Farmer Reparations

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At issue is almost a billion dollars paid out by the Department of Agriculture (USDA) for alleged racial discrimination by local offices administering farm loans under the Farm Service Agency. Dan Glickman, Bill Clinton’s Secretary of Agriculture, following public complaints and even a White House demonstration by African American farmers in the 1990’s confessed the USDA’s guilt. He declared in a 1997 publication of the USDA news that local officials had “discriminated against some of the very people we were meant to help.”

What followed was a class action lawsuit (originally named Pigford v. Glickman) and a settlement by the Clinton administration in 1999. The consent decree which ended the lawsuit provided that farmers who had suffered discrimination could come forward to present claims and receive compensation.

However, the seeds of a vast scam were sown: with only a simple affidavit signed by someone who alleged he had applied for a loan or merely that he had “attempted to own or lease farm land,” $50,000 (tax free no less) would be paid out. Upon a slightly greater showing of proof (“a preponderance of the evidence”) even more money could be claimed.

Claimants did not need to prove that they ever actually farmed—or ever applied for a loan, only that they “attempted to farm” explains USDA’s General Counsel Marc Kesselman. {snip}

At the time of the consent decree, attorneys for the government assured concerned legislators that the settlement would be manageable. After all, in 1982 there were only an estimated 33,000 African American farmers. In 1997 there were an estimated 18,500 African American farmers. The total number of potential claimants was estimated at between 2500 and 5000.

{snip} Nearly a half a million dollars was spent to advertise on cable TV and in newspapers, with special attention to African American press. Kesselman says forcefully that USDA “went well beyond the provisions of the consent decree” in alerting potential claimants about the settlement. {snip}

Within the original time period for claimants to come forward some 22,440 claims were made. Only 1420 of these were actual borrowers. Employees of USDA and others privy to the details of the settlement are blunt: they consider the vast majority of the claims to have been fraudulent. They suspect that so-called civil rights activists and by class action lawyers eager to sign up as many potential claimants as possible simply rounded up as many individuals as they could find, even if they never farmed, never applied for a loan and never seriously pursued farming. With the minimal proof needed for a $50,000 settlement 67% of the claims were approved by an independent arbitrator.

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Pursuant to the terms of the settlement more than $700M in claims were paid out and more than $100M in administrative costs have been rung up, for a total of nearly a billion dollars. But that was not enough.

After the initial time period for the settlement ran out in October 1999 the consent decree provided for another period of eleven months whereby claimants upon “extraordinary circumstances” could still file claims. More than 65,000 additional claimants stepped forward to file claim requests. Another 8000 then came forward with their late claims. (So in a universe of 18,500 farmers in 1997, 96,000 individuals managed to make claims.) But there had been a court-imposed deadline. {snip}

Plaintiffs’ lawyers and activists began the hue and cry, claiming notice to potential class members had been inadequate and there was no remedy for those who missed the deadline. {snip}

Under HR 3073 and a companion bill in the Senate, these activists sought to extend the deadline, in essence overruling the consent decree. Another 75,000 claimants could possibly prevail if new claims could now be brought. (Of those identified only 85 have been confirmed as actual borrowers.) An estimated $3B more could be required to administer and pay out these claims.

The farm bill currently caps the amount for paying out additional Pigford claims at $100M. Kesselman says that “the math doesn’t add up” and we “need to be honest in the accounting.” He also stresses that USDA and the federal courts, which have already weighed in with concerns about the effect on their docket should the legislation pass, need to be given adequate resources if they are expected to administer thousands of new claims. {snip}

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Although the evidence is plain, the fear of being labeled as “insensitive” or “opposing civil rights remedies” has kept most every legislator from stepping forward to challenge the gravy train of cash give away. After all, it’s only your money.

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[Editor’s Note: American Renaissance described this spectacular fraud in detail in the February 2001 cover story.]