Opinion ID: 760214
Heading Depth: 2
Heading Rank: 2

Heading: Koster's Attempt to Defraud the CCC

Text: 8 In 1979, Koster began farming in a rural area near Dixon, Illinois. Koster's farming operation consisted of land that he owned and land that he leased. To finance his farming operation, Koster borrowed money from the CCC, totaling approximately one million dollars. In 1984, Koster defaulted on these loans. 9 The indictment charged that, from approximately February 1990 to March 1995, Koster engaged in a scheme to obtain deficiency payments and Farm Stored Loans while avoiding set-offs by inducing two ineligible individuals, Jerome Lauer and Joseph Michlig, and one ineligible entity, 4-D Farms, Inc., to fraudulently enroll in the government funded programs and pay him the proceeds they received. 10 Jerome Lauer was Koster's hired hand from mid-1985 through late-1993. Koster paid Lauer cash wages to assist him on portions of his leased farmland. In 1990, however, Koster devised a plan to use Lauer as a straw man to receive additional deficiency payments and Farm Stored Loan disbursements. That same year, Koster personally prepared a Plan and Contract for the 1990 Set Aside Program. Koster had Lauer sign both the Plan and Contract in Lauer's own name and submit the documents to the ASCS office. Relying on the validity of the information submitted in these documents, the ASCS enrolled Lauer in the Set Aside Program and began sending Lauer deficiency payments and Farm Stored Loan disbursements, which Lauer then turned over to Koster. 11 Had the ASCS known that Koster, and not Lauer, actually was renting the farmland, Lauer would not have qualified as an eligible individual for these government funded programs. Koster resubmitted Plans in Lauer's name, and continued receiving deficiency payments and Farm Stored Loan disbursements for several years. 12 Joseph Michlig was another straw man Koster used to defraud the ASCS. Michlig worked on Koster's farms from approximately 1985 to 1988. Between 1989 and 1993, after Michlig no longer worked for Koster, Koster enrolled Michlig in the Set Aside Program and Farm Stored Loan Program. In the Contract and Plan submitted to the ASCS, Koster represented that Michlig was leasing four different farms from three different landowners. In actuality, Michlig did not lease any of this land and thus would not have been eligible for the federally funded programs. Additionally, Koster represented in the Plan that Michlig farmed this land with equipment Koster owned or leased from Michlig's father. In reality, Michlig contributed no equipment, management, or labor to Koster's farming operation during this time frame. 13 From approximately 1989 to 1990, at Koster's direction, Michlig and his wife received the deficiency payments and Farm Stored Loan disbursements and deposited these funds into a bank account. Michlig and his wife then issued personal checks to Koster in the amounts of the payments. Beginning in 1991, Koster stopped receiving checks from the Michligs and instead directed them to make disbursements to parties Koster specified. 14 Koster also used 4-D Farms, Inc. as a straw corporation to defraud the CCC. 4-D Farms owned approximately 840 acres of farmland in Whiteside and Lee Counties. Glen Moody, a professional farm manager, acted on behalf of 4-D Farms in negotiating leases. According to Moody, Koster personally leased the 840 acres of land between 1989 and 1993 on a cash-rent basis--meaning that Koster agreed to pay 4-D Farms a specific amount of rent per acre, regardless of whether Koster made a profit from farming that land. Because the land was cashrented to Koster, 4-D Farms did not meet the requirements for participation in the Set Aside Program. Koster, however, submitted a Plan and Contract to the ASCS, representing that this land was leased to other persons, including Lauer and Michlig. Koster also represented that the land was rented on a crop-share basis, and therefore was eligible for deficiency payments. Based on these representations, 4-D Farms' application was approved and 4-D Farms was enrolled in the federally funded programs. It received deficiency payments between 1989 and 1993. 15 At trial, Koster's theory of defense was that he did not engage in any scheme to defraud the ASCS and that all the representations made in the Plans and Contracts submitted to the ASCS regarding Lauer, Michlig, and 4-D Farms were true. Koster also maintained that all his actions were taken in good faith to maintain the viability of his farming operation. Accordingly, at the end of the evidence, Koster tendered two good faith jury instructions to the trial court: one for the false statement charges and the second one for the mail fraud charges. The district court refused to give either instruction. Koster now appeals that decision.