GRAND RAPIDS, Mich. – A Michigan farmer has agreed to pay $87,500 to resolve allegations that he fraudulently obtained federal crop insurance benefits in a settlement reached earlier this month.

David Zelmer, of Niles, did not raise the crops he claimed on his USDA application for crop insurance coverage that resulted in Farm Service Agency payments for reported yield losses, according to federal authorities.

U.S. Attorney Mark Trotten said his office is committed to investigate such claims to protect the future health of federal programs intended to protect the nation’s food producers.

“Michigan farmers depend on federal programs to provide economic security, but the well-being of these programs depends on farmers telling the truth and playing by the rules,” Totten said.

Totten, the U.S. Attorney for the Western District of Michigan based in Grand Rapids, said the resolved claims under terms of the Jan. 7 settlement remain allegations with no admission of guilt or liability.

The federal case alleged Zelmer entered into a lease agreement in 2015 on land he owned and previously raised crops on in the southwest part of the state.

Despite the lease agreement, Zelmer allegedly certified he was the sole producer on the ground he sought federal crop insurance protection and benefits for crop years 2015, 2016 and 2017.

Trotten said the actual producer, though, was the farmer working the land under the three-year lease.

Shantel Robinson, special agent-in-charge for the Office of Inspector General under USDA, said Zelmer was in violation of the federal False Claims Act (FCA).

The FCA dates to 1863 and allows the federal government through civil action to go after someone who files a false claim for up to three times the amount wrongfully collected, along with penalties linked to inflation.

Robinson vowed to continue the mission of his office to investigate allegations of waste, fraud and abuse in USDA programs.

“Fraudulent activity within the crop insurance program undermines its intent and misdirects taxpayer dollars from which they were intended,” Robinson said.

Robinson said USDA’s Risk Management Agency was also involved in the joint investigation resulting in the settlement.

According to the U.S. Department of Justice, more than $2.6 billion in settlements and judgments were obtained under the FCA from civil cases involving fraud and false claims against the federal government in the fiscal year ending Sept. 30, 2024. Nearly 70 percent of the recoveries involved healthcare fraud.

According to USDA, federal crop insurance programs administered by FSA award benefits when the actual revenue for a farm drops below a certain level based on things like historical performance of the operation.

Payments are also awarded to recover from losses on a cover commodity blamed on market fluctuations and other factors like drought, excessive moisture, wind and disease.

According to USDA, federal crop insurance was authorized by Congress in the 1930s to help growers recover from both the Great Depression and the Dust Bowl.

Initially, the program was mostly limited to major crops in the main producing areas but was expanded in 1980 to cover many more crops and regions of the country. 

According to the DOJ, the False Claims Act in agriculture can also be used to prosecute fraud in the food supply chain and other areas like farm benefit schemes. FAC can apply to individuals and companies, including federal contractors.