U.S. Attorney Cole Finegan recently announced Patrick Esch and Ed Dean Jagers of Springfield, Colorado, have agreed to pay over $6.5 million to resolve allegations that they defrauded federal crop insurance programs by tampering with and damaging rain gauges. Esch was also sentenced to be imprisoned for two months while Jagers was sentenced to be imprisoned for six months. 

One way the United States Department of Agriculture (USDA) supports farmers and ranchers is by providing federal funding for crop insurance programs that pay indemnities when there is less than the usual amount of precipitation. Esch and Jagers concocted a scheme to defraud these insurance programs by making it appear that there was less precipitation in their area than there actually was. To carry out that scheme, the members of the conspiracy, including Esch and Jagers, tampered with and damaged rain gauges in southeast Colorado between July 2016 and June 2017 to prevent those gauges from accurately measuring rainfall. Some of the rain gauges that were tampered with belonged to the National Oceanic and Atmospheric Administration and were operated by the National Weather Service.

The conspirators used various means and methods to tamper with the rain gauges. Esch covered gauges in southeastern Colorado with agricultural equipment and used other means as well, such as filling gauges with silicone to prevent them from collecting moisture, cutting wires on the gauges, or detaching and then tipping over the bucket that collected precipitation. Jagers typically used an agricultural disc blade to cover up a rain gauge in Lamar, Colorado. This tampering created false records making it appear that less rain had fallen than was the case.

The United States investigated Esch and Jagers using civil tools, including the False Claims Act, which imposes civil penalties for certain types of fraud on the federal government, and the Financial Institutions Reform, Recovery, and Enforcement Act, which imposes civil penalties for a variety of misconduct, including knowingly making any false statement or report for the purpose of influencing in any way the action of the Federal Crop Insurance Corporation. The U.S. alleges that this conduct violated both statutes. Esch and Jagers have agreed to pay a combined $3.5 million to settle these civil allegations.

The U.S. also indicted Esch and Jagers criminally for their roles in the conspiracy. Esch and Jagers both pled guilty and were sentenced to pay a combined $3.1 million in restitution.

“Hardworking farmers and ranchers depend on USDA crop insurance programs, and we will not allow these programs to be abused,” said U.S. Attorney Cole Finegan. “This case also shows the full measure of justice that can be achieved when our office uses both civil and criminal tools to protect vital government programs.”

Jeffrey Lysaght, special agent in charge for the U.S. Department of Commerce, Office of Inspector General: “The Department of Commerce OIG is dedicated to working with the Department of Justice and our law enforcement partners to curb fraud, waste, and abuse. We continue to vigorously investigate those individuals who seek to compromise the integrity of National Weather Service equipment and data in an effort to defraud the federal government. We greatly appreciate the cooperation and effort of the United States Attorney’s Office and our law enforcement partners in ensuring justice is served in this matter.”

The claims resolved in the civil settlements are allegations. In agreeing to settle, Esch and Jagers did not admit liability except to the extent admitted in their guilty pleas.

The civil settlements also resolve qui tam allegations against Esch and Jagers brought in federal court by private party. The qui tam or whistleblower provisions of the False Claims Act allow a private party known as a “relator” to file an action on behalf of the United States and receive a portion of the recovery. In this case, the relator has passed away, and the relator’s estate will receive approximately $500,000.