PROSSER, Wa. — A Prosser farmer is accused of collecting tens of thousands of dollars in hidden wheat sales while collecting on crop insurance for alleged losses.

Rick T. Gray and his company, Gray Land and Livestock LLC, were sued recently by the federal government for the multi-year scheme involving wheat farming operations in Klickitat County.

He reportedly received more than a half-million dollars in crop insurance indemnity payments.

The civil enforcement action alleges Gray — from April 2015 through February 2019 — defrauded the federally backed program that is designed to help farmers nationwide.

The 41-page complaint, filed in U.S. District Court in the Eastern District of Washington, brings eight counts against Gray and his company.

Those charges include: violations of the False Claims Act; false applications to the Federal Crop Insurance Corporation (FCIC); mail fraud; wire fraud; bank fraud; unjust enrichment; and for payment by mistake.

Federal prosecutors state in the complaint that Gray either hid or failed to disclose wheat sales while falsely claiming a wheat production loss.

"Under the False Claims Act , Mr. Gray and his company face triple damages for any fraudulently caused losses to the United States — over $1.6 million in triple damages as alleged — as well as additional penalties under the False Claims Act and the Financial Institutions Reform and Recovery Enforcement Act (FIRREA)," the Department of Justice said in a news release.

Wheat production 'concealed'

In 2015, Gray allegedly concealed more than half of the wheat production of the companies he owned or controlled.

He falsely claimed crop insurance loss adjusters that those companies only sold 21,000 bushels of wheat for about $130,000, when actually his companies also sold over 35,000 bushels of wheat for an additional $184,000 in hidden and undisclosed wheat sales, the DOJ news release said.

"As alleged, Mr. Gray's false statements netted him and the companies he owned and/or controlled at least $540,028 in insurance indemnity payments for 2015."

Prosecutors say Gray was trying to execute the same scheme in 2016, but his plans were foiled by loss adjusters and the U.S. Department of Agriculture "before he once again fraudulently obtained phony crop insurance loss payments."

The USDA's Farm Services Agency's records report that Gray and his companies — between 2014 and 2016 — held the largest amount of insured wheat acreage in Klickitat County, which is to the west of Prosser.

The county averaged close to 100 wheat farms in each of those years.

Bankruptcy filing

Online state records show Gray Land and Livestock was administratively dissolved in February of this year.

The civil complaint states that once Rick Gray's fraudulent scheme was detected, he filed for bankruptcy for that company, leaving creditor Columbia State Bank with more than $3.5 million in outstanding claims.

Another company, Gray Farms and Cattle Co. LLC, became delinquent with the state of Washington in 2020 and was dissolved in April, according to online records.

The Washington Secretary of State site shows that he still has Gray Holdings LLC, which is listed as a property management business.

The case is being handled by federal prosecutors with support from the U.S. Department of Agriculture's Office of Inspector General and Risk Management Agency.

It has been assigned to Judge Thomas O. Rice.

Federal prosecutors have requested a jury trial. No date has been set yet.

This story was originally published October 7, 2021 5:00 AM.

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(c)2021 Tri-City Herald (Kennewick, Wash.)

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