The news media have recently discovered a big story that has been around since January 1999, when the Washington Post reported that the government had agreed to a consent decree in a class-action lawsuit filed against the Department of Agriculture by black farmers seeking compensation for discrimination they allegedly suffered when they applied for government farm loans. When the government signed the consent decree to allow the case to go forward, it was expected that about 2,500 plaintiffs would join in the suit.
By the closing date of October 1999, over 20,000 had joined, and to date 21,325 cases have been adjudicated. The plaintiffs had won12,849 of them and lost 8,476. The winners were awarded $50,000 tax free and forgiveness of any debt they owed the Department of Agriculture.
The cost to the government was $659 million, counting $17 million of debts that were forgiven but not the heavy expenses that had been incurred.
Accuracy in Media investigated and wrote about this scandal 18 months ago, pointing out that the government had needlessly agreed to conditions that were guaranteed to generate a large number of fraudulent claims that would have to be paid. The black applicant had to claim he or she was a farmer who had applied for a government farm loan on a date between January 1, 1981 and December 31, 1996 at such and such an office?and assert that because of race they had been turned down or given a loan on less favorable terms than those given a comparably situated white applicant.
Since the Department of Agriculture had destroyed its records of rejected loan applications prior to 1995, it had no evidence that it could use to prove the falsity of claims of rejections from 1981 through December 1994. If the applicants could find one person, not a family member, who would attest to the validity of their claims that their applications had been rejected, the claims had to be accepted. It was much easier to disprove false claims that loans had been offered on discriminatory terms because the department had kept the records of the loans that had been made.
Many claims were rejected because there was evidence that proved they were false.
In some cases the loan applications were said to have been made to officials who were not employed in the offices where the applications were allegedly submitted. Many were obvious duplicates of applications filed by others. Some were filed in the name of very young children. Some employees of the Department of Agriculture applied for the $50,000 and got it even though they were ineligible to apply. The General Accounting Office was said to be looking into the matter last year, asking why so many people who collected $50,000 appear to have no connection with agriculture.
The lax requirements that encouraged the fraudulent claims had been included in the consent decree, much to the disgust of some government attorneys. A veteran Justice Department lawyer says this was done on orders of Clinton appointees who saw it as an opportunity to help out poor blacks. He says the consent decree was used because it was irreversible. A Department of Agriculture attorney believes that it was employed to minimize adverse publicity about discriminatory lending practices at the department by keeping the suit from going to trial. He also believes the Democrats saw it as a way of getting out the black vote in the 2000 election.
Most of the claims that were filed came in after the two-year statute of limitations for filing discrimination suits had expired, but Congress waived the statute of limitations for claims from 1981 through 1995. Before this waiver expired, some 60,000 additional blacks, Hispanics, American Indians, Asian-Americans, women and even some whites tried unsuccessfully to board the gravy train. The blacks have been venting their anger, and on August 13, the Washington Post ran a long, sympathetic story about those who missed out on the $50,000 payment.
The story said each applicant had to prove that they had been victims of discrimination. It didn’t say that all they had to do was find a friend who would verbally support their claim and that many of those who collected had never farmed. John Stringfellow, a Department of Agriculture county agent in Arkansas, was outraged by the volume of fraudulent claims submitted from his six counties. He told me he knew of only 25 black farmers in his counties, but over 700 claims were submitted. The GAO has not produced its report on this scandal?nor have the news media.