U.S. Opens Spigot After Farmers Claim Discrimination

Sharon LaFraniere, New York Times, April 25, 2013

In the winter of 2010, after a decade of defending the government against bias claims by Hispanic and female farmers, Justice Department lawyers seemed to have victory within their grasp.

Ever since the Clinton administration agreed in 1999 to make $50,000 payments to thousands of black farmers, the Hispanics and women had been clamoring in courtrooms and in Congress for the same deal. They argued, as the African-Americans had, that biased federal loan officers had systematically thwarted their attempts to borrow money to farm.

But a succession of courts—and finally the Supreme Court—had rebuffed their pleas. Instead of an army of potential claimants, the government faced just 91 plaintiffs. Those cases, the government lawyers figured, could be dispatched at limited cost.

They were wrong.

On the heels of the Supreme Court’s ruling, interviews and records show, the Obama administration’s political appointees at the Justice and Agriculture Departments engineered a stunning turnabout: they committed $1.33 billion to compensate not just the 91 plaintiffs but thousands of Hispanic and female farmers who had never claimed bias in court.

The deal, several current and former government officials said, was fashioned in White House meetings despite the vehement objections—until now undisclosed—of career lawyers and agency officials who had argued that there was no credible evidence of widespread discrimination. What is more, some protested, the template for the deal—the $50,000 payouts to black farmers—had proved a magnet for fraud.


The compensation effort sprang from a desire to redress what the government and a federal judge agreed was a painful legacy of bias against African-Americans by the Agriculture Department. But 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. 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.

From the start, the claims process prompted allegations of widespread fraud and criticism that its very design encouraged people to lie: because relatively few records remained to verify accusations, claimants were not required to present documentary evidence that they had been unfairly treated or had even tried to farm. Agriculture Department reviewers found reams of suspicious claims, from nursery-school-age children and pockets of urban dwellers, sometimes in the same handwriting with nearly identical accounts of discrimination.

Yet those concerns were played down as the compensation effort grew. Though the government has started requiring more evidence to support some claims, even now people who say they were unfairly denied loans can collect up to $50,000 with little documentation.

As a senator, Barack Obama supported expanding compensation for black farmers, and then as president he pressed for $1.15 billion to pay those new claims. Other groups quickly escalated their demands for similar treatment. In a letter to the White House in September 2009, Senator Robert Menendez of New Jersey, a leading Hispanic Democrat, threatened to mount a campaign “outside the Beltway” if Hispanic farmers were not compensated.


A 2010 settlement with Native Americans was contentious for its own reasons. Justice Department lawyers argued that the $760 million agreement far outstripped the potential cost of a defeat in court. Agriculture officials said not that many farmers would file claims.

That prediction proved prophetic. Only $300 million in claims were filed, leaving nearly $400 million in the control of plaintiffs’ lawyers to be distributed among a handful of nonprofit organizations serving Native American farmers. Two and a half years later, the groups have yet to be chosen. It is unclear how many even exist.

The Times’s examination was based on thousands of pages of court and confidential government documents, as well as interviews with dozens of claimants, lawyers, former and current government officials and others involved in the cases over the past 14 years. {snip}

Mr. Vilsack has said the compensation effort ushers in “a new chapter of civil rights at U.S.D.A.,” where “we celebrate diversity instead of discriminate against it.”

In an interview, he said the payments had been fully justified and carefully controlled. Fraud has been a “really, really small part of it,” he added, pointing out that so far, three of every 10 claims had been rejected and only three claimants had been convicted of fraud.


Mr. Vilsack blamed disgruntled Agriculture Department employees for the criticism of the payouts, saying some simply refused to acknowledge the pervasiveness of discrimination. “There are a lot of agendas here, and you are opening up a Pandora’s box,” he said.


{snip} The original lawsuit, Pigford v. Glickman, filed in federal court in Washington in August 1997, argued that the Agriculture Department’s credit bureau, now called the Farm Service Agency, routinely denied or limited loans to black farmers while freely distributing them to whites.

Two government reports that year found no evidence of ongoing, systemic discrimination. The Government Accountability Office reported that 16 percent of minority farmers were denied loans, compared with 10 percent of white farmers, but traced the difference to objective factors like bad credit. An Agriculture Department study also found “no consistent picture of disparity” over the previous two years.

But the study concluded that decades of discrimination before then had cost African-American farmers significant amounts of land and income. Black farmers gave heart-rending accounts of loan officers who withheld promised money while crops withered, who repossessed their land and sold it to white cronies, who advised them to milk cows for white farmers rather than sow their own crops.


There were certainly legal reasons to resolve the case. The presiding federal judge, Paul L. Friedman, was clearly unsympathetic to the government’s arguments. Moreover, the Justice Department was barred from appealing his certification of the lawsuit as a class action until after the case was over. That set the stage for a potentially long and costly battle.

Still, “it was more a political decision than a litigation decision,” said one lawyer familiar with the administration’s stance. “The administration was genuinely sympathetic to the plight of these farmers.”

Mr. Clinton asked Carol Willis, then a senior adviser to the Democratic National Committee who was known for his expertise in black voter turnout, to get involved. Mr. Willis said the president wanted to make sure his home state, Arkansas, benefited. Mr. Willis said he recruited Othello Cross, a Pine Bluff lawyer, to join the plaintiffs’ legal team.

“It had been wrong for many years,” Mr. Willis said. “Clinton figured he had to try to right it.”

So did Judge Friedman.

He initially limited the class of potential claimants to African-Americans who had farmed between 1981 and 1996 and had previously filed written discrimination complaints. But his final order significantly expanded the class, admitting those who had only “attempted to farm.” And it threw out the requirement for a written bias complaint, stating that an oral complaint was sufficient if someone other than a family member attested to it in an affidavit.

The Agriculture Department was partly to blame for the lack of records. It routinely discarded failed loan applications after three years, and it had badly mismanaged written discrimination complaints. Ninety percent of the farmers had no records either, plaintiffs’ lawyers said.

The billion-dollar settlement, the judge’s opinion said, was designed to provide “those class members with little or no documentary evidence with a virtually automatic cash payment of $50,000.” Those with documentary proof could seek higher awards, a tack ultimately chosen by fewer than 1 percent of applicants.


Delton Wright, a Pine Bluff justice of the peace, recalled what happened after word of the settlement reached his impoverished region: “It just went wild. Some people took the money who didn’t even have a garden in the ground.” He added, “They didn’t make it hard at all, and that’s why people jumped on it.”

Mr. Wright, whose family owns farmland outside Pine Bluff, won his claim. So did two other applicants whose claims were virtually identical to his, with the same rounded handwriting, the same accusations of bias and similar descriptions of damages suffered.

Now 57, with his memory weakened by what he said was a recent stroke, Mr. Wright said he could not recall details of the discrimination he encountered, much less explain the apparent duplicate claims.


Claimants described how, at packed meetings, lawyers’ aides would fill out forms for them on the spot, sometimes supplying answers “to keep the line moving,” as one put it.

Even his own staff was complicit, Mr. Cross said; he discovered that four employees had been slipping unverified claims into stacks of papers that he signed. He did not inform the court monitor, he said, because “the damage was done.”

On two floors of the Cotton Annex building in Washington, a 300-member team from the Farm Service Agency reviewed claims before adjudicators rendered their final decisions. In recent interviews, 15 current and former Agriculture Department employees who reviewed or responded to claims said the loose conditions for payment had opened the floodgates to fraud.

“It was the craziest thing I have ever seen,” one former high-ranking department official said. “We had applications for kids who were 4 or 5 years old. We had cases where every single member of the family applied.” The official added, “You couldn’t have designed it worse if you had tried.”

Carl K. Bond, a former Agriculture Department farm loan manager in North Carolina, reviewed thousands of claims over six years.

I probably could have got paid,” said Mr. Bond, who is black. “You knew it was wrong, but what could you do? Who is going to listen to you?”


The true dimensions of the problem are impossible to gauge. The Agriculture Department insists that the names and addresses of claimants are protected under privacy provisions. But department data released in response to a Freedom of Information request by The Times are telling. The data cover 15,601 African-Americans who filed successful claims and were paid before 2009.

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.

In Maple Hill, a struggling town in southeastern North Carolina, the number of people paid was nearly four times the total number of farms. More than one in nine African-American adults there received checks. In Little Rock, Ark., a confidential list of payments shows, 10 members of one extended family collected a total of $500,000, and dozens of other successful claimants shared addresses, phone numbers or close family connections.


Some 66,000 claims poured in after the 1999 deadline. Noting that the government had given “extensive” notice, Judge Friedman ruled the door closed to late filers. “That is simply how class actions work,” he wrote.

But it was not how politics worked. The next nine years brought a concerted effort to allow the late filers to seek awards. Career Agriculture Department officials warned that they might be even more problematic than initial claimants: in one ZIP code in Columbus, Ohio, nearly everyone in two adjoining apartment buildings had filed, according to the former high-ranking agency official.


Public criticism came primarily from conservative news outlets like Breitbart.com and from Congressional conservatives like Representative Steve King, Republican of Iowa, who described the program as rife with fraud. Few Republicans or Democrats supported him. Asked why, Mr. King said, “Never underestimate the fear of being called a racist.”

Congress finally inserted a provision in the 2008 farm bill allowing late filers to bring new lawsuits, with their claims to be decided by the same standard of evidence as before. {snip}

Congress overrode a veto by Mr. Bush, who objected to other provisions in the bill. But as Mr. Bush left Washington, Congress had appropriated only $100 million for compensation, hardly enough to pay for processing claims.

Within months of taking office, President Obama promised to seek an additional $1.15 billion. In November 2010, Congress approved the funds. {snip}

But simultaneously, the Agriculture Department abandoned the costly and burdensome review process it had applied to earlier claims. As a result, according to internal government memos, the percentage of successful claims is expected to exceed that in the original 1999 settlement. More than 40,000 claims have been filed and are under review.


The Bush Justice Department had rebuffed all efforts to settle the parallel discrimination suits brought by Native American, Hispanic and female farmers. But now, the Obama administration’s efforts to compensate African-American farmers intensified pressure from members of Congress and lobbyists to settle those cases as well.


The Native-American case was clearly problematic for the government.{snip}

But Justice Department litigators were far from unarmed. If they lost on damages, case law suggested that the decision might be reversed. Depositions had revealed many of the individual farmers’ complaints to be shaky. And federal judges had already scornfully rejected the methodology of the plaintiffs’ expert, a former Agriculture Department official named Patrick O’Brien, in the women’s case.

Mr. O’Brien contended that white farmers were two to three times as likely as Native Americans to receive federal farm loans in the 1980s and 1990s than were other farmers. But the government’s expert, Gordon C. Rausser, a professor of economics and statistics at the University of California, Berkeley, had produced a 340-page report stating that Mr. O’Brien’s conclusions were based “in a counter-factual world” and that Native Americans had generally fared as well as white male farmers.

Professor Rausser was astounded when, with both sides gearing up for trial in late 2009, the government began settlement negotiations. “If they had gone to trial, the government would have prevailed,” he said.

“It was just a joke,” he added. “I was so disgusted. It was simply buying the support of the Native-Americans.”


On Feb. 19, 2010, Alan Wiseman, a lawyer for the Hispanic farmers, strode into Federal District Court in Washington unusually upbeat. “Sometimes,” he told Judge James Robertson, “it takes divine intervention” to move the government.

Over the past decade, his case had not gone well. Nor had the parallel lawsuit brought by female farmers.

Judge Robertson had refused to certify either group as a class. The United States Court of Appeals had upheld him, stating in 2006 that the Hispanic plaintiffs had been denied loans “for a variety of reasons, including inadequate farm plans and lack of funds.” Nor had female farmers proved a pattern of bias, the court found.

The Justice Department’s lawyers had definitively ruled out any group-style settlement. {snip}

Michael Sitcov, assistant director of the Justice Department’s federal program branch, told the judge that senior department officials agreed with career litigators that the cases should be fought one by one.

But members of the Congressional Hispanic caucus and a group of eight Democratic senators, led by Mr. Menendez, were lobbying the White House to move in the opposite direction. They grew increasingly agitated as the plaintiffs’ cases appeared to falter.

In a letter to Mr. Obama in June 2009, the senators noted that black farmers stood to receive $2.25 billion in compensation, but that Hispanic farmers, who alleged the same kind of discrimination, had gotten nothing. Should that continue, Mr. Menendez wrote that September, “Hispanic farmers and ranchers, and their supporters, will be reaching out to community and industry leaders outside of the Beltway in order to bring wider attention to this problem.”

The issue came to a head after the Supreme Court refused to reopen the issue of class certification. The next month, on Feb. 11, 2010, Daniel J. Meltzer, principal deputy White House counsel, held the first of three meetings at which resolution of the case was discussed, records and interviews show. Among the attendees were senior Justice and Agriculture Department officials, including Mr. West, Associate Attorney General Thomas J. Perrelli, and Krysta Harden, then the assistant agriculture secretary for Congressional relations.

Settlement negotiations began the next week. Judge Robertson expressed surprise at the news, “given the history of the case.”


In agreeing to the payout, the government did, for the first time, impose a greater evidentiary burden. While one major category of claimants—those who said their loan applications had been unfairly denied—remained eligible for payments of up to $50,000 without any documentation, others were required to produce written evidence that they had complained of bias at the time. The Hispanic plaintiffs were indignant.


The claims process opened in late September, six weeks before the election. In the weeks before the March 25 deadline, facing far fewer claimants than expected, the Agriculture Department instructed processors to call about 16,000 people to remind them that time was running out, despite internal disquiet that the government was almost recruiting claims against itself. The deadline was then extended to May 1.

So far, about 1,900 Hispanics and 24,000 women have sought compensation, many in states where middlemen have built a cottage industry, promising to help win payouts for a fee.


[Editor’s Note: Absent from the Times report is the fact that American Renaissance reported on the Pigford fraud back in February 2001.]

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