Kentucky farmer pleads guilty to fraud involving crop insurance claims of $700,000 [Lexington Herald-Leader]

A Central Kentucky farmer pleaded guilty to taking part in fraud involving a loss of more than $700,000 to a federal agency and an insurance company.

James A. McDonald entered a plea in federal court in Lexington Thursday to two charges of conspiracy to commit an offense against the U.S. through fraud involving crop insurance.

McDonald’s sister-in-law, Cherie Lynn Noble, also pleaded guilty Thursday to one charge of crop insurance fraud.

McDonald owned and rented farm land in Bourbon and Nicholas counties and grew tobacco and corn during the period covered in the charges from 2013 to 2017, according to the court record.

McDonald worked with another farmer charged in the case, Randall D. Taulbee — and at times with an insurance agent — to falsify crop insurance polices a number of ways, according to his plea agreement.

Those included claiming to grow more acres than he did in at least one year, bringing a bigger payout on a loss claim; falsifying a loss claim for at least one crop year; falsely inflating expenses; claiming sole ownership of a crop when he was actually partners with Taulbee and split an insurance payout with him; and selling corn in the name of his son to hide the sales.

The plea agreement did not identify the insurance agent who allegedly helped with the fraud.

Taulbee has pleaded not guilty.

In the 2015 and 2016 crop years, McDonald agreed with Taulbee to take out insurance on their tobacco crop in Noble’s name, McDonald said in his plea.

Noble also agreed to the arrangement, which allowed McDonald and Taulbee to get bigger insurance payouts because she was listed as a new producer.

Noble gave most of the money to McDonald and Taulbee, according to court documents.

Noble initially lied to investigators about her relationship to the two men and said the money she paid them was for cattle, but she did not own or rent farm land or raise any crops or cattle, according to her plea document.

Noble is Taulbee’s sister and McDonald’s sister-in-law.

McDonald’s plea agreement said restitution is mandatory in the case, listing the amounts as $458,104 to a division of the U.S. Department of Agriculture and $260,680 to AgriSompo North America, an insurance company.

The court record said McDonald agreed to a personal judgment of $207,754, representing the amount he received as a result of the fraud.

The plea document said McDonald should be liable for the entire amount of restitution with Taulbee and Noble, but her plea said she argues she should only be liable for $3,028, representing the amount of money she earned from the scheme.

U.S. District Judge Karen K. Caldwell scheduled McDonald and Noble to be sentenced in September.

Crop insurance fraud carries a maximum sentence of five years in prison.

The case against Taulbee, McDonald and Noble is among a series of indictments in recent years alleging pervasive crop insurance fraud in Central Kentucky.

More than two dozen people pleaded guilty in fraud totaling millions of dollars, including farmers, an insurance agent and people associated with a tobacco warehouse.

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