Obama, Farming, Racism, and Fraud

[Kleves]

Here's one story that explains why people have a dim view of the government's ability to avoid waste: http://www.nytimes.com/2013/04/26/us/farm-loan-bias-claims-often-unsupported-cost-us-millions.html?pagewanted=1&_r=1&hp. It's too long to post the whole thing, but here's the gist:

In the winter of 2010, after a decade of defending the government against bias claims by Hispanic and female farmers, Justice Department lawyers seemed to have victory within their grasp.

Ever since the Clinton administration agreed in 1999 to make $50,000 payments to thousands of black farmers, the Hispanics and women had been clamoring in courtrooms and in Congress for the same deal. They argued, as the African-Americans had, that biased federal loan officers had systematically thwarted their attempts to borrow money to farm.

But a succession of courts — and finally the Supreme Court — had rebuffed their pleas. Instead of an army of potential claimants, the government faced just 91 plaintiffs. Those cases, the government lawyers figured, could be dispatched at limited cost.

They were wrong.

On the heels of the Supreme Court's ruling, interviews and records show, the Obama administration's political appointees at the Justice and Agriculture Departments engineered a stunning turnabout: they committed $1.33 billion to compensate not just the 91 plaintiffs but thousands of Hispanic and female farmers who had never claimed bias in court.

The deal, several current and former government officials said, was fashioned in White House meetings despite the vehement objections — until now undisclosed — of career lawyers and agency officials who had argued that there was no credible evidence of widespread discrimination. What is more, some protested, the template for the deal — the $50,000 payouts to black farmers — had proved a magnet for fraud.

"I think a lot of people were disappointed," said J. Michael Kelly, who retired last year as the Agriculture Department's associate general counsel. "You can't spend a lot of years trying to defend those cases honestly, then have the tables turned on you and not question the wisdom of settling them in a broad sweep."

The compensation effort sprang from a desire to redress what the government and a federal judge agreed was a painful legacy of bias against African-Americans by the Agriculture Department. But an examination by The New York Times shows that it became a runaway train, driven by racial politics, pressure from influential members of Congress and law firms that stand to gain more than $130 million in fees. In the past five years, it has grown to encompass a second group of African-Americans as well as Hispanic, female and Native American farmers. In all, more than 90,000 people have filed claims. The total cost could top $4.4 billion.

From the start, the claims process prompted allegations of widespread fraud and criticism that its very design encouraged people to lie: because relatively few records remained to verify accusations, claimants were not required to present documentary evidence that they had been unfairly treated or had even tried to farm. Agriculture Department reviewers found reams of suspicious claims, from nursery-school-age children and pockets of urban dwellers, sometimes in the same handwriting with nearly identical accounts of discrimination.

Yet those concerns were played down as the compensation effort grew. Though the government has started requiring more evidence to support some claims, even now people who say they were unfairly denied loans can collect up to $50,000 with little documentation.

As a senator, Barack Obama supported expanding compensation for black farmers, and then as president he pressed for $1.15 billion to pay those new claims. Other groups quickly escalated their demands for similar treatment. In a letter to the White House in September 2009, Senator Robert Menendez of New Jersey, a leading Hispanic Democrat, threatened to mount a campaign "outside the Beltway" if Hispanic farmers were not compensated.

The groups found a champion in the new agriculture secretary, Tom Vilsack. New settlements would provide "a way to neutralize the argument that the government favors black farmers over Hispanic, Native American or women farmers," an internal department memorandum stated in March 2010.

The payouts pitted Mr. Vilsack and other political appointees against career lawyers and agency officials, who argued that the legal risks did not justify the costs

[derspiess]

My favorite part was at the end:

Last October, a court-appointed ombudsman wrote that hundreds, perhaps thousands, of people had given money to individuals and organizations in the belief that they were reserving the right to file a claim under the second settlement for black farmers, only to learn later that their names had never been forwarded to the authorities. People familiar with that statement said it was directed in part at Thomas Burrell, a charismatic orator and the head of the Black Farmers and Agriculturalists Association, based in Memphis.

Mr. Burrell has traveled the South for years, exhorting black audiences in auditoriums and church halls to file discrimination complaints with his organization's help, in exchange for a $100 annual membership fee.

In an interview last month, Mr. Burrell said he had dedicated his life to helping black farmers after biased federal loan officers deprived him of his land and ruined his credit. He said his organization had misled no one, and had forwarded the names of all those eligible and willing to file claims.

"I have never advocated anybody file a false claim," he said. "I have worked almost pro bono for this cause."

On a recent Thursday at the Greater Second Baptist Church in Little Rock, several hundred African-Americans listened intently as Mr. Burrell told them they could reap $50,000 each, merely by claiming bias. He left out the fact that black men are no longer eligible, and that black women are eligible only if they suffered gender, not racial, bias.

"The Department of Agriculture admitted that it discriminated against every black person who walked into their offices," he told the crowd. "They said we discriminated against them, but we didn't keep a record. Hello? You don't have to prove it."

In fact, he boasted, he and his four siblings had all collected awards, and his sister had acquired another $50,000 on behalf of their dead father.

She cinched the claim, he said to a ripple of laughter, by asserting that her father had whispered on his deathbed, "I was discriminated against by U.S.D.A."

"The judge has said since you all look alike, whichever one says he came into the office, that's the one to pay — hint, hint," he said. "There is no limit to the amount of money, and there is no limit to the amount of folks who can file."

He closed with a rousing exhortation: "Let's get the judge to go to work writing them checks! They have just opened the bank vault."

[Admiral Yi]

I wonder if the decision to pay out had anything to do with Vilsak getting suckered by that Breitbart video of the black lady.

Oh well, it's only 1.3 billion and I'm sure they're all nice people.

[derspiess]

Fraud is fraud.

[Admiral Yi]

Fraud is fraud.

If you started smoking weed you would pick up irony a lot quicker.

[The Minsky Moment]

The full article provides some more context but it is still misleading.  This is a complicated series of cases, and the writer is mixing some things together.

The first case was the Black farmer case brought back in 1997.  The government settled that case in 1999.  They settled presumably because the judge had made a number of rulings that favored the farmers, and the government was exposed to huge potential liability if it went to trial.  The compensation procedures for claims were set by the District Judge.  Not the Dept of Agriculture - they just had to carry out the Court's judgment and order.

The next thing that happened was that the claims period in the Black farmers expired.  Congress passed legislation in 2008 extending the claims deadline.  Bush vetoed the bill.  And Congress over-rode the veto.  I don't know the vote count, but it had to be at least 2/3 of both Houses as composed in 2008, which suggests broad bi-partisan support.

Obama and Vilsack are accussed by the NYT writer of doing two things with respect to the Black farmer case:
1.  Asking Congress to fund the claims extension.  I don't see how this is objectionable.  Congress passed the law, it is the executive responsibility to carry out the law and go back to Congress for additional appropriations as needed.
2.  Vilsack is accused of withdrawing an Ag Dept review process.  But this also seem unobjectionable.  The claims extension law left the old claims processing procedures intact.  The Court's order didn't give the Dept of Ag authority to impose additional levels of review.

The second set of cases involved Native American farmers and Hispanic farmers.  The NYT article admits the government was not doing so well in the Native American case.  So it isn't a big surprise that case settled.

The NYT writer does make a big deal about pro-government rulings in the Hispanic farmer case.  And it is true that the Hispanic farmers lost their motion for class certification.  What that means is that they couldn't bring a class action; instead every individual Hispanic farmer would have to bring a separate lawsuit.  That is "good" for the government in that lots of individual farmers might not bother bringing claims, thus lowering the total liability.  But it is a double-edged sword.  Because a lot of individuals very well might sue, and while the total damages would be lower, the burden on the government to litigate hundreds of separate cases all around the country is greater.   The government's response was to set up an optional adminstrative claims process.  Potential plaintiffs could use the administrative procedure rather than suing in Court.  That did make it cheaper and easier for plaintiffs to make claims.  But it also made it easier and cheaper for the government as opposed to defending lots of separate lawsuits in court.

Note that the Hispanic farmer claims process does NOT have the "no doc" feature of the Black farmer settlement.  The Hispanic farmer claims must include written documentation.  The NYT article covers this but buries that fact at the end of the piece.

[Razgovory]

So the it's not quite the clear cut Obama is transferring our wealth to shiftless minorities story that's being trumpeted.

[Admiral Yi]

Right.  I could be the court or Congress.

[Razgovory]

Right.  I could be the court or Congress.

But my money is on you being Yi.