FARGO, ND (AP)--Federal agriculture officials are alarmed over reports that some North Dakota farmers are submitting fraudulent applications for government payments, and they are urging growers not to take the risk.
About 13 cases of suspected fraud involving farmers who have applied for loan deficiency payments will be forwarded to the U.S. Department of Agriculture's Office of the Inspector General for review, state Farm Service Agency director Scott Stofferahn said.
More reports could follow.
Agency workers, despite being inundated with paperwork, will continue random inspections, he said.
"We've got more potential cases reported to us than all of last year," said Larry Lampl, a program specialist in the state FSA office in Fargo.
Said Stofferahn: "We may have had just as much activity last year, but we just didn't find it. We did get a lot of calls after the fact."
In Minnesota, the agency's regional offices have not reported any cases of potential fraud, said Kathy Kohns, an assistant program specialist at the state office in St. Paul.
Farmers that file fraudulent applications for loan deficiency payments risk losing their payments and can face criminal charges and fines, Stofferahn said.
"The bottom line is that we just don't want them to try something that is so ill advised," he said.
"When we have what appears to be a knowing violation, we have to submit those for review of possible fraud," he said. "There's nothing worse than having to do that."
"But when they have gotten that far along in misrepresenting what they have, there's not much we can do," he said. "It's out of our hands."
Under the 1996 farm bill, farmers become eligible for loan deficiency payments when market prices for qualified crops fall below their loan rates. The payments essentially cover the difference between established loan rates and lower market prices.
To be eligible for deficiency payments, farmers must grow qualified crops, and they must harvest the commodities before applying for the payments. Also, farmers can only factor in this years crops as a basis for the payments.
Most reports of possible fraud involve farmers in the state's northern counties, where heavy rains have slowed harvest, Stofferahn said.
During harvest, farmers have watched some loan deficiency payments drop by 20 cents a bushel.
Some are locking in on deficiency payment rates, in hopes that they can avoid further reductions.
But farmers unable to get their crop harvested don't have that option legally.
Through random inspections, the Farm Service Agency has found that some farmers have applied for deficiency payments reporting total yields on crops not yet harvested, Stofferahn said.
"Spot checks are finding empty bins and unharvested fields," he said.
Farmers found to have defrauded the program will forfeit the loan deficiency payment, cannot take out a government loan on the commodity and can be assessed a fine equal to 25% of the requested payment. They could also face criminal charges, Lampl said.
"We just don't want producers to get involved in those kinds of problems," he said. "It's not something that should be taken lightly.
"If the grain is standing in the field, its pretty hard to say, I thought it was in the bin," Lampl said.