Feds Want Proceeds from Convicted North Dakota Farmers’ Property Sale

Prosecutors are asking a judge to allow the government to seize money from an auction sale by two North Dakota brothers who were ordered to pay back more than $900,000 for intentionally destroying potatoes to collect federal crop insurance payments.

A jury in December convicted Aaron and Derek Johnson, who farmed near Cooperstown, of conspiring to receive illegal payment and making false statements. They were both sentenced to federal prison in Duluth — Aaron Johnson for four years and Derek for 11/2 years — and ordered to pay back the proceeds of their scheme.

Assistant U.S. Attorney Nick Chase would not comment about the case, but said in court documents filed Thursday that he wants the money from an auction that was scheduled June 18 to sell a tractor, RV, pickup and other equipment belonging to the Johnsons.

“No payment has yet been made on the money judgment,” Chase wrote. “The actual assets/funds derived from this scheme were depleted and are, therefore, largely unrecoverable.”

Neil Fulton, who heads the public defender’s office in the Dakotas and represents Aaron Johnson, said lawyers are evaluating the government’s motion.

“We are looking at any necessary response,” Fulton said. “No decision has been made.”

Chase acknowledged in court documents that there may be other creditors who have a stake in the property at the auction. He said once the judge enters an order forfeiting those assets, third parties have the right to contest the ruling if they can show a superior ownership interest.

The U.S. Department of Justice said the spud scam was the only federal farm fraud case decided in 2014.

Prosecutors accused the brothers of adding spoiled and frozen potatoes to their stored crop and using portable heaters to make the potatoes deteriorate faster. In addition, prosecutors said, the defendants found that best way to wreck the crop was by using Rid-X, a chemical that’s designed to dissolve solid materials in septic systems.

Ben Thomas, the attorney for Derek Johnson, did not respond to a request seeking comment. He said during trial that his client was wrongly blamed for his brother’s actions.