Kentucky crop-insurance agent admits fraud in payouts totaling $23 million

Oct. 30--A Kentucky crop-insurance agent has admitted taking kickbacks to help farmers file false claims in a scheme that caused $23 million in fraudulent losses to a company and the federal government.

Michael McNew, of Mount Sterling, pleaded guilty Thursday in federal court to a charge of conspiring to commit wire fraud between December 2013 and March 2016.

McNew, 49, admitted he helped farmers growing tobacco, corn and soybeans file applications for hail-damage policies that had false information, including the amount of acreage involved and who owned the crop.

McNew also filed loss claims for farmers that had false information on the amount of damage to crops and the number of acres involved, according to his plea agreement.

The indictment against McNew alleged that in one case, he submitted a claim for a farmer for damage to a crop that hadn't actually been planted, and in another case he filed a claim for one farmer using a photo of someone else's field.

McNew's wife, Karen Ann Nickell, who worked as an insurance adjuster, also pleaded guilty Thursday.

Nickell admitted she helped in the fraud scheme by falsifying loss claims.

She certified losses three times on tobacco crops at a field in Bourbon County that actually was a wooded area with no tobacco grown on it, according to her plea agreement.

That document identified the farmer involved in the claims only by his initials, E.L.P., which match Earl Lee Planck Jr.

Planck, of Nicholas County, is charged in a separate indictment with making fraudulent crop-insurance claims.

The indictment against him included a request by the federal government to take more than 1,000 acres and $575,000 from Planck if he is convicted.

Planck has pleaded not guilty.

The guilty pleas by McNew and Nickell are the latest convictions in a wide-ranging investigation of crop-insurance fraud in Central Kentucky.

More than a dozen people have pleaded guilty and charges are pending against several other people, including Roger Wilson, who once owned Clay's Tobacco Warehouse in Mount Sterling.

Wilson, who has pleaded not guilty, allegedly helped farmers hide the amount of tobacco they grew and provided false paperwork for fraudulent crop-damage claims.

The investigation has shown that abuse of the crop insurance program in Central Kentucky "is pervasive and severe," federal prosecutors said in one court document.

McNew faces up to 20 years in prison. He is scheduled to be sentenced in January.

McNew agreed to pay a $3 million judgment, according to his plea agreement, and could also be ordered to make restitution.

The plea agreement for Nickell recommends a sentence of two years on probation, with six months of that on home confinement, along with a $15,000 fine and $58,486 in restitution to the U.S. Department of Agriculture, which underwrites crop policies.

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