Who Wants to Be a Black Millionaire?

Over the past three years, the media have been covering an ongoing class-action lawsuit against the U.S. Department of Agriculture (USDA) by black farmers. According to the press, the department has admitted discriminating for years against thousands of honest black farmers, and is now paying the price. To date, no press report has fully explained the lawsuit and the way it was settled. This means no press report has told the truth about what amounts to a deliberate decision by USDA to write checks to virtually any black who steps forward with a claim of “racism.” This article, relying exclusively on knowledgeable sources within the government, is the first in-depth look at this sad affair, which is likely to cost taxpayers at least $2 billion and perhaps as much as $4 billion. The story is an involved one but is sadly instructive of the self-abasement now common in the name of race. It likewise provides blacks yet more encouragement in their belief that they are beset by bigotry at every turn.

The story began simply enough in December 1996, when a small group of black farmers demonstrated in front of the White House, complaining about alleged USDA discrimination in its vast farm lending program. Blacks are less than one percent of the farming population but account for three times that proportion of USDA lending (3.2 percent), which suggests the very opposite of deliberate exclusion, but no one pointed this out at the time. The press gave the demonstration more coverage than its small numbers and unsubstantiated claims merited, and shortly afterwards, according to sources within the government, William Clinton told Agriculture Secretary Dan Glickman to keep complaining blacks “out of my back yard.” Mr. Glickman, who had been given a cabinet post by Mr. Clinton after being ousted in the 1994 Republican landslide from a House seat he had held for 18 years, was quick to comply.

Within days, Mr. Glickman announced the sudden discovery of rampant discrimination within the department he had headed for nearly two years (and which had been run before him by a black former congressman, Mike Espy). He offered no evidence of racism, but scheduled a series of “listening sessions” around the country to look for some.

At a probable cost of a million dollars or more, the January 1997, USDA “listening” tour made stops in 11 cities from California to Washington, D.C. The entourage included Mr. Glickman’s deputy secretary, the black leader of a newly created Civil Rights Action Team (CRAT), and a hand-picked group of 11 other government officials. The CRAT had originally numbered ten, but an eleventh was hurriedly added when it was discovered Mr. Glickman had forgotten to include a Hispanic.

The “listening” tour had much to listen to. Plenty of people, many of whom had been complaining for decades about alleged USDA racism, were happy to repeat well-practiced accounts of mistreatment. Among the aggrieved was a small group of black farmers whose attempt to file a class-action suit had been dismissed a few years earlier. They did not claim USDA had refused them money — all had received farm loans — but that white bureaucrats had not done enough to help make them successful farmers.

After hearing a variety of accusations, Mr. Glickman’s CRAT concluded that USDA’s civil rights apparatus had not been doing its job. It blamed the Reagan Administration for this, although Democrats had been in charge for the preceding five years. The CRAT declared that the Civil Rights Division was in a “persistent state of chaos,” largely because of constant “reorganization” (which usually resulted in higher pay for the mostly-black staff). CRAT also discovered that the general impression of the Civil Rights Division was true: It was a “dumping ground” for obstreperous or unproductive employees who were transferred there to undemanding jobs, as a way of resolving conflicts with previous supervisors.

Needless to say, CRAT also found that lax supervision by the civil rights division had permitted racism to run riot through the department, and Mr. Glickman accepted all CRAT recommendations on how to correct this. As part of this process, he ordered an immediate review of 956 backlogged discrimination complaints. The department paid millions of dollars to bring field office workers to Washington to review these complaints, with the result that possible discrimination was found to have occurred in only five of 956 cases.

The department suppressed these inconvenient findings. After these employees had spent months poring over case files a Glickman assistant condemned them to their faces as liars intent on covering up the misdeeds of fellow employees. He also told them to destroy their notes.

Let’s Make a Deal

There had to be a better solution, and Mr. Glickman set out to find it. In 1995, five USDA borrowers had filed a lawsuit (Williams v. Glickman) charging discrimination against black and Hispanic farmers. District of Columbia Judge Thomas Flannery denied class-action status, citing the amorphous nature of the proposed class and noting that the claims of the named plaintiffs were not representative of the claims of potential class members.

However, with the legal climate improved by Mr. Glickman charging his own employees with bigotry, two black farmers in North Carolina filed separate but similar suits in 1997, this time on behalf of blacks only. One plaintiff was Timothy Pigford and the other was Cecil Brewington. The Pigford suit is particularly notable because USDA had investigated his claims at least three times and found no discrimination.

What’s more, a previous suit by Mr. Pigford against USDA had been dismissed with prejudice, which means he should not have been allowed to file another suit making the same charges. Both he and Mr. Brewington enlisted high-powered professional civil rights lawyers who recruited hundreds of plaintiffs. At least partly because USDA refused to challenge Mr. Pigford’s right to sue, and made only token defenses, the cases became a legal juggernaut.

U.S. District Judge Paul Friedman, a Clinton appointee, got both cases. Judge Friedman often presided over sensitive Clinton-related cases, which he appears to have received outside the normal assignment process. His cases included those of Chinese bagman Charlie Trie, Democrat fundraiser Pauline Kanchanalak, and Maria Hsia of the notorious Buddhist temple fundraiser. In each case, Judge Friedman dismissed the charges against Mr. Clinton’s associates, and in each case, a higher court promptly reinstated the charges, leading to the suspicion that Judge Friedman might be answering to a higher authority than mere law. (Judge Friedman also got the slander suit filed by White House aide Sidney Blumenthal against Internet reporter Matt Drudge. Under Judge Friedman’s supervision, that case has dragged on for years, sapping Mr. Drudge’s finances and energy. No trial date is set.)

Judge Friedman combined the cases and they are today known as Pigford v. Glickman. Amazingly, the complaint cites absolutely no evidence of discrimination by USDA other than Mr. Glickman’s statement that discrimination was rampant in his department. Judge Friedman certified class-action status for the suit in October, 1998, and juggernaut was ready to launch.

There was just one obstacle: the federal statute of limitations on discrimination complaints is two years from the date of discrimination, and had already expired for almost all the complainants. The Congressional Black Caucus came to the rescue and drafted legislation waiving the statute of limitations. Heretofore, all such waivers extended the deadline before the original statute of limitations had expired. Some would argue that a waiver after expiration is an unconstitutional ex post facto law, because it recriminalizes an action after the statute of limitations has decriminalized it.

Nevertheless, the waiver was added as an amendment to the Agriculture appropriations bill for fiscal year 1999, and authorized consideration of discrimination claims from January 1, 1981, through December 31, 1996. Republicans happily helped pass the bill. Had USDA raised the Constitutional question, it is possible the entire suit could have been derailed, but it was clearly Mr. Glickman’s wish to cooperate with the plaintiffs rather than defend his department.

In April, 1999, the government and the plaintiffs entered into a consent decree approved by Judge Friedman (the text of the decree and other related information is available on the Internet. Although the department accepted no blame, the document was hailed in the press as an admission of wrongdoing by USDA. The consent decree set up a two-stage process for securing compensation for alleged acts of racism. The first was to join the class of claimants and the second was to demonstrate USDA bias. The criteria for both were so lenient they were hardly obstacles to anyone determined to join the class and receive a payment.

In order to join, a claimant must be black and (1) have “farmed or attempted to farm between January 1, 1981, and December 31, 1996,” (2) have applied to USDA for a loan or crop payment and believe that application was denied because of race, and (3) have “filed a discrimination complaint on or before July 1, 1997, regarding USDA’s treatment of such farm credit or benefit application.” These sound like reasonable criteria but in practice none is a real obstacle. For example, no claimant need ever have set foot on a farm — a claim to have applied unsuccessfully for a loan qualifies as having “attempted to farm.” Nor is any claimant required to prove he actually applied for any USDA benefit. He need only say he did.

The third condition — that a claimant show he detected discrimination at the time of the loan application and filed a complaint — has been watered down to essentially nothing. The claimant need only “demonstrate” that he “has actively pursued judicial remedies” (this violates the federal requirement that all administrative remedies must be exhausted before taking judicial action), “was induced or tricked by USDA’s misconduct” into missing the filing deadline, or “was prevented by other extraordinary circumstances beyond his control” from filing a complaint on time. And once again, the “proof” required of a claimant that he actually “pursued judicial remedies” for discrimination is laughable. If he can’t show a copy of a complaint and there are no USDA documents that refer to a complaint — which is the case for the vast majority of claimants — the court will accept any of the following:

1) A declaration from a non-family member that the claimant filed a discrimination complaint with USDA. (No corroboration from USDA is required, and it is not likely to be difficult to find someone to make such a declaration.)

2) A declaration by a non-family member with “first-hand knowledge that, while attending a USDA listening session, or other meeting with a USDA official or officials, the claimant was specifically told by a USDA official that the official would investigate the specific claimants oral complaint of discrimination.” (In other words, someone need only say that he heard the claimant accuse USDA of discrimination and heard a USDA official say the department would look into it. Even USDA admits “there is no mechanism to assess credibility” of such a claim.)

3) A copy of correspondence to Congress, the White House, or a local or federal official “averring that the claimant has been discriminated against.” (There need be no corroboration or acknowledgment from any of these officials. The claimant need only affirm that he mailed the letter of which he has a copy, and there are no standards for judging the authenticity of such a copy.)

As a practical matter, therefore, anyone who feels like writing a back-dated letter or can persuade someone to lie can be a member of the class. The only genuinely limiting qualification for class membership is that the claimant be black. What is more, under the consent decree, the statement of any complainant is accepted as true unless USDA can refute it with documentation, but the department’s document retention policies make it impossible to refute most claims. It keeps records of unsuccessful loan applications for only three years, so there is no paper trail for applications made any earlier than 1994 — especially for “farmers” who never applied for a loan at all! Therefore, the government knew when it consented to the decree that it could not disprove any claim concerning a loan allegedly denied between 1981 and 1994. Even the most obviously fraudulent claimant is accepted by default if he says he was turned down for a loan before 1994.

Any class of plaintiffs that is easy to join and that promises a handsome payoff is going to find a lot of takers. As soon as Judge Friedman approved the consent decree, the class attorneys started promoting it, promising that any black who joined the class had a good chance of getting $50,000. To publicize the terms of the decree, USDA had to spend nearly half a million dollars on advertisements on Black Entertainment Television and Cable News Network, in TV Guide, Jet magazine, and 27 general circulation newspapers and 115 black-owned papers. This widely-publicized offer of $50,000 set off something like the Oklahoma land rush.

When the plaintiff’s attorneys first sought to have the case certified as a class action, they estimated perhaps 2,500 people would file claims. By the decree’s official closing date of October, 1999, over 20,000 had joined the suit — more than the total number of black farmers in the United States (18,451 according to the 1997 Census of Agriculture). This number, representing a potential liability of at least $1 billion (not counting debt forgiveness, “Track B” cases explained below, and heavy expenses to be paid by the government) was not enough for Judge Friedman. He let hundreds apply after the closing date. Today, more than a year after the “deadline,” the final number of claimants cannot be determined because these “bonus” claimants are still being certified, but as of Dec. 21, 2000, 21,105 blacks had been accepted as members of the class. Judge Friedman is now considering loosening the deadline once again, in a procedure that could bring in as many as 50,000 new claimants.

A private firm, Poorman-Douglas of Portland, Oregon, was hired to mail out claim packages, receive claims, and process them. Fraud surfaced immediately. Some prospective claimants tried to have children as young as two years old certified as class members. A few whites tried to “pass,” but were rooted out. Husbands and wives, who may have applied for one loan, tried to get separate certification, hoping to be paid twice for a single act of discrimination. A number of dead people have joined the suit, since USDA agreed to let surviving relatives argue on their behalf.

For claimants who have actually done business with USDA there are immediate benefits simply to joining the class. The department must stop all efforts to foreclose on their delinquent loans. Also, if the government owns property it obtained in foreclosure on a claimant, it must not sell the land but must hold it until the claim is decided. If the claimant wins he gets the property back free and clear, even if there was not the slightest hint of discrimination in the proceedings that led to the foreclosure.

In practice, the suit has become an across-the-board ban on foreclosure of black delinquent borrowers because they are all potential parties to the suit. As might be expected, defaults have soared. USDA regularly calculates the percentage of borrowers of each race that are delinquent, and in late 2000, the rate for blacks was 36 percent as opposed to a white rate of 14 percent. In the forgiving atmosphere created by the Pigford case, the black delinquency rate has been as high as 48 percent.

Take the Money, Please

Joining the class, however, does not automatically mean money. The decree provides for two “tracks” for resolving complaints and determining whether a payment is due. USDA rather candidly describes Track A as “the easier, more streamlined track for class members who do not have as much, or any, direct proof of discrimination.” [Italics added]

For those who choose Track A, a “contract adjudicator” decides the case. Federal rules of evidence and other legal standards do not apply. To win, a claimant need only give “substantial evidence,” the lowest standard of proof required in any judicial proceeding, of the following:

1) He “owned or leased, or attempted to own or lease, farm land.”

2) He “applied for a specific credit transaction at a USDA county office” during the specified period.

3) The loan was “denied, provided late, approved for a 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.”

4) “USDA’s treatment of the loan application led to economic damage to the class member.”

Once again, since USDA no longer has any records of loans denied before 1994, any claim from that period is virtually impossible to refute. If a Track A claimant wins, he gets a flat $50,000, regardless of the form the discrimination is alleged to have taken. If he is an actual USDA borrower, and is claiming he got a loan on unfavorable terms because of racial discrimination, he also gets complete loan forgiveness, plus 25 percent of this amount, which goes to the IRS for taxes. If the government owns any foreclosed property that used to belong to a successful claimant he gets it back. He also jumps to the head of the line for consideration for future USDA loans, and for the purchase of one farm property foreclosed upon by the government.

Track B is for people unwilling to settle for $50,000. All Track B claimants are demanding millions and one ambitious farmer says it will take no less than $70 million to make him whole. These cases are decided by an arbitrator, Michael K. Lewis of ADR Associates, who is black. Under his supervision, claimants must demonstrate discrimination by a “preponderance of the evidence,” a somewhat higher standard of proof than Track A. Track B cases involve rules of evidence, discovery, witnesses, sworn testimony and other legalisms that will increase the amount owed to class attorneys. Even if the government wins a Track B case, the arbitrator receives a fee that can exceed $10,000 and is paid from tax dollars. If a Track B claimant wins, he gets actual damages, discharge of debt, return of property, and the same advantages in future dealings with USDA as claimants in Track A. By Dec., 2000, only about 196 (fewer than one percent) of the first 21,000 plaintiffs had chosen this option, which actually requires some proof of discrimination.

By last December, 19,770 Track A cases had been decided, and the government had won about 40 percent of them. It has managed to win most of the cases in which the claimant was actually a borrower, because the department keeps the complete case file for the entire life of a loan (usually 30 years), and therefore has all the necessary documentation to refute charges of discrimination. It is highly significant that of the 11,932 claimants who had won so far, there were actual records of USDA loans for only 1,140 or 9.5 percent of them. This means only a tiny minority of successful claimants had some kind of documented borrowing relationship with USDA. It is impossible to know what proportion of the other 90.5 percent ever had contact with the department at all, much less suffered anything that could be described as discrimination. It is in these very dubious circumstances that the department has paid out nearly half a billion dollars in $50,000 payments.

Of the 1,140 successful claimants who had actually borrowed money from USDA, only 131 had loan balances that could be forgiven; most of the rest had defaulted and the department had already taken losses on the loans. This means USDA not only never got its money back, it had to hand over another $50,000 because of alleged racism in the way the loans were made.

USDA has managed to win some of the cases for which it does not even have documentation. This is a tribute to a group of about 250 dedicated government workers who analyze the unsubstantiated claims and are able to discredit some solely on the basis of statements made by claimants. Some of these claims are literally photocopies of each other, alleging discrimination in the same manner, by the same USDA official in the same county office. When it can be proven that the official was not working in that office at the time, or if there are other obvious contradictions, the claim can be denied. There appear to be no plans to prosecute claimants who committed perjury by making false claims.

Track B cases take longer, so there have been fewer results. The record is distinctly mixed. As of December 2000, only 14 of 196 cases had been disposed of, with seven dismissed outright. Two had been settled, and the arbitrator had issued five rulings, three in favor of the complainant. If the settlements are counted as draws, the government has won nine, lost three, and drawn two. The bigger cases are proving more difficult to win, even against a department that has bent every rule to make things easy for the complainants.

Back in the field, where USDA loans are still being made, some nonwhite farmers have been quick to take advantage of the current “civil rights” climate, openly threatening credit officers with legal action if they don’t get loans. Not coincidentally, the latest figures show an increase in loans to nonwhites, and a corresponding drop in loans to whites (because the total allocated by Congress remains the same.) While many department employees are disgusted by this practice, they go along with it because they know USDA never punishes anyone for making loans that fail, but is desperate to find someone it can punish for discrimination. Of course, when a doomed loan does go sour, this too can tag the loan officer as a racist because he didn’t support the borrower and make him a success.

The publicity surrounding the thousands of payouts to black farmers has prompted a flurry of imitators. Not content with $50,000, American Indians have filed a similar suit, demanding $1 million each. Curiously, Judge Friedman refused a motion that this suit be “piggybacked” on the Pigford case, claiming there is not enough “similarity” in the cases. In fact, the Indian case is a virtual carbon copy of the black case.

In October, 2000, a group of three Hispanics filed suit on behalf of an alleged 20,000 of their brethren, making identical claims. Later that month, just before the final expiration of the statute-of-limitations waiver, Asian-Americans and women filed similar suits. At this point, virtually every “protected” group except homosexuals and the handicapped now alleges mistreatment by USDA.

Popular new cash crop.

Even more remarkable is yet another lawsuit (Green v. Glickman)filed on May 12, 2000, on behalf of “non-African-American” farmers (mostly whites), which claims USDA treated them the same way it treated blacks. Congressman Bennie Thompson (D-MS), who is black and an ardent partisan of black causes says, “I can see little difference in the way black farmers were treated in Pigford and what has happened to the farmers in this suit,” adding, “I believe it has the potential to be larger than the black farmers’ suit once word gets out.” Congressman Thompson may not understand the significance of what he is saying: If USDA treated all of its borrowers equally (badly), regardless of race, then it didn’t discriminate against anyone. If the congressman is right, all the lawsuits are equally fraudulent.

On the other hand, for obvious reasons the Justice Department is very serious about fighting the white claimants. U.S. Magistrate Alfred Nicols has refused to accept amended claims that could add hundreds of additional plaintiffs. The class is now frozen at approximately 100 claimants, and despite Congressman Thompson’s enthusiasm for it, the case is likely to be dismissed.

The black case, though, is typical of everything that is wrong about “discrimination” lawsuits. Like most defendants, the department admitted no guilt, but agreed to huge payouts because it is so time-consuming and expensive to fight a discrimination case all the way to a “not guilty” verdict. In this case, though, the department also cooperated with the plaintiffs, making it ridiculously easy to take its money, rather than mount the many defenses available to it. The larger effect, of course, is to create and publicize yet another example of systemic “racial discrimination.” Every black crank and agitator has yet another scalp to nail to the wall, yet more proof that even the United States government is seething with racism.

Furthermore, as in almost all major “discrimination” cases, the press has reported next to nothing about the actual workings of the case or about what specific wrongs were done the plaintiffs — only that thousands of blacks are finally being compensated for years of discrimination. One reason for the silence is that, as we have seen, the case is complicated. But another is that close examination shows that virtually all the “discrimination” for which blacks are being compensated amounts to nothing more than pure assertion by claimants. USDA put itself in the absurd position of agreeing to give money to thousands of blacks simply because they say they deserve it. This is, in fact, a very juicy story for an enterprising young reporter, but the media are vastly more interested in trumpeting even dubious claims of discrimination than in showing them to be false — even when falsehoods lead to huge drains on the public purse.

Was there discrimination against black farmers? Perhaps there was. But Track A is hardly a procedure that proves it. Track B, with its more formal rules of evidence may yet uncover some kind of wrongdoing, but these proceedings are closed to the public and their records are sealed. The public will probably never know the basis for the million-dollar judgments that could ensue.

There is, however, a faint stirring of interest in the case in certain quarters. In December, 2000, the General Accounting Office notified USDA that at the request of Rep. Larry Combest (R-TX), chairman of the House Agriculture Committee, it would be studying the Pigford case, as well as the individual settlements agreed to by the department outside the case. Something it is reportedly keen to understand is why so few of the people who got $50,000 payments under the lawsuit appear to have had any connection with American agriculture — a very good question.

There is other disturbing question about this case. When racists are discovered they usually face quick and severe punishment, and there have already been 11,932 official Track A findings of racial discrimination. There must have been an awful lot of racists in the department practicing a great deal of racism — aren’t they going to be brought to book? The black claimants and their lawyers keep pushing this, insisting that heads must roll. Mr. Glickman obliged by repeatedly threatening to fire or otherwise discipline the “racists,” but this is mostly bluff. Any civil service or court action resulting from such a dismissal could very well establish that there had been no discrimination at all. On the other hand, most department employees cannot afford the huge legal fees it would take to clear their names, so the threat of retribution has created an atmosphere of quiet terror in USDA.

In fact, the department refuses to say whether or how many USDA employees have been disciplined in connection with Pigford. It will certainly not divulge names, though it might be quite interesting to hear what someone punished in this connection might have to say. So for the time being a strange and troubling contradiction hangs over this case: The department has compensated nearly 12,000 black farmers for what could only have been entrenched racism, but will not confirm it has fired a single racist.

Department of Agriculture employees who cannot be thanked openly for their help, contributed immensely to this report.