Feds expand allegations in North Dakota spud scam

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FARGO, N.D. (AP) - Federal authorities have expanded the scope of their investigation into two brothers from North Dakota accused of intentionally destroying potatoes to collect crop insurance payments.

The original indictment alleged that Aaron Johnson, 50, and Derek Johnson, 47, and their company, Johnson Potato, conspired to receive more than $800,000 in illegal payments dating back to 2006. Now, the government says the farmers from the Cooperstown area pocketed more than $2 million since 2002.

The Johnsons have pleaded not guilty to conspiracy and making false statements. One of their lawyers told The Associated Press on Friday that it’s a complex case that will take time to decipher.

“We’re engaged in that process and have not reached a point where we can make any decisions with our client yet.” said Neil Fulton, head of the federal public defender’s office for North and South Dakota.

Federal prosecutors declined comment.

The updated indictment filed last week accuses the brothers of adding chemicals to the potato seeds so they would not grow and purposely damaging the plants with cultivators. The Johnsons claimed their lack of potato production was the result of natural causes “rather than their own intentional destructive conduct,” the indictment says.

Federal crop insurance covers setbacks only for a “naturally occurring event” and does not cover losses due to negligence, mismanagement, or wrongdoing. Authorities said that during the course of the investigation, the brothers have lied to officials from law enforcement and agencies within the U.S. Department of Agriculture about the cause of the damaged spuds.

Investigators had previously said the Johnsons applied chemicals and added spoiled and frozen potatoes to their stored crop, which caused the potatoes to rot. One of the chemicals was a substance known as “Rid-X,” which is designed to dissolve solid materials in septic systems.

The brothers used portable heaters to warm the warehouse above 80 degrees and make the potatoes deteriorate faster, according to court documents.

It’s not the first time Aaron Johnson has been accused of manipulating federal farm programs. He pleaded guilty in 1995 to conversion of property held by a commodity credit corporation. He was sentenced to three years or probation and ordered to pay back nearly $33,000.

Trial for the brothers is set for July 15.

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Follow Dave Kolpack on Twitter at http://twitter.com/DaveKolpackAP.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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