County farmer had made fraudulent claims with the help of an insurance agent and adjuster.
There was another anonymous complaint in 2013 alleging that an insurance agent in Mount Sterling had approached a farmer and offered to "give them a good insurance claim," according to court documents.
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