Fireman's Insurance To Pay Out $44 Million For False Claims Case

Fireman’s Fund Insurance Company has agreed to pay $44 million to settle allegations under the False Claims Act that it knowingly issued insurance policies that were ineligible under the U.S. Department of Agriculture’s (USDA) federal crop insurance program and falsified documents, the Justice Department announced today.  Fireman’s Fund, an Allianz SE subsidiary headquartered in Novato, California, provides personal and commercial property insurance throughout the United States.

“Federal crop insurance provides vital support for farmers suffering crop losses due to natural disasters,” said Acting Assistant Attorney General Benjamin C. Mizer of the Department’s Civil Division.  “The Department of Justice will continue aggressively to pursue those who abuse this important program.” 

Between 1999 and 2002, Fireman’s Fund operated a crop insurance business and participated in the federal crop insurance program.  Under the program, Fireman’s Fund sold and serviced crop insurance policies that were reinsured by the USDA for a portion of the risks.

The United States alleged that between Jan. 1, 1999, and Dec. 31, 2002, Fireman’s Fund knowingly issued federally reinsured crop insurance policies that were ineligible for federal reinsurance.  Specifically, Fireman’s Fund allegedly backdated policies, forged farmers’ signatures, accepted late and altered documents, whited-out dates and signatures, and signed documents after relevant deadlines.  The policies were issued by Fireman’s Fund offices in Modesto, California; Lambert, Mississippi; Fargo, North Dakota; Lubbock, Texas; Prosser, Washington; and Overland Park, Kansas. 
“Today's announcement shows how working alongside our partners in law enforcement, we will ensure the integrity of the crop insurance program for American taxpayers and producers alike,” said Risk Management Agency Administrator Brandon Willis of the USDA.

$80 Million Judgment Entered Against BNP Paribas for False Claims to the U.S. Department of Agriculture



BNP Paribas is a global financial institution headquartered in Paris.   

 

The United States filed a lawsuit against BNP Paribas in connection with its receiving payment guarantees under USDA’s Supplier Credit Guarantee (SCG) Program.  The program provided payment guarantees to U.S.-based exporters. The SCG Program regulations stated that U.S. exporters were ineligible to participate in the SCG Program if the exporter and foreign importer were under common ownership or control because the government insured the shortage if any foreign purchase should decide to not pay.

           

The judgment entered by the court proves that from 1998 to 2005, BNP Paribas participated in a sustained scheme to defraud the SCG Program. Also the scheme American exporters and Mexican importers who were under common control improperly obtained SCG Program export credit guarantees for transactions between the those exporters and importers.  In some cases, they were blatant shams and did not involve any real shipment of any grain.  BNP Paribas accepted assignment of the credit guarantees from the American exporters, even though it knew that the affiliated exporters and importers were ineligible for SCG Program financing, and a BNP Paribas vice-president, Jerry Cruz, received bribes from the exporters.  Beginning in April 2005, when the Mexican importers began defaulting on their payment obligations, BNP Paribas submitted claims to the USDA for the resulting losses.

 

On Jan. 20, 2012, Cruz pleaded guilty to conspiracy to commit bank fraud, mail fraud and wire fraud, and conspiracy to commit money laundering.