The former owner of a tobacco warehouse in Mount Sterling used his business to further a conspiracy to submit false crop-insurance claims, a federal grand jury has charged.
The grand jury also charged two more farmers in the investigation, which has led to indictments or convictions against more than 15 people in Central Kentucky and accusations of millions in fraudulent claims paid by the U.S. Department of Agriculture or private insurance companies.
The latest indictments were against Roger Wilson, who once owned Clay’s Tobacco Warehouse, and farmers John D. Watkins and Kevin C. Watkins.
Wilson was indicted March 5 on one charge of conspiring to defraud the federal government and one charge of conspiring to launder money from the scheme.
Wilson allegedly helped Central Kentucky farmers conceal the amount of tobacco they grew and provided fake paperwork through his warehouse about damage to their crops, so that they could file fraudulent claims for insurance payments.
The money-laundering charge alleges he helped farmers conceal the bogus payments.
The conspiracy included conduct in Bath, Bourbon, Clark, Fleming, Mason, Montgomery and Nicholas counties, the indictment said.
The most serious charge against Wilson has a maximum sentence of 20 years in prison.
The charges are related to a recent indictment against Earl Lee Planck Jr., R. Chad Price and Jesse G. Smith, according to a court document.
In that case, the government wants to take 1,300 acres of land and $575,000 for alleged crimes including filing fraudulent insurance claims and evading taxes.
Mary Trotman, a special agent with the FBI, said in a 2016 affidavit that Planck received insurance payments totaling $1.52 million from 1994 through 2014.
In some cases, Planck filed claims for damage to tobacco crops he said he grew on a piece of land that was actually steep and heavily wooded, which investigators said was not capable of being used for crops, Trotman said.
The indictment against Wilson says he agreed with people identified by the initials E.P. and D.M. to help “numerous” farmers conceal their tobacco production for the purpose of filing false claims.
Debra Muse was a Clay’s Tobacco Warehouse employee who admitted helping generate paperwork at the warehouse for use in bogus insurance claims.
Prosecutors said in one court document that Muse “churned out” fake documents and reports used in the scam that caused the government to pay out $5.9 million in payments that farmers didn’t deserve.
“This investigation has revealed that the abuse of the crop insurance program is pervasive and severe,” prosecutors said in a sentencing memorandum in that case.
Muse was sentenced to five years in prison and ordered to pay $1.6 million in restitution.
A separate indictment returned March 5 charged John D. and Kevin C. Watkins with conspiracy to commit money laundering and mail and wire fraud, and to defraud the government.
John D. Watkins, who owned or rented farm land in Bath, Nicholas and Fleming counties, also faces four charges of making false statements for allegedly under-reporting how much tobacco he produced.
The two allegedly took part in filing false insurance claims. They used matching photos of damaged tobacco in separate claims, the indictment said.
The indictment also charged that they laundered the proceeds of bogus claims through Wilson’s warehouse.
The most serious charge John D. Watkins faces has a maximum prison sentence of 30 years, while Kevin C. Watkins faces up to 20 years.
The government also is seeking financial judgments against all three men. The indictments don’t specify an amount.