RALEIGH - United States Attorney Thomas G. Walker announced that in federal court today HARRY DEAN CANADY, 63, of Lumberton, North Carolina, pled guilty before Chief United States District Judge James C. Dever III to the following offenses:  conspiracy to make false statements, to make material false statements, and to commit mail and wire fraud, all in violation of Title 18, United States Code, Section, 371; false statements to the Federal Crop Insurance Corporation and aiding and abetting the same, all in violation of Title 18, United States Code, Sections 1014 and 2; aggravated identity theft in violoation of Title 18, United States Code, Section 1028A; money laundering and aiding and abetting the same in violation of Title 18, United States Code, Sections 1957 and 2; felon in unlawful possession of a firearm in violation of Title 18, United States Code, Section 922(g); and retaliation against a federal official in violation of Title 18, United States Code, Section 115.

U.S. Attorney Walker stated, “This investigation exemplifies how our nation’s law enforcement officers place their lives at risk in the investigations of crimes, even white collar offenses.  Such intimidation tactics will not be tolerated in the pursuit of justice for the American people and the protection of public funds.” 

According to the Indictment returned by a federal grand jury on June 13, 2012, court filings, and information presented in open court, CANADY owned and rented farmland in Robeson County, North Carolina, and produced, among other crops, tobacco, corn, wheat, and soybeans.  From August 2006 through December 2009, CANADY conspired with others to commit fraud upon the federal crop insurance program.  It was the purpose of the conspiracy to profit through the filing of false, ficitious, and fraudulent federal crop insurance claims, the sale of unreported tobacco and other grains, and to hide the criminal proceeds through payments and sales in nominee names.

Specificially, CANADY worked with a co-conspiring insurance agent, warehousemen, brokers, and adjusters to make false crop insurance claims, and to hide some or all of his crop production by selling it in nominee names or the names of family members,  or for cash to co-conspiring warehousemen.  CANADY profited under the scheme because he was paid twice for each pound or bushel of his crop: once through the false crop insurance claim, and also through the sale of the “hidden” tobacco or “hidden” grain.  CANADY and other co-conspirators misrepresented the truth of farm operations in a variety of documents, including applications, reports of actual production history, acreage reports, and claim forms made and submitted in support of crop insurance coverage and claims that failed to truthfully show who had an insurable interest and who really suffered a loss and the extent of that loss which were submitted to the Risk Management Agency, and agency of the United States Department of Agriculture, and private entities.

For example, law enforcement determined that CANADY, without authorization, used the name of his grandchildren, to hide some of his soybean production.  Specifically, on January 21, 2008, CANADY declared that he only produced, harvested, and sold 7,192 bushels of soybeans, when in fact, he sold an additional 2,261 bushels of soybeans in the name of his grandchildren.  By failing to disclose the sales in his grandchildren’s name, CANADY was paid $99,537 on a false claim.

The investigation further revealed that CANADY took the criminal proceeds obtained through other acts of aggravated identity theft and federal crop insurance fraud, and engaged in various financial transactions with those funds, including causing his daughter to deposit an $84,655.97 check into a financial institution and to transfer the funds to an account controlled by him.  These funds were derived from the unreported sale of 23,730 bushels of corn in the name of a grandchild.

In an effort to increase the amount of money he could defraud from the federal crop insurance program, CANADY created and used a new corporation, MC FARMS CO., INC..  CANADY caused another person to submit false documents to the Farm Service Agency, and the federal crop insurance program under that corporation name.

During the course of the investigation, law enforcement received information that CANADY unlawfully possessed firearms.  During the execution of a November 22, 2010, search warrant, officers recovered 6 firearms and over 180 rounds of ammunition.  CANADY had been previously convicted of involuntary manslaughter, a crime punishable by a term of imprisonment exceeding one year. 

CANADY, who was aware of the federal investigation since at least 2008, made several threats against law enforcement.  Most recently, on January 23, 2012, CANADY threated to assault and murder a USDA-OIG Special Agent with the intent to retaliate against such law enforcement officer.  As a result of the offense conduct, CANADY fraudulently obtained a total of $1,036,516 worth of federal corp insurance indementity payments.

Karen Citizen-Wilcox, the Office of Inspector General’s (OIG) Special Agent-in-Charge for the Southeast Region, stated, “We have uncovered extensive fraud and program abuses in our ongoing crop insurance investigations in the Eastern District.  However, Mr. Canady went far beyond mere financial crimes when he threatened to assault and murder one of our special agents.  We will not tolerate retaliation against OIG agents as they serve and protect the public interest with respect to USDA programs.  We are pleased that Mr. Canady will face sentencing on these charges.”

“IRS-CI is committed to ensuring that fraud in the federal crop insurance program is thoroughly investigated.  We will continue to work with the U.S. Attorney’s Office and other federal agencies to prosecute those who commit fraud in government programs,” said Jeannine A. Hammett, Special Agent in Charge, Charlotte Field Office.

The criminal investigation of this case was conducted by United States Department of Agriculture – Office of the Inspector General - Investigations; United States Department of Agriculture - Risk Management Agency – Special Investigations Branch; and the United States Internal Revenue Service – Criminal Investigations.  Assistant United States Attorney Banumathi Rangarajan is handling the prosecution on behalf of the Eastern District of North Carolina.

 

 

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