ND Farmers Indicted on Crop Ins. Fraud.
Two North Dakota farmers were arrested after a grand jury handed down an indictment alleging they conspired to shift production between two farms and made false statements on crop insurance claims.
The 20-page indictment filed in the U.S. District Court for the District of North Dakota alleges Daniel Scott Flaten and Derek Scott Flaten shifted or concealed actual crop production so one insured farming operation appeared to have abnormally low yields, while placing some of that production in another family member's name.
The indictment said that precision agriculture records helped form an evidentiary trail for investigators. Prosecutors allege combine/harvest technology recorded larger yields than the yields later certified to insurers.
Prosecutors said the Flatens received about $619,000 in allegedly improper indemnity payments and another $104,000 in FCIC subsidy expenses associated with the policies.
Each farmer was indicted on three felony counts including one for conspiracy to make false statements to the Federal Crop Insurance Corporation, and two counts each of making false statements involving crop insurance claims. An indictment means a grand jury found probable cause for the case to go to trial.
If convicted, each man faces up to five years in prison on the conspiracy charge and up to 30 years in prison and a $1 million fine on each of two crop-insurance false-statement charges. Prosecutors are also seeking forfeiture of proceeds traceable to the alleged offenses.
According to the indictment prosecutors allege Daniel Flaten understated actual corn and soybean production on insured units where he claimed losses. At the same time, some of his corn allegedly was sold under Derek Flaten's name.
The two producers operate farms in Cass, Grand Forks, Traill and Steele counties in North Dakota.
This made Daniel Flaten's production appear to be artificially low, according to the indictment. He then would allegedly attribute a shortfall to an insurable natural cause and collected larger indemnities.
On the other side of the alleged transaction, Derek Flaten or other family members reported production that came from Daniel Flaten's fields, making Derek Flaten's yields appear unusually high, according to the indictment.
Those yields become part of actual production history which helps a farmer establish a future production guarantee.
ALLEGED CONSPIRACY, FALSE STATEMENTS
The indictment said the alleged conspiracy and false statements started in January 2021 and continued through Jan. 31, 2023.
Prosecutors alleged that on Nov. 15, 2021, Daniel Flaten falsely certified that 453 acres of insured dry beans had been damaged by natural causes, while allegedly concealing production to create the appearance of a crop loss.
On the same day, according to the indictment, Daniel Flaten allegedly falsely certified that 412 acres of soybeans had been damaged by natural causes and concealed production.
On Feb. 19, 2022, the indictment alleges Derek Flaten falsely certified 1,562 acres of soybeans as damaged by natural causes while hiding part of the production.
SOYBEANS CERTIFIED
Then on Feb. 29, 2024, Derek Flaten allegedly falsely certified that 2,109 acres of soybeans for the 2023 crop year were damaged by natural causes and concealed production.
In 2019, Daniel Flaten allegedly certified 288 acres of dry beans in Steele County, North Dakota, and 149 acres in Grand Forks County that year. The indictment said Derek Flaten allegedly didn't produce nor insure dry beans in 2019.
Daniel Flaten sold 55,600 pounds from Grand Forks County on Oct. 31, 2019, and 114,720 pounds from Steele County on Nov. 6, 2019.
"On or about Nov. 7, 2019, Daniel Scott Flaten instructed Columbia Grain Elevator to apply two loads of dry beans to Daniel Scott Flaten's contract but to issue the check for those loads to Derek Scott Flaten at Daniel Scott Flaten's address," according to the indictment.
"The two trucks delivered 69,820 pounds of dry beans, and Columbia Grain paid Derek Scott Flaten $14,106 for these two truckloads. On or about Nov. 8, 2019, Daniel Scott Flaten submitted a notice of loss for his Grand Forks County dry beans claiming damage by natural causes."
Daniel Flaten allegedly did not disclose to an adjuster that he sold the dry beans under Derek Flaten's name.
PRECISION AG DATA
Prosecutors alleged that in 2021, precision ag data from Daniel Flaten conflicts with corn production reported to insurance. The indictment shows Flaten certified that he planted 1,495 acres of corn in Cass County, North Dakota, in 2021. Derek Flaten reported about 747 acres, according to the indictment.
Daniel Flaten then filed a loss notice on Nov. 22, 2021, saying his corn was damaged via natural causes. Prosecutors allege he intentionally concealed contemporaneous precision farming yield data. The differences between reported yields and precision ag yields on four tracts were 54, 62, 49 and 51 bushels per acre.
The indictment said Daniel Flaten allegedly received $280,000 in crop insurance indemnities for corn in 2021.
Then again in 2022, the indictment said Daniel Flaten reported 1,044 acres of corn in Cass County and filed a loss notice on Nov. 28, 2022.
Then on Jan. 13, 2023, he certified production and submitted records from three elevators. Certified yields ranged from 72 to 115 bushels per acre.
However, prosecutors said precision ag records showed yields on five parcels averaged 52 bushels higher than reported yields.
The indictment said Daniel Flaten received about $182,000 in crop insurance indemnities and more than $23,000 in Farm Service Agency disaster payments on that corn crop.
According to court records, Daniel Flaten was arrested on Oct. 26, 2026, and Derek Flaten was arrested on Nov. 2, 2026. Both men have bonded out of jail.
Source - https://www.dtnpf.com
