Lumberton farmer sentenced in $1M fraud case
Posted October 31, 2013
Kinston, N.C. — A Lumberton farmer was sentenced to six years in prison after defrauding the federal government of more than $1 million in crop insurance payments and threatening to kill a special agent who was investigating the illegal activity, the U.S. Attorney’s Office said Thursday.
Harry Dean Canady, 63, was also ordered to serve five years of probation following his release on charges of conspiracy, identity theft, unlawful possession of a firearm and retaliation against a federal official.
Investigators said Canady owned and rented farmland in Robeson County, where he grew tobacco, corn, wheat, soybeans and other crops. In 2009, Canady conspired with others to file false federal crop insurance claims and hid some of his crop production by selling it in the names of others or for cash.
Canady profited because he was paid twice for each pound or bushel of his crop: Once through the false insurance claim and then through the sale of “hidden” grain. Investigators said Canady received a total of $1.03 million in federal crop insurance indemnity payments, including a payment of nearly $100,000 on a single false claim filed in 2008.
Canady involved family members in the scheme, using the names of his grandchildren to sell some of the “hidden” crops and making his daughter deposit some of the illegal funds. He also created a new corporation to continue to defraud the federal crop insurance program.
A search executed on his property in 2010 netted six firearms and more than 180 rounds of ammunition. Canady has a previous conviction for involuntary manslaughter and was prohibited from owning a weapon.
Investigators said Canady also threatened to kill a special agent from the U.S. Department of Agriculture who was investigating the case.
“This investigation exemplifies how our nation’s law enforcement officers place their lives at risk in the investigations of crimes, even white-collar offenses. Such intimidation tactics will not be tolerated in the pursuit of justice for the American people and the protection of public funds,” U.S. Attorney Thomas G. Walker said in a statement.
U.S. District Court Judge James C. Dever III also ordered Canady to repay the $1.03 million.
Walker’s office on Thursday also announced sentencings of two more North Carolina farmers on fraud charges.
William L. Whaley Jr., 50, of Kinston, will serve a year and day in prison on a charge of making false statements in connection with a commodity credit corporation loan.
Investigators said Whaley, the controlling partner of Whaley Partners, a large farming operation, offered bushels of soybeans as collateral for a $272,986.56 loan from the USDA. When an agency employee went to Whaley’s farm to confirm the quantity and quality of the soybeans, Whaley had a farm worker suspend a bucket of soybeans below the opening of an empty grain bin to make it appear that the bin was filled with 54,000 bushels of soybeans.
Investigators said Whaley submitted false lien waivers along with the loan application.
Whaley also was sentenced to three years of probation following his release. The court did not impose a fine because Whaley had already paid a $50,000 penalty.
Patrick Rex Lovett, 48, of Tabor City, will serve five years of probation, with nine months of house arrest, and pay a $10,000 fine for his part in a tobacco insurance fraud scam.
Investigators said Lovett structured 22 currency transactions, totaling $160,696, with financial institutions in order to evade the legal requirement to report transactions over $10,000. Six of the transactions related to sales of “hidden” tobacco that were not reported to the USDA. He also did not report the sales on his tax returns until he amended them as part of his guilty plea.