Feds: Wilson insurance agent cheated government out of millions
Posted September 25, 2009 6:00 p.m. EDT
Updated September 25, 2009 7:05 p.m. EDT
Wilson, N.C. — A well-known Wilson insurance agent is accused of using phony tobacco insurance claims to cheat the U.S. government out of millions of dollars.
Robert "Carl" Stokes owned Hallmart Agency Inc. and sold crop insurance policies for agricultural products, including tobacco. He also ran a check-cashing business in the same location, according to an indictment against him.
Federal agents say he posted some of the highest numbers for crop losses among insurance agents across the country. After an undercover sting operation, agents said they determined that some of his business dealings were fraudulent.
'False crop insurance claims'
Agents said Stokes worked with a group of tobacco farmers, tobacco warehouse men, crop insurance adjusters and others.
He recruited them to "take out insurance policies through Hallmart, to make false crop insurance claims and to hide some or all of their tobacco production by selling it in nominee names or for cash to co-conspirating warehouse men," according to court documents.
"The co-conspirating farmer profits under the scheme because he gets paid twice for each pound of tobacco," documents showed.
Stokes profited by getting kickbacks, agents said. Attorney Kieran Shanahan said Stokes is being targeted because he worked hard for his clients and filed a lot of claims.
Nine other men have pleaded guilty to various charges in the case.
They are: Kenneth Kelly, Roland McCoy Jr., Joseph Edward Williams of Zebulon, Robert Veasey of Durham, David Harrison of Snow Hill, William Earl Dawson of Statonsburg, Robert Lemuel Dawson of Statonsburg, Travis E. Wilson of Cove City and Dennis Hawley of Wilson.
Stokes' house, business, reputation and freedom are at stake when he begins his defense in federal court in December. When he does, a key witness against him won't be there.
Undercover informant Danny Denton, a 46-year-old Elm City man, died of a heart attack in 2007, according to his family. His wife said she believes stress from the death of their son and the case against Stokes were factors.
Court papers indicate that Denton did construction work on Stokes' beach home. Stokes wanted to pay Denton through fake crop insurance claims and Denton reported him, documents show.
Will videos be allowed in court?
Denton helped investigators with undercover videotapes, which show Stokes counting money. Stokes’ defense attorney said he doesn’t want the government to see the tapes since Denton can’t be in court to testify.
“It’s much more vivid for (a) jury to see the exchange of cash on the video,” said Lisa Griffin, a Duke University law professor.
Griffin says videotapes are strong evidence and can be admitted under some circumstances, even if someone on the tape has died.
“The agent who filmed the transaction can establish authenticity of the tapes, and much of the info conveyed can be established through other means,” she said.
Defense attorneys also are trying to keep the checks and receipts with Denton's name from the jury's view, because Denton can't be cross-examined. They are also calling part of the search at Stokes' business illegal. That search netted records, shredded documents and cash.
The case could come down to what the jury is allowed to hear.
Crop fraud statistics
The U.S. Department of Agriculture has investigated 35 cases of criminal activity in crop insurance rates since 2006, according to statistics provided by the USDA. Of those, 30 resulted in indictments and 20 in convictions.
The government won more than $18.5 million in "monetary results," which are primarily restitutions, forfeitures, fines and penalties imposed upon people or entities who owe the government money.