Reed Irvine and Cliff Kincaid
February 26, 2001

Our government has squandered over a half-billion dollars paying out $50,000 each to twelve thousand blacks who claimed that they were victims of discrimination when they applied for government farm loans.

Two lawsuits charging discrimination that were filed in 1997 were certified as having class-action status. Lawyers for the plaintiffs launched a drive to get more blacks to join in the suit. They thought that about twenty-five hundred would do so.

The U.S. Department of Agriculture (USDA) spent half a million dollars on ads to inform blacks of this opportunity to collect an easy fifty thousand dollars from Uncle Sam. By the closing date in October 1999, over twenty thousand blacks had signed up. That exceeds the total number of black farmers in the country. All they had to do to qualify was submit a letter claiming that they had applied for the USDA farm loan between 1981 and 1997 and had been turned down or had obtained a loan on terms that were discriminatory. They had to have someone who was not a family member vouch for the validity of their claim.

Most of these claims were filed after the two-year statute of limitations for filing discrimination suits had expired, but prodded by the Black Caucus, Congress waived the statute of limitations for claims from 1981 through 1996. This put USDA at severe disadvantage and opened the door for fraud. The department kept records of rejected loan applications for only three years, and so it couldn't tell if the great majority of the claimants had ever applied for a loan. It was in a better positions to contest claims of discriminatory treatment in cases where loans had been made. It had the records, and in those cases, most of the claims were rejected.

As of January 17, 2001 over 12,000 cases had been decided in favor of the claimants. The Justice Department is paying $50,000 to each successful claimant, a total of 600 million dollars. It could have been much more, but many of the claims were clearly fraudulent. For example, a lot of them were found to be photocopies of other claims.

The USDA had records on less than ten percent of the successful claimants. There is no way of knowing how many of the others ever had any contact with the USDA, but they all get their fifty thousand dollars.

Much of the blame for this waste of taxpayers’ money lies with Judge Paul Friedman, a Clinton appointee who presided over the case, and with Clinton’s Secretary of Agriculture, Dan Glickman. Glickman did not defend his employees from unfair charges of racism. The judge made it easy for the plaintiffs to file fraudulent claims and win $50,000. He has now extended the deadline for new applicants to get on this gravy train.

As a result, the number of black claimants has risen to twenty-five thousand. Now Hispanics, Asians and even a mostly white group of farmers have filed suit, claiming that the USDA treated them the same way it treated blacks. The General Accounting Office is looking into the matter asking why so many people who collected $50,000 appear to have no connection with agriculture.

THE CLINTON $600 MILLION FARM-LOAN RIPOFF

Reed Irvine
February 23, 2001

How would you like to get $50,000 tax-free from Uncle Sam by just writing a letter and getting a friend to attest to your claim that you had applied to the Department of Agriculture for a farm loan and had been turned down because of your race? Impossible, you say? Not if you were black and had joined in a class-action lawsuit known as Pigford v. Glickman (Dan Glickman, Clinton’s last Secretary of Agriculture).

On January 17, 2001, as the Clinton era was coming to an end, the Department of Agriculture (USDA) Web site showed that 12,000 blacks who had joined the lawsuit had qualified to receive $50,000 tax-free. They claimed that they had applied for a government farm loan between January 1, 1981 and Dec. 31, 1996 and had been turned down because of race. They didn’t have to submit any proof. All they needed was one person, not a family member, who would attest to the validity of their claim. Since the USDA did not keep records of rejected loans for more than three years, it had no documentation to verify or disprove claims of loan applications made before 1996. Nevertheless, 8,000 claims were rejected as obvious frauds. These lax requirements 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 political appointees who saw it as an opportunity to help out poor blacks. He says the consent decree was used, because it was irreversible. A USDA attorney believes that it was employed to minimize adverse publicity about discriminatory lending practices at the USDA by keeping the suit from going to trial. He says the Democrats saw it as a way of getting out the black vote in last year’s election.

When Judge Paul Friedman certified the suit for class action status in October 1998, the plaintiffs’ attorneys estimated that 2,500 claims might be filed by October 1999, the agreed closing date. A USDA costly advertising campaign resulted in 20,000 blacks joining the suit. That exceeded the total number of black farmers in the country. Most of these claims were filed after the two-year statute of limitations for filing discrimination suits had expired, but prodded by the House Black Caucus, Congress waived the statute of limitations for claims from 1981 through 1995.

That opened the door wide for fraud, because the only records USDA kept that far back were for loans that had been made. Because it had the records, most of the claims of discriminatory treatment in those cases were rejected, but the cost for each successful claimant was higher. In addition to being paid $50,000 tax-free, any balance due on their loans was forgiven.

The USDA had records on less than ten percent of the successful claimants. There is no way of knowing how many of the others ever had any contact with the USDA, but they all get their $50,000 checks. Much of the blame for this fiasco lies with Judge Paul Friedman, a Clinton appointee, and with Clinton’s Secretary of Agriculture, Dan Glickman. Glickman did not defend his employees from unfair charges of racism. The judge has now extended the deadline for new applicants to get on this gravy train. An additional 5,000 have done so, and thousands more are lined up hoping they too will be approved.

The General Accounting Office is looking into the matter, asking why so many people who collected $50,000 appear to have no connection with agriculture.

People who are told about this story invariably find it astonishing and wonder why they haven’t seen anything about it in the establishment media. If unchecked, this ripoff could expand and spread to other groups, costing the taxpayers billions of dollars. Last October, three Hispanics claiming to represent 20,000 Hispanic farmers filed a suit very similar to Pigford v. Glickman. A group of American Indians has filed a similar suit, seeking a million dollars each. Just before the statute-of-limitations waiver expired, a group of Asian-Americans and a group of women filed similar suits. Even a mainly white group has filed a suit on behalf of non-black farmers. The Justice Department is very serious about fighting that one. If it proceeds, perhaps the media will decide it is time to pitch in and try to bring this outrageous raid on the treasury to an end.