Crop Insurance Update: North Carolina Farmer Sentenced to 11 Years for Charges Including Attempt to Defraud Crop Insurance

Written by M. Sean High – Staff Attorney

On January 27, 2016, the United States Department of Justice United States Attorney’s Office for the Eastern District of North Carolina (USAO-EDNC) issued a press release announcing that North Carolina farmer Milton Russ Barnhill had been sentenced to 11 years in a federal prison on charges for: 1) “Conspiracy to Make False Statement in Connection with Federal Crop Insurance;” 2) “Making False Statements in Connection with Federal Crop Insurance;” and 3) “Mail Fraud and Money Laundering.”

According to USAO-EDNC, Barnhill was charged with conspiring to defraud the Federal Crop Insurance Corporation (and the Farm Service Agency) by “produc[ing] crops which he sold in the names of others.” USAO-EDNC stated that Barnhill and his coconspirators “then reported on insurance claims that the crops were lost due to natural disasters.” Additionally, USAO-EDNC asserted that Barnhill “also placed crops and insurance policies into the names of conspirators to boost the amount of money he could collect on the insurance claims.”

USAO-EDNC stated that Barnhill was charged with making (and assisting others to make) false federal crop insurance claims.  According to USAO-EDNC, Barnhill had “received more than $1 Million into his bank account that was derived from hidden crop production, underreported crop production, and overstated crop acreages.”

Additionally, the USAO-EDNC press release stated that: 1) Barnhill was charged with mail fraud after using a fictitious tobacco sales contract as collateral to secure a farm operating loan; and 2) Barnhill was charged with money laundering after a) proceeds from his fraudulent actions were placed in his bank account, and b) those funds were then used to file false crop insurance claims. 

Importantly, the USAO-EDNC press release noted that “Barnhill previously went to trial on these charges on August 4, 2015, but pled guilty following jury selection.”

North Carolina Passes Bill Legalizing Growing Industrial Hemp

Written by Katharine Richter

On October 31, 2015, North Carolina passed a bill (SB 313) into law and legalize hemp for industrial use.  SB 313 was presented to North Carolina Governor Pat McCrory who failed to approve the law within the prescribed time and by taking no action, the bill became law.

In SB 313 the stated purpose of the bill is to recognize the “importance and legitimacy of industrial hemp” and to promote agricultural employment while being in compliance with Agricultural Act of 2014.  In the first section, § 106-58.50, it states the bill establishes an “agricultural pilot program for the cultivation of industrial hemp in the State,” which will provide data for research on industrial hemp. 

The second section of SB 313, § 16-568.51, defines terms.  The following section, § 106-568.52, defines the creation of the North Carolina Industrial Hemp Commission.  The Commission will be comprised of five members and will serve four year terms with potential for reappointment of second year for another four years.  § 106-568.53 of SB 313 sets the powers and duties of the Commission.  The Commission is the body that will issue licenses for hemp production to the extent  allowed by federal law.  Licensees will be responsible for providing an accurate geographical description of “the location of the industrial hemp farming operation.”  In addition, the Commission is responsible for implementing procedures and rules for growers, studying marketplace opportunities for hemp products and investigating hemp cultivation methods best suited to sustainable growing practices.

Under § 7606 of The Agricultural Act of 2014, growing industrial hemp is allowed “under an agricultural pilot program or other agricultural or academic research.”  SB 313 complies with the Agricultural Act of 2014 by legalizing the growing of hemp  through  the authorized agricultural pilot program.