Last week, the Hartford Courant’s Dave Altimari broke the story, that a judge in Connecticut found that a “former state legislator ‘unjustly enriched’ himself at the expense of his family’s Enfield tobacco farm,” and that a Farm Credit association, CoBank’s very own Farm Credit East, helped him do it. The facts of the case are alarming: The defendant used his father’s farm as “collateral to take out millions of dollars in loans to buy a Rhode Island vacation house and pay his children’s private school tuition, among other personal expenses.” Farm Credit’s no stranger to financing luxury property, but it gets worse.
The presiding judge declared that “Farm Credit walked Steven through a process to set up a new LLC in order to get additional funds from the federal government that were not available to the business while the estate was being settled…there is serious question as to whether this was appropriate or even legal since it was nothing more than a shell corporation to funnel federal money.”
The FCS has had its fair share of unauthorized loans and transgressions, but this one takes the cake. An FCS association used its status as a government-sponsored enterprise (GSE) to sneak away funds, backed by the federal government and American taxpayers, through a shell corporation for one person’s benefit. This is a betrayal of the public’s trust.
And the judge who presided over the case indicated “that the IRS, other relevant federal agencies and state officials may want to look at them.” It’s a sore day when the Farm Credit Administration (FCA), the FCS’ regulator, needs to be reminded to do its job. It’s an even worse day when the IRS has to step in and do the job the FCA was supposed to do itself.
It was only two months ago that the House Committee on Agriculture held a hearing on the FCS and found that the FCA’s enforcement was severely lacking. If that didn’t inspire the FCA to act, then what will?