Critics call USDA Discrimination Settlement a Scam

May 8, 2013. Washington. In 1996, the US federal government admitted that its USDA loan department had been discriminating against black farmers since Ronald Reagan took office as President in 1981. When the Clinton administration agreed to compensate the wronged farmers, it was estimated that there were 91 black claimants who would each receive $50,000. Billions of dollars and 17 years later, the settlement is bordering on a racist embezzlement scam.

Pres. Obama and USDA Sec. Vilsack are on the defensive over billions in fraudulent settlement payments.

The settlement

In 1999, three years after federal officials confirmed that racial discrimination took place within the US Dept of Agriculture, President Clinton agreed to pay thousands of potential victims a maximum of $50,000 each. At the time, the victims were limited to black farmers primarily located in America’s old south. They argued that for decades, blacks were unjustly denied farm loans or were approved for lower amounts than they qualified for. They also showed that in some cases, the terms and conditions were much harsher than similar loans for white farmers.

Soon thereafter, a number of other groups came forward to demand financial compensation for the same discrimination. Hispanics sued, followed by Native Americans and women, to be included in the settlements or be awarded their own monetary reward for damages due to the USDA’s systemic racial bias. But after years of court battles, including a ruling by the US Supreme Court, the victims’ class was limited to an estimated 91 black farmers.

Obama administration ignores courts

As detailed in a shocking report by the New York Times two weeks ago, records show that immediately after the Supreme Court’s ruling, the Obama White House, the Justice Department and the Agriculture Department hatched a plan to award financial payments to any and all women or non-white farmers who came forward claiming discrimination. The previously undisclosed documents show the administration put aside $1.33 billion for payments, far more than the court ordered $5 million.

The newspaper’s investigation shows that the settlement program sculpted inside the White House is now rife with corruption and saturated with racism and sexism, exactly the crimes the lawsuits and subsequent monetary awards were intended to punish.

‘An examination by The New York Times shows that it became a runaway train, driven by racial politics, pressure from influential members of Congress and law firms that stand to gain more than $130 million in fees,’ the Times writes, ‘In the past five years, it has grown to encompass a second group of African-Americans as well as Hispanic, female and Native American farmers. In all, more than 90,000 people have filed claims. The total cost could top $4.4 billion.’

Free money, no documentation needed

Since little official paperwork remains of loan applications from the 1980’s and 1990’s, the Agriculture Department began processing and approving discrimination claims from black farmers with little or no documentation. From the start, the settlement program was criticized for being wrought with corruption. Seeing an opportunity for enrichment, and offended at being left out of the class action, powerful Hispanic politicians began pressuring the White House for inclusion in the payments.

In 2009, Sen. Robert Menendez (D-NJ) wrote a letter to President Obama threatening to take the fight to the court of public opinion if Latinos weren’t included in the discrimination payments. Sensing a PR nightmare, President Obama and newly appointed Agriculture Secretary Tom Vilsack quietly agreed to spread the wealth to the rest of the minority community. As internal documents show, it wasn’t because there was evidence that Hispanic farmers were discriminated against, but because it would be a valuable political move.

As a March 2010 memo authored by Secretary Vilsack explains, expanding the settlement class would be, ‘a way to neutralize the argument that the government favors black farmers over Hispanic, Native American or women farmers.” By the time the Obama administration was finished expanding the list of victims, it included everyone but white and Asian males.

Examples of fraud

Additional records detailed by the NY Times show that internal government auditors who inspected some of the payments to victims found widespread fraud and repeated examples of awards to individuals who were obviously not farmers at the time the discrimination took place. Some were found to have lived in urban cities their entire lives. Other claimants are so young, they would have been toddlers at the time. And stacks of other claims were shown to be filled out by the same individual, with the same handwriting and even using the same wording to describe the various individual experiences.

Another example of blatant and widespread fraud against the taxpayers was found in the number of claims being filed from certain parts of the Deep South. The critical report found, ‘In 16 zip codes in Alabama, Arkansas, Mississippi and North Carolina, the number of successful claimants exceeded the total number of farms operated by people of any race in 1997, the year the lawsuit was filed. Those applicants received nearly $100 million.’

Detailing hundreds of millions of dollars in overpayments, the federal government’s own records show that the USDA discrimination settlements are a virtual give-away program for anyone who has the courage to file a fraudulent claim. Citing the monetary award for the Native Americans’ 2010 group settlement of $760 million, critics insisted that amount was far too high considering the small number of possible Native American victims.

The fears of taxpayer watchdogs proved justified. Records show that even with little or no documentation required, only $300 million in claims were made by, and awarded to, Native American farmers. So, rather than return the unused money to the taxpayers, $400 million was awarded to various non-profit Native American organizations.

Black farmers aren’t taking the accusations of fraud lightly. The largest association of black farmers in the US was quick to respond. “The New York Times article is a lame shot at those who cannot defend themselves,” National Black Farmers Association President John Boyd Jr. argued, “Insinuating that the black farmers’ case seeded, encouraged, or inspired fraud is a low blow.”

Probably without realizing it, Agriculture Secretary Vilsack shed more light on the alleged corruption than he was aware when asked for a comment on the controversy recently. The USDA Secretary explained, “There are a lot of agendas here, and you are opening up a Pandora’s box.”

Read the full New York Times report.

Visit the USDA’s website dedicated to the discrimination settlement.

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