This Couple Thought They Could Pull the Wool over the Government’s Eyes

An Iowa couple may be feeling a bit sheepish now that they have to repay
the Government $1,376,670 they collected in subsidies for sheep they did
not own. The sheepless couple was apparently trying to take advantage
of subsidies administered by the Farm Services Agency (FSA) of the U.S.
Department of Agriculture (USDA).

I’m a lawyer who represents
whistleblowers who know about government subsidy fraud as well as other types of fraud against the Government. So I say with
some authority that forshear audacity, this False Claims Act case ranks pretty high.

According to the Department of Justice press release,Money Judgment of $1,376,670 Rendered Against Iowa Couple For Violations
of the False Claims Act, the Knoxville, Iowa, husband-wife team operated L & J Wool &
Fur, a South Dakota corporation. Over a six-year period, Howard “Jack”
Aleff and Reena Slominski submitted 132 false claims for payment under
the Wool and Mohair Loans and Loan Deficiency Program.

In a publication from the United States Department of Agriculture (“USDA”),
Marketing Assistance Loans & Loan Deficiency Payments, the USDA explains
that the Wool and Mohair Loans and Loan Deficiency Program has two chief
components. First, ranchers (farmers) raising sheep or goats can get a
loan from the Government. If the price of wool drops below a particular
rate that has been set by law – the commodity loan rate —
then the farmer can obtain the loan to allow him to hold on to his crop
until later in the year, when presumptively the price will have increased
again. In case the price does not rise, the farmer has the option of delivering
the goods to the CCC as full payment for the loan. To discourage this
course, the government has provided that the producer can repay less than
the full amount of the loan, which will allow the farmer to sell his crop
and still receive a “marketing gain.”

Alternatively, the rancher or farmer can decide not to take a loan at all.
In that case, the producer still can get a Loan Deficiency Payment (LDP).
The producer will be paid the difference between the established loan
rate for the applicable loan commodity and the repayment rate, multiplied
across the full amount of the product produced.

Luckily for this Iowa couple, they did not need to take a loan –
what with not having any sheep to feed or graze, their costs for non-farming
were really quite low. Instead, they took the LDP option. Each year they
fleeced the Government by submitting fake documents that made it look
as if they actually raised sheep and had legitimate business transactions
involving the sale of wool.

Apparently this pair not-owned a large number of sheep, because the LDP
difference netted them an average of $50,000 a year. Of course, with careful
breeding, it is possible that they were able to not-own more and more
sheep over the years, as imaginary sheep begat cute, little imaginary lambs.

To ram the point home, the Department of Justice also prosecuted the duo
criminally. Aleff and Slominski were given five years of probation, and
shorn of $60,000 by way of a fine. They were also ordered to pay restitution
of $303,890 to the Commodity Credit Corporation. The Commodity Credit
Corporation (CCC) is a government-owned corporation that has been charged
with stabilizing and protecting farmers’ incomes and the prices
of farm goods.

So tell me – does this fraud against the Government get your goat?