Robeson County Farmer Sentenced In Million Dollar Crop Insurance Fraud, Aggravated Identity Theft, Firearm Offense, And Threat To Law Enforcement
RALEIGH - United States Attorney Thomas G. Walker announced that in federal court today Chief United States District Judge James C. Dever III, sentenced HARRY DEAN CANADY, 63, of Lumberton, North Carolinato a total of 72 months imprisonment followed by 5 years supervised release. The Court also ordered CANADY to pay restitution in the amount of $1,036,516.
On December 19, 2012, CANADY pled guilty to the following offenses: conspiracy to make false statements, to make material false statements, and to commit mail and wire fraud; false statements to the Federal Crop Insurance Corporation; aggravated identity theft; felon in unlawful possession of a firearm; 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.”
“USDA-OIG-Investigations remains committed to working with the U.S. Attorney’s Office and our law enforcement partners to bring those to justice who willfully violate the law, threaten our agents, and facilitate fraud against USDA programs. Threatening federal agents is a serious offense. USDA-OIG will always take action to protect its law enforcement agents from such threats”, said Karen Citizen-Wilcox, Special Agent-in-Charge.
"It is very rewarding to see these people sentenced after such a complex and exhausting investigation by our special agents and our law enforcement partners," said Special Agent in Charge, Jeannine A. Hammett, IRS Criminal Investigation.
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, fictitious, 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.
Specifically, 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.
The investigation revealed that 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, an 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 threatened 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 crop insurance indemnity payments.
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 handled the prosecution on behalf of the Eastern District of North Carolina.