Magazine | February 21, 2011, Issue

Pigford’s Harvest

How an honorable farmer’s quest for justice launched an epic fraud

One unhappy night in 1992, 40-year-old Timothy Pigford, a fourth-generation black farmer having a terrible time of it trying to grow soybeans in North Carolina, sat in the living room of the house he was barely holding on to and drew up the outline of a lawsuit against the federal government. It was a decision more than 15 years in coming, ever since the first of the many times he’d been denied a USDA loan because — he was convinced — of the color of his skin. Before all was said and done, he would spend 20 years of his life trying to convince government officials, members of Congress, judges, and even the president that the USDA had ruined him even as it had given similarly situated whites the credit and support they needed to thrive as farmers. He’d go bankrupt in the process — losing his farmland, his home, and the 1990 Toyota he would put 350,000 miles on traveling up I-95 to Washington to press his case — while his relationship with his wife and two teenage sons would be stressed to the breaking point.

But eventually, he’d win.

And in finally securing justice for himself and the few hundred farmers who first joined his class-action suit, he’d unwittingly set off an injustice greater than the one he sought to rectify: one that would involve the waste of billions of dollars, systemic fraud implicating top federal officials, the unseemly electioneering of two presidential campaigns — even murder.

Timothy Pigford’s discrimination case looks plausible. In an extensive 1998 profile in Business North Carolina magazine, Pigford spoke at length about his upbringing in the segregated South, where goodly white farmers sometimes let his father bundle his tobacco crop with theirs so the white auctioneers would give him a fair price. A college dropout, Pigford rented and farmed a small tract of land, and paid for a John Deere by working the night shift at a chemical plant. In 1976, after three years of putting in 100-hour weeks to bolster his operations, he submitted an application for a $110,000 loan through the county representative of the Farmers Home Administration (FmHA), a descendant of the New Deal that gave credit and grants to rural farmers for homes, capital investments, irrigation, and disaster relief. Pigford wanted to own the land he worked.

His loan was denied.

He got other loans from the USDA, including $21,500 to buy a home later that same year, short-term loans he repaid when he sold his crops, and disaster relief when Hurricane Diana struck in 1984. But he was convinced he wasn’t getting a fair shot at success, even as white farmers who worked nearby land were getting loans to expand their operations.

In 1984, a fed-up and indebted Pigford testified before a House committee investigating USDA loan practices, a move he says made him even more of a target for the USDA reps back home. Denials of debt-restructuring and operating loans followed. By 1992, $55,000 behind on $200,000 in loans, Pigford drew up his suit and began lobbying his congressman to take up his cause — and that of other black farmers in the district, who Pigford believed were subject to the same discrimination.

On its own, Pigford’s case was probably a coin flip. On one hand, a 1986 USDA inspector general’s report shows that two white farmers named by Pigford received better treatment from FmHA officials, getting large loans quickly despite problems with their applications. On the other hand, the local FmHA officials who handled Pigford’s loan applications were cleared of wrongdoing by a separate internal probe: They said they had denied the loan because financing costs, on top of the fact that Pigford’s tract was already losing money, made his plan uneconomic.

#page#It’s unclear whether the facts would have cohered into a “preponderance of the evidence” — the standard required to prevail in civil suits — for Pigford. But there is statistical evidence of USDA discrimination against black farmers through the 1980s. According to a USDA report, in several southeastern states it took an average of three times as long to process successful loan applications from blacks as from whites — and in a field as time-sensitive as farming, such delays were often disastrous. By contrast, loan denials and foreclosures came quicker for blacks than for whites. The USDA office that investigated such complaints was closed down in 1983, leaving farmers two possible channels of recourse: the same FmHA boards that they believed had discriminated against them, or the federal courts.

Pigford fought his way up the bureaucracy, securing meetings with high-level USDA officials, and even one with President Clinton. By 1997, the Clinton administration was offering ten-cents-on-the-dollar settlements to Pigford and his relatively small cohort of black farmers, in the interest of healing (and avoiding a messy lawsuit). And Pigford might have been ready to settle. But unwittingly, by building momentum for his cause, Pigford — who had been begging attorneys to take up the case for years — had drawn the attention of the sharks.

Enter Al Pires, a trial lawyer and former Justice Department hand who had helped break up AT&T before going into a lucrative private practice. He agreed to take up the cause of as many as 2,500 black farmers, turning their discrimination cases into a class-action suit seeking as much as $3 billion in damages from Uncle Sam. He promised not to accept a cent in legal fees until the farmers got their awards. Pigford and the others signed on. Within months, Pires had the Clinton administration admitting that there had been costly discrimination over the last two decades, and a trial date was set for Pigford v. Glickman.

The government hoped that mediation would keep the case out of the courtroom. Pires wanted the opposite, government lawyers say, and launched a campaign to sabotage the negotiations. He eventually prevailed, and the defeated government offered him terms he could live with. There were unsubstantiated grumbles, then and now, that the timing of the settlement had something to do with Al Gore’s desire to compete with George W. Bush in the rural South. Whatever the merits of those claims, there can be no doubt that the Clinton administration’s new conciliatory tone affected the tenor of the negotiations — a 1996 public apology offered by Clinton secretary of agriculture Dan Glickman was seen by all as having been a turning point in the legal battle.

On Jan. 5, 1999, a federal district court in Washington, D.C., approved a preliminary consent decree — essentially a seal of approval for a settlement — granting class-action relief for a wide swath of black farmers. Give or take an unseemly lawyer, it looked like the angels had won. It was a victory bipartisan in the making: Speaker Newt Gingrich had helped push through legislation waiving the statute of limitations for discrimination complaints, allowing the suit to clear a crucial legal hurdle. But the story was far from over, and Pigford v. Glickman would prove the settlement that launched a hundred thousand frauds.

The “Pigford class” — the range of individuals eligible to claim settlement money — originally was defined as

 all African-American farmers who (1) farmed between January 1, 1983, and Feb. 21, 1997; and (2) applied, during that time period, for participation in a federal farm program with USDA, and as a direct result of a determination by USDA in response to said application, believed that they were discriminated against on the basis of race, and filed a written discrimination complaint with USDA in that time period.

#page#Both sides acknowledged that the class size wasn’t likely to exceed 2,500. But the seeds of abuse were already sown. Despite the fact that the class was at first strictly limited to those who had “filed a written discrimination complaint” with the USDA, the settlement crucially allowed that most members of the class lacked any documentation of these complaints, purportedly owing to poor record-keeping by the USDA. So the resolution mechanism offered potential claimants two “tracks” toward settlement money. Track B required a higher bar for evidence — the “preponderance” standard traditional in civil actions, demonstrated during one-day “mini-trials” before court-appointed arbitrators — but it came with no cap on potential awards. Track A provided, in the words of the case’s judge, “those class members with little or no documentary evidence with a virtually automatic cash payment of $50,000, and forgiveness of debt owed to the USDA.” Track A claimants would also get their taxes on that debt paid directly to the IRS for them, and priority consideration on their next USDA loan application.

To get their checks, Track A claimants were required to show court-appointed facilitators “substantial evidence” that they had had “communication” with the USDA, a member of Congress, the White House, or any federal, state, county, or local official regarding a discrimination complaint. How “substantial”? According to the consent decree, “something more than a ‘mere scintilla’” — in practice, as little as the corroboration of one’s story by a single individual who was not immediate family. The definitions of “communication” and “complaint” were stretched as well: Under the agreement, even participating in a “listening session” with USDA officials was as good as filing a discrimination complaint. And in cases where there was no documentary evidence whatsoever of communication with the USDA, a popular defense was for claimants to explain that USDA officers would not even give them the forms and applications they requested — in one fell swoop both demonstrating the discrimination and accounting for the lack of a paper trail. Thus could blacks who had never cultivated land they’d owned or rented — who in point of fact might never have mown a lawn or tended to a shrub — claim that systemic racism thwarted their farming careers before they ever started. Such claimants came to be known as the “attempted to farm” class, and by some estimates as many as 92 percent of all Pigford filers marched under their banner.

What followed was a feeding frenzy of claimants egged on by fee-seeking tractor-chasers. The original 400 members of the Pigford class had swelled to 14,000, and a total of $1.25 billion had been paid out. The largest single settlement — some $13,000,000 — went to a communal farm in Georgia called New Communities, Inc., headed by Charles Sherrod and his wife, Shirley, who would be hired by the USDA, where she would gain a measure of notoriety, just three days after she received her settlement.

Even after the deadline for submission passed in 1999, claims kept — and to this day, keep — pouring in, such that the number of claimants now stands at nearly 100,000. But there is a curious thing: A 1997 agricultural census found only 18,500 black farmers nationwide, and even the most liberal third-party estimates suggest that there never were more than about 33,000 at any point during the period of eligibility between 1981 and 1996. Even if you accept as sound the decree’s reasoning that persons are entitled to compensation for “attempting to farm,” the numbers force the conclusion that for every black farmer actually working the land there were four or five who’d been prevented from speeding the plow.

#page#If the queerness of those numbers doesn’t stand out on its own, consider that while the USDA’s credit and benefit programs are federally funded, decisions on individual applications are made at the county level, usually by small committees of local farmers and ranchers elected by their peers. The Pigford settlement would have you believe that racism was universal, not just inside the institution of the USDA but across all those semi-autonomous county offices: even in places like Jefferson County, Ark., where numerous discrimination claims came in despite the fact that all the supervisors at that office were black.

Parsimony demands a simpler explanation: that the majority, even the vast majority, of Pigford claims are frivolous at best and fraudulent at worst. That is the case being made by perhaps the loudest critic of Pigford: journalistic gadfly Andrew Breitbart.

Though Breitbart says the biggest revelations are yet to come, he has coauthored a report detailing some of the crime that has been directly tied to Pigford. The most sensational example comes from 2006, when a Mississippi couple was sentenced to life in prison on conspiracy charges in the murder of Clovis Reed, who had plotted with the couple to make fraudulent Pigford claims and who they feared would testify against them in court. The year before, two college administrators in Arkansas were convicted of attempting to fraudulently claim $400,000 after they attended a meeting whose organizers told them the settlement was a “veiled way to collect reparations for centuries-old grievances.”

The government is not unaware of the widespread fraud. According to an anonymous FBI source quoted in Breitbart’s report, a preliminary investigation into Pigford suggested that at least half the claims filed had been falsified — but the investigation never went anywhere, because federal prosecutors had no taste for the racial politics that would have attended it.

The USDA itself appears to have turned a blind eye to blatant irregularities. One USDA employee with firsthand knowledge of the claims process told Breitbart et al.:

We saw claims come in from affluent areas. There were claims from Palm Beach and Palm Springs, and they said they were black farmers. One applicant said the Chicago USDA office discriminated against them. There is no USDA office in Chicago. They got paid anyway.

Others went on record. John Stringfellow, a farm-loan supervisor covering six Arkansas counties, called Pigford “the largest scam against federal taxpayers in the history of the United States,” saying that among the 800 or so claims he personally received, over 80 percent had never applied to USDA assistance programs, nor farmed at all.

But even the largest scam against taxpayers eventually runs its course. By 2007, with every filing deadline having passed, the consent decree in mothballs, and tens of thousands of unpaid claimants lingering on the rolls, Pigford advocates knew they needed new judicial action, or help from Congress, to get paid. They got the latter in the form of the Pigford Claims Remedy Act of 2007, which came, as so much legislative mischief does, as an amendment to that year’s farm bill. It had a single sponsor: Sen. Barack Obama, Democrat of Illinois (where, incidentally, only 98 out of 77,000 farms are operated primarily by blacks). The bill, which became known as Pigford II, extended the filing deadline by more than ten years, through June 19, 2008. It also continued the Track A and Track B routes, appropriated an additional $1.25 billion for payouts, and added a provision that prevented claimants’ homes from being foreclosed on while their cases were being adjudicated.

#page#It came after Gary Grant, president of the influential and Pigford-evangelizing Black Farmers & Agriculturalists Association, had written Obama a letter promising him all the financial and ballot support the BFAA could marshal in the rural South in exchange for his continued work on the plight of the black farmer. Grant had told Fox News he didn’t care whether all the Pigford claimants were really farmers, since “if you are an African American, you deserve $50,000, because your roots are in farming, and your folk have already been cheated.” Claimants, according to Grant, were “collecting what [their] grandparents didn’t have the opportunity to.”

Obama’s championing of Pigford II was seen by some as part of an effort to run up the score against Hillary Clinton with rural black voters in tough southern primaries. Whatever its purpose, the bill languished in committee through the 110th Congress. But Obama didn’t forget. As president, he signed the Pigford II legislation, and charged agriculture secretary Tom Vilsack and attorney general Eric Holder with negotiating a new settlement for unpaid claimants. It came in February 2010, with Vilsack’s announcement that the federal government would no longer stand vis-à-vis Pigford claimants “as an adversary, but as a partner.”

The settlement made use of $100 million in funds already available for unsettled claims, and in December 2010, Congress added substantially to the kitty, appropriating $1.2 billion after a last-minute blitz by Vilsack to wring votes out of a reluctant lame-duck session.

Meanwhile, the gravy train shows no signs of slowing down. Many of the few hundred farmers who composed the original Pigford class have wound up like Timothy Pigford himself — driven out of farming altogether — or like Willie Head.

Head, a 58-year-old, third-generation farmer and rancher who produces melons, corn, soybeans, and livestock on the southwestern Georgia parcel he bought from his father in 1980, was one of the first Pigford plaintiffs. Throughout the early 1980s, many of the loan applications he filed were rejected with little cause, and those he was granted were placed in bank accounts jointly operated by USDA supervisors, a condition to which no similarly situated white farmer was subject. By 1984, Head had gone bankrupt, taking writedowns that have to this day precluded him from asking for any further USDA loans.

He says that when the consent decree was approved, he initially intended to file for broader compensation under Track B, but was pressured by lawyers like Pires to take the sure $50,000 promised by Track A.

“We were drowning,” he says, “and we took whatever rope we could get, no matter who it was that was handing it to us.”

Head used the money he received to buy a used pickup truck to haul his produce and to fix his rundown tractor. But he also waited nine years for the debt relief promised in the original settlement, relief that never came. Had he known, he says, he would have spent differently.

Head says Pigford “did more harm than good” for black farmers “who are still out here, working the land,” because accepting the settlement meant being “shut out for life” from further compensation.

Head is still farming, “with what I can scrape and can scoop,” but he can afford to work only half his land, and imagines he’ll eventually sell it to the white farmer who owns an adjacent plot. His daughter has passed away, and his son has seen too much to have any interest in carrying the family tradition through a fourth generation.

At a December 8 signing ceremony, President Obama heralded Pigford II as the close of “a long and unfortunate chapter in our history.” In a way, one hopes the president is right — that the credulity, or perhaps the shame, of the American government and its taxpayers cannot be strained to accommodate the petty greed of more than 94,000 phantom farmers, and that the con will finally have run its course. But that is unlikely. Two Pigford-style class-action suits — one for Hispanic farmers, another for women — with the potential to dwarf current settlements are working their way through the courts. Like so many Pigfords to the trough.

Daniel Foster — Daniel Foster is a former news editor of National Review Online.

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