Rep. Steve King Says Witnesses Are Ready to Testify in Congress About Alleged Fraud in Federal Compensation Payments to Black Farmers

January 10, 2011 - 9:00 AM

Rep. Steve King

Rep. Steve King (AP Photo/Haraz N. Ghanbari)

(CNSNews.com) - Rep. Steve King (R.-Iowa), who serves on both the House Agriculture Committee and the House Judiciary Committee, says he has personally talked to two potential witnesses in recent months who are ready to come forward and speak to a congressional committee—if one decides to actually investigate the matter--about alleged fraud in discrimination-compensation payments that the U.S. Department of Agriculture has made to black farmers.

One of these would-be witnesses is a black farmer who was a litigant in the initial class action suit that black farmers brought against the USDA in the 1990s. The other is a current long-time employee of the USDA itself.

King said the black farmer who is prepared to testify told him that some attorneys in the case he was involved in traveled neighborhoods to sign up people up who had never farmed to receive the discrimination-compensation payments the USDA agreed to make in the negotiated settlement of the case. The enlistees even included homeless people this farmer alleged, according to King.

King said he spoke with the farmer for two hours and 20 minutes several weeks ago about the settlement, reached in 1999, that saw the government pay out $1 billion in compensation to 15,640 black farmers who alleged discrimination.

King said that a few months ago he also interviewed a USDA employee of more than 30 years who says he was personally aware of numerous fraudulent claims that were filed seeking compensation under the negotiated settlement. The USDA employee, who spoke to King for about an hour and a half, worked processing USDA farm loans in the South.

King said that both of these witnesses want to remain unnamed for now to protect themselves from retaliation or intimidation, but are willing to come forward and testify under oath for the record if Congress holds hearings on the matter.

King says that over the years, as he has served on the Agriculture Committee, he has also talked to a number of other USDA officials who have information that would be relevant to an investigation of the case. At least a couple of these, he says, would be willing to cooperate with a congressional investigation if a House committee were to undertake one.

“I asked several of them, would you be willing to testify if called upon,” King told CNSNews.com. “Some of them like the jobs that they have now. This puts them at significant risk. So there are a couple that said they would cooperate with a congressional investigation, but they would not speak on the record in any other fashion.”

King and some other members of Congress who have been critical of how the government has handled the issue believe that the USDA did in fact discriminate against black farmers in the period from 1981 through 1996. However, they are concerned that the number of people who have received compensation payments from the government, and who are anticipated to receive compensation under a new settlement, may significantly exceed the number of people who were actual victims of discrimination.

USDA’s Farm Service Agency county commissions allegedly discriminated against black farmers in dispensing federally funded farm loans between 1981 and 1996. In 1999, the federal government settled a class action suit—commonly called the “Pigford” case after the name of the lead plaintiff--that black farmers had brought against the government. As a result of the Pigford settlement, the government eventually paid $1 billion in compensation to 15,640 claimants.

However, 73,800 additional people applied for compensation after the final September 2000 deadline that had been set for claims applications.

The U.S. Census Bureau’s Statistical Abstracts for the United States indicate that in the period from 1981 through 1996, in which the alleged discrimination took place, the number of black farmers in the United States peaked at 33,000 in 1982. But the 15,640 people who actually received compensation under Pigford combined with the 73,800 who applied for compensation after the deadline represent a total of 89,440 potential claims.

In 2008, then-Sen. Barack Obama managed to get $100 million included in the annual farm bill to pay compensation to black claimants who missed the September 2000 deadline in the original Pigford settlement. In February 2010, Vilsack and Attorney General Eric Holder reached a new settlement with the black farmers—called “Pigford II”--to provide a total of up to $1.25 billion in additional compensation payments to black farmers whom the USDA allegedly discriminated against in the 1981-through-1996 period.

In November, Congress approved $1.15 billion (to add to the $100 million Obama had inserted into the 2008 farm bill) to complete appropriations for the $1.25 billion in additional compensation payments. Obama signed that funding into law late last year.

The controversy over whether additional compensation payments are justified is in part fueled by the apparent discrepancy between the number of black farmers the Census Bureau says there were during the period in question and the number of people who are seeking compensation payments for being discriminated against as black farmers.

Back on Oct. 14, 1999, John W. Boyd Jr., who is president of the National Black Farmers Association, presented written testimony to the House Agriculture Subcommittee on Department Operations, Oversight, Nutrition and Forestry, in which he said that at the end of the millennium “there will be less than 18,000 black farmers” in the United States.

Another advocate Gary R. Grant, president of the Black Farmers and Agriculturalists Association, said in a prepared statement at the same subcommittee hearing: “In 1920, 925,000 farmers (14 percent) were black. Today, there are less than 17,000 depending upon the USDA definition of ‘farmer,’ but I assure you the number is far less.”

The USDA indicated to CNSNews.com that it takes allegations of fraud seriously and concedes there need to be strong provisions in place to prevent fraud from taking place in the distribution of the $1.25 billion in additional compensation money made available by Pigford II.

The new settlement, a USDA spokesperson told CNSNews.com, includes stricter oversight provisions than the initial settlement did. The spokesperson said the USDA will be closely monitoring the payouts in the months and years ahead.

The law providing the $1.15 billion for additional compensation payments, in fact, includes a provision that requires the USDA Office of Inspector General and the Government Accountability Office to audit the payouts as a means of preventing fraud.

Reps. Michelle Bachmann (R-Minn.) and Bob Goodlatte (R-Va.) have joined King in calling for a probe into potential fraud in the Pigford payments.

“It’s our fiscal and fiduciary duty to the taxpayers to do an investigation,” Bachmann told CNSNews.com. “We don’t have the facts and circumstances of even one case before Congress to show discrimination. Yes, there may have been discrimination. If there was, we need to go in and investigate that to see if the proper amount of money was awarded to the claimants. Perhaps they deserve more. We don’t know.”

The Pigford I consent decree approved on April 14, 1999 stated that a claimant must have “owned or leased, or attempted to own or lease farm land;” “applied for a specific credit transaction at a USDA county office;” “the loan was denied, provided late, approved for lesser amount than requested, encumbered by restrictive conditions, or USDA failed to provide appropriate loan service, and such treatment was less favorable than that accorded specifically identified, similarly situated white farmers;” or “USDA’s treatment of the loan application led to economic damage.”

In 2005, the Associated Press and other news organizations reported that three people pleaded guilty in U.S. District Court in Jacksonville, Fla. to conspiracy to submit false claims to the USDA to obtain payments from the Pigford settlement. According to the National Journal, the USDA has said that the FBI prosecuted a total of 3 individuals for making false claims following the Pigford I settlement.

A congressional investigation of the Pigford settlement would “make the victim the enemy,” said Grant, president of the Black Farmers and Agriculturalist Association.

“I don’t think it [fraud] was any major problem in Pigford I and I don’t see it being any major problem in Pigford II. The process itself is there to help eliminate and catch people who might be trying to slip in under the radar as they say,” Grant told CNSNews.com. “I’m all in favor of ensuring that no one gets through this that does not deserve to get through it. But there are ample folks that have legitimate claims.”

Grant said Bachmann and King “should be ashamed” for demanding an investigation.

King said he has many copies of Pigford I claims applications in his possession that he thinks should be examined. He stresses that he believes that the USDA did discriminate against some black farmers and thinks that the USDA officials guilty of that discrimination should be or should have been fired.

“I believe it (discrimination) happened, as I understand there were complaints that were thrown away or just destroyed or never acted on, so there is some substance,” King said. “I believe that to be true and I believe that they should be compensated for the damage they suffered because of that racial discrimination.”

But that does not make it acceptable to payout fraudulent claims to people who were not discriminated against, King said.