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Farm loan ripoff?

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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 vs. Glickman (Dan Glickman, the last Clinton secretary of Agriculture).

On Jan. 17, as the Clinton era was coming to an end, the Department of Agriculture 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 Jan. 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 Agriculture Department 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. An Agriculture Department attorney believes that it was employed to minimize adverse publicity about discriminatory lending practices at the department 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 costly Agriculture Department 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 the department 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 department had records on less than 10 percent of the successful claimants. There is no way of knowing how many of the others ever had any contact with the department, but they all get their $50,000 checks. Much of the blame for this fiasco lies with Judge Friedman, a Clinton appointee, and with Mr. Glickman, who 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 rip-off could expand and spread to other groups, costing the taxpayers billions of dollars. In October, three Hispanics claiming to represent 20,000 Hispanic farmers filed a suit very similar to Pigford vs. 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.

Reed Irvine is chairman of Accuracy in Media.

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