Farmer to serve 3+ years in prison, pay nearly $9M for fraud

Published 3:44 pm Tuesday, May 28, 2024

By Justin Story, Bowling Green Daily News

A farmer who was fined and ordered to spend a day in custody eight years ago after admitting to defrauding the federal crop insurance program was ordered to prison Tuesday for illegally taking millions more in funds from the program.

David Manion, a Lafayette, Tennessee, resident and tobacco farmer with land in Tennessee and southcentral Kentucky, was given a 42-month prison sentence by U.S. District Court Chief Judge Greg Stivers.

Manion pleaded guilty earlier this year to a count of federal crop insurance fraud, based on knowingly making false statements and reports on applications for crop insurance between Aug. 2, 2016, and July 13, 2022, in Simpson County.

Manion, represented by attorney Kyle Bumgarner, reached an agreement with federal prosecutors in which he would pay $8,998,023.

The amount to be paid is split between $3.5 million in restitution that all parties agreed as the amount of loss for sentencing purposes, with the remaining money to be repaid to satisfy other claims dating back to 2016.

Bumgarner said Tuesday in U.S. District Court that $2 million has been paid already and that cashier’s checks have been written to pay the remaining balance.

According to federal court records, Manion carried out this scheme by having his children insure crops in their names on land that he owned.

The children submitted losses on tobacco crops and received insurance checks from the Federal Crop Insurance Corporation, with a portion of the payments going back to Manion, who had been banned for five years from involvement in the crop insurance program.

Family members used the rest of the money to pay for living expenses, equipment and farming supplies and bought farmland and titled it in their names, court records show.

Assistant U.S. Attorney David Weiser said when Manion began this scheme, he was in the midst of plea negotiations to settle a criminal case against him for similar allegations of crop insurance fraud.

In 2016, Manion received a sentence of one day in custody and was made to pay a $250,000 fine and $1,133,498 in restitution after authorities uncovered instances of Manion intentionally overstating damage to his tobacco crops in Allen, Simpson and Warren counties on insurance claims filed between 2009-12.

Manion received a five-year ban from taking part in U.S. Department of Agriculture farm programs at that time, including the crop insurance program, and his punishment in this case also entails a permanent ban from the program, with family members receiving seven-year bans.

“Mr. Manion received the mercy of the court the first time around,” Weiser said at Tuesday’s hearing. “It was his decision to continue to perpetrate this scheme to defraud the federal government.”

Federal sentencing guidelines set forth an advisory penalty range of 37-46 months of incarceration for Manion.

Weiser argued for a sentence at the low end of the guidelines, while Bumgarner requested a non-custodial sentence for Manion, arguing that he suffers from a host of ailments, among them uncontrolled diabetes, that requires care by multiple doctors and his wife and that would strain the resources of the prison system.

“I think his physical condition is such that he simply cannot go into a detention setting,” Bumgarner said.

To pay back the nearly $9 million to the federal government, the Manions have mortgaged nearly all their farmland, and Bumgarner said a bad crop year puts the family at risk now that they cannot access the crop insurance program.

Stivers, however, concluded that the factors in this case weighed heavily in favor of incarcerating Manion, noting specifically that the conduct that led to the fraud charge began as his sentence in the prior fraud case was being negotiated.

“During all that time, you were starting to lay the groundwork for a situation with the same goal,” Stivers said while addressing Manion. “A non-custodial sentence would promote the idea that the federal crop insurance program is a joke to be ripped off by landlords and farmers.”

One of Manion’s daughters, Leann Elizabeth Manion Bergdorff, was prosecuted for crimes associated with the scheme.

Bergdorff pleaded guilty to making false statements to law enforcement during an interview in 2021 with special agents from the U.S. Department of Agriculture, the Office of Inspector General and the Risk Management Agency.

According to court documents, Bergdorff falsely claimed she was actively involved in the farming of all crops insured in her name.

Stivers placed Bergdorff on probation for two years Tuesday and fined her $4,000.