Reed Irvine - Editor
|2001 Report #3|
THE $600 MILLION BLACKS ONLY LOTTERY
A class-action lawsuit against the U.S. Department of Agriculture (USDA) by black farmers that was certified in October 1998 has already cost the taxpayers $600 million but it has had very little coverage in the news media. It has been reported that the USDA has admitted discriminating for years against thousands of black farmers, staining the department's reputation. The public has not been told how the mishandling of this suit by Secretary of Agriculture Dan Glickman has made his department's misconduct appear to be far worse than it really is and the cost to the taxpayers absurdly excessive. The information in this article, provided by confidential sources within the government, has been offered to major national media. As with so many other scandals in the Clinton administration, they have chosen not to report it.
The story begins in December, 1996, when a small group of black farmers demonstrated in front of the White House, complaining about alleged USDA discrimination in its vast farm-loan program. Blacks constitute less than one percent of our farmers, but 3.2 percent of the USDA farm loans by number are made to blacks. The news media gave the demonstration more coverage than its size and unsubstantiated claims warranted. It is said within the department that President Clinton ordered Secretary Glickman to keep the blacks out of his back yard.
Within days Secretary Glickman announced that there was rampant racial discrimination in USDA's farm loan program. It had gone unnoticed in the two years he had headed the department and in the 22 months it was headed by Mike Espy, a black former congressman from Mississippi. Glickman offered no evidence of racial discrimination, but he scheduled a series of listening sessions around the country to look for some. At a probable cost of a million dollars or more, the January, 1997, USDA listening tour made stops in 11 cities from Washington, D.C. to California. The entourage included Mr. Glickman's deputy secretary, the black leader of a newly created Civil Rights Action Team (CRAT), and a hand-picked group of 11 other government officials. The CRAT had originally numbered ten, but an eleventh was hurriedly added when it was discovered Mr. Glickman had forgotten to include a Hispanic.
The listening tour had much to listen to. Plenty of people, many of whom had been complaining for decades about alleged USDA racism, were happy to repeat well-practiced accounts of mistreatment. Among the aggrieved was a small group of black farmers whose attempt to file a class-action suit had been dismissed a few years earlier. They did not claim that USDA had refused them money. All had received loans. They complained that white bureaucrats had not done enough to help them succeed as farmers.
After hearing all the charges, CRAT concluded that the USDA civil rights apparatus had not been doing its job. It blamed the Reagan administration for this, although Democrats had been in charge for five years. CRAT declared that the Civil Rights Division was in a persistent state of chaos, largely because of frequent reorganizations, which usually resulted in higher pay for the staff, which is mostly black. CRAT also discovered that the general impression of the Civil Rights Division was accurate. It is viewed as a dumping ground for troublesome or unpro-ductive employees who are given undemanding jobs there.
Needless to say, CRAT also found that lax supervision by the Civil Rights Division had permitted racism to run riot through the department. Secretary Glickman accepted all CRAT recommendations on how to correct this. As part of this process, he ordered an immediate review of 956 backlogged discrimination complaints. The department paid millions of dollars to bring field office workers to Washington to review these complaints. They reported that possible discrimination was found to have occurred in only five of the cases.
The department suppressed these inconvenient findings. After these employees had spent months poring over case files, a Glickman assistant condemned them to their faces as liars intent on covering up the misdeeds of fellow employees. He also told them to destroy their notes.
In 1995, five USDA borrowers had filed a lawsuit (Williams v. Glickman) charging discrimination against black and Hispanic farmers. District of Columbia Judge Thomas Flannery denied class-action status, citing the amorphous nature of the proposed class and noting that the claims of the named plaintiffs were not representative of the claims of potential class members.
After Glickman charged his own employees with bigotry, two black farmers in North Carolina, Timothy Pigford and Cecil Brewington, filed separate but similar suits in 1997, this time on behalf of blacks only. The USDA had investigated Pigford's claims at least three times and found no discrimination. A previous suit by Pigford had been dismissed with prejudice. That means he should not have been allowed to file another suit making the same charges. Both he and Brewington enlisted civil rights lawyers who recruited hundreds more plaintiffs. The USDA refused to challenge Pigford's right to sue, making only token defenses, and the suits have become monstrosities.
Both cases were assigned to District Judge Paul Friedman, a Clinton appointee. He has presided over several sensitive Clinton-related cases, including those of bagman Charlie Trie, big DNC donor Pauline Kanchanalak, and Maria Hsia, who arranged the Buddhist temple fund-raiser. Judge Friedman dismissed those three cases, but the court of appeals promptly reinstated the charges. Friedman combined the black farmers' cases, and they are now known as Pigford v. Glickman. The complaint cites no evidence of discrimination by USDA other than Glickman's statement that it was rampant in his department. Friedman certified class-action status for the suit in October, 1998.
There was one major problem. The federal statute of limitations on discrimination complaints is two years, and it had already expired for almost all the complainants. The Congressional Black Caucus came to the rescue and drafted legislation waiving the statute of limitations. Heretofore, all such waivers extended the deadline before the statute of limitations had expired. The waiver was added as an amendment to the Agriculture appropriations bill for FY1999, authorizing consideration of claims from January 1, 1981to December 31, 1996 with the help of Republican votes. The suit might have been derailed if USDA had challenged the waiver on constitutional grounds, but Glickman was cooperating with the plaintiffs rather than defending his department.
In April, 1999, the government and the plaintiffs entered into a consent decree approved by Judge Friedman. The department accepted no blame, but the document was hailed in the press as an admission of wrongdoing by USDA. It set up a two-stage process for securing compensation for alleged discrimination. The first was to join the class of claimants and the second was to demonstrate USDA bias. Claimants had to be black and to have farmed or tried to farm between 1981 and 1996. They had to claim to have applied to USDA for a loan or crop payment and assert that the application was denied because of race. Finally, their discrimination complaint had to be filed on or before July 1, 1997. None of these requirements is a real obstacle. But the claimant need not prove that he had ever farmed. To claim to have applied for a loan qualifies as having attempted to farm. He doesn't have to prove that he applied for a loan. He need only say he did.
The requirement that a discrimination complaint had been filed by July 1, 1997 has been rendered meaningless. The claimant need only demonstrate that he has actively pursued judicial remedies. He need only say that he was induced or tricked by USDA's misconduct into missing the filing deadline or was pre-vented by circumstances beyond his control from filing a com-plaint on time. If he can't show a copy of a complaint and there are no USDA documents that refer to a complaint, which is the case for the vast majority of claimants, the court will accept any of the following:
Any black who is willing to write a back-dated letter or can persuade a non-family member to lie for him can join the class. Under the consent decree, the statement of any complainant is accepted as true unless USDA has documents to refute it. Since USDA keeps records of rejected loan applications for only three years there is no record of applications made before1994. When it agreed to the consent decree the government knew that it had no evidence to disprove claims of loan rejections between 1981 and 1994. Therefore claims that are clearly fraudulent must be accepted if they are alleged to have been denied before 1995.
When the consent decree was approved, the plaintiffs' attorneys began promising that any black who joined the class had a good chance of getting $50,000. USDA spent nearly $500,000 to publicize the terms of the consent decree in ads on television and in newspapers and magazines. The plaintiff's attorneys had estimated perhaps 2,500 people would file claims when they first had it certified as a class action law suit. By the closing date of October, 1999, over 20,000 had joined the suit, more than the number of black farmers in the country in 1997. By January 17, 2001, 19,995 cases had been adjudicated. Claimants won 60 percent of them, costing the government nearly $600 million, plus its heavy expenses and the debts it was required to forgive.
That was not enough for Judge Friedman. He let hundreds apply after the closing date. The final number of claimants cannot be determined because these claimants are still being certified, but as of January 17, 2001, 25,036 had been accepted as members of the class. Judge Friedman is now considering extending the deadline again, adding many more new claimants.
A private firm, Poorman-Douglas of Portland, Oregon, was hired to mail out claim packages, receive claims, and process them. Fraud surfaced immediately. Some prospective claimants tried to have children as young as two years old certified as class members. A few whites tried to pass, but were rooted out. Spouses who may have applied for a loan tried to get separate certification, hoping to be paid twice for a single act of discrimination. A number of dead people have joined the suit, since USDA agreed to let surviving relatives argue on their behalf.
Claimants who have received USDA loans may gain immediate benefits by joining the class if they are behind in their payments.
The decree provides for two tracks for resolving complaints and determining whether a payment is due. USDA describes Track A as the easier, more streamlined track for class members who have little or no direct proof of discrimination. For those who choose Track A, a contract adjudicator decides the case. Federal rules of evidence and other legal standards do not apply. To win, claimants need only give substantial evidence of the following: (1) owned or leased, or attempted to own or lease, farm land; (2) applied for a specific credit transaction at a USDA county office during the specified period; (3) loan was denied, provided late, approved for a lesser amount than requested, encumbered by restrictive conditions, or USDA failed to provide appropriate loan service, and such treatment was less favorable than that accorded specifically identified similarly situated white farmers; and (4) USDA's treatment of the application harmed the class member economically.
Lacking any records of loans denied before 1994, USDA finds it virtually impossible to refute any claim from that period. If a Track A claimant wins, he gets a flat $50,000, regardless of the form of the alleged discrimination. If he is an actual USDA borrower, and claims he got a loan on unfavorable terms because of racial discrimination, he also gets complete loan forgiveness, plus 25 percent of this amount, which goes to the IRS for taxes, and the return of his foreclosed property if the government still owns it. He also gets preference for future USDA loans and for the purchase of one farm property foreclosed by the government.
Track B is for those seeking over $50,000. The Track B claim-ants are demanding millions. One wants at least $70 million. These cases are decided by a black arbitrator, Michael K. Lewis. Claimants must demonstrate discrimination by a preponderance of the evidence, a higher standard of proof than Track A. Track B cases involve rules of evidence, discovery, witnesses and sworn testimony, all of which will increase the amount owed to class attorneys. The arbitrator receives a fee that can exceed $10,000. If a Track B claimant wins, he gets actual damages, discharge of debt, return of property, and the same advantages in future dealings with USDA as claimants in Track A. By January 17, 2001, only 198 of the 25,036 claimants had chosen this option, which requires some proof of discrimination.
The 40 percent of the adjudicated Track A cases that had been decided in the government's favor by January 17, 2001 included 62 percent of the 2,997 cases in which a borrower was claiming discriminatory treatment. USDA keeps the complete case file for the life of a loan (usually 30 years), and it had documents to refute charges of discrimination. It is highly significant that of the 12,076 claimants who had won by January 17, only 1,150, or 9.5 percent, had a documented borrowing relationship with USDA. It is unknown how many, if any, of the others ever had any contact with the USDA, but they have all been paid $50,000 each.
Of the 1,150 successful claimants who had actually borrowed money from USDA, 131 owed a total of $8.3 million that was forgiven. Most of the rest had defaulted, and the department had already taken losses on the loans. USDA not only did not collect all it was owed, but it also had to pay the borrowers $50,000 because of alleged racial discrimination.
USDA has managed to win some of the cases for which it does not have documentation. A group of some 250 employees have analyzed the claims and succeeded in discrediting some on the basis of false statements submitted by claimants. Some of them were literally photocopies of others, alleging discrimination in the same manner, by the same USDA official in the same county office. When it was shown that the official was not working there at the time, or if there were other obvious contradictions, the claim was denied. There appear to be no plans to prosecute claimants who committed perjury by making false claims.
Track B cases take longer, and so there have been fewer cases decided. As of January 17, only 14 of 198 cases had been disposed of, with seven dismissed outright. Two had been settled, and the arbitrator had issued five rulings, three in favor of the plaintiffs. If the settlements are counted as draws, the government has won nine, lost three, and drawn two. The bigger cases are proving more difficult than the Track A cases for the plaintiffs because they have to produce valid evidence.
Some nonwhite farmers have been quick to take advantage of the current climate created by these suits, threatening credit officers with legal action if they don't get loans. The latest figures show an increase in loans to nonwhites, and a corresponding drop in loans to whites, because the total funds available remain the same. While many employees dislike succumbing to pres-sure, they go along with it. They know USDA won't punish anyone for making bad loans, but it loves to find someone it can punish for racial discrimination. But when a minority fails, the loan officer can be attacked as a racist, because he didn't sup-port the borrower enough to insure his success.
The publicity surrounding the thousands of payouts to black farmers has prompted a flurry of imitators. Not content with $50,000, American Indians have filed a similar suit, demanding a million dollars each. Curiously, Judge Friedman refused a motion that this suit be piggybacked on the Pigford case, claiming there is not enough similarity in the cases. In fact, the Indian case is a virtual carbon copy of the black case. In October, 2000, a group of three Hispanics filed suit on behalf of an alleged 20,000 of their brethren, making identical claims. Later that month, just before the final expiration of the statute-of-limitations waiver, Asian-Americans and women filed similar suits. At this point, virtually every protected group except homosexuals and the handicapped has alleged mistreatment by USDA.
Even more remarkable is yet another lawsuit (Green v. Glickman) filed on May 12, 2000, on behalf of non-African-American farmers (mostly whites). It claims USDA treated them the same way it treated blacks. Congressman Bennie Thompson, D-MS, who is black and an ardent partisan of black causes says he can see little difference in the way black farmers were treated in Pigford and what has happened to the farmers in this suit. He believes it has the potential to be larger than the black farmers suit once word gets out. Congressman Thompson may not understand the significance of what he is saying: If USDA treated all of its borrowers equally (badly), regardless of race, then it didn't discriminate against anyone. If he is right, all the lawsuits are equally fraudulent.
On the other hand, for obvious reasons the Justice Department is very serious about fighting the white claimants. U.S. Magistrate Alfred Nichols has refused to accept amended claims that could add hundreds of additional plaintiffs. The class is now frozen at approximately 100 claimants, and despite Congressman Thomp-son's enthusiasm for it, the case is likely to be dismissed.
The black case, though, is typical of everything that is wrong about discrimination lawsuits. Like most defendants, the department ad-mitted no guilt, but agreed to huge payouts because it is so time-consuming and expensive to fight a discrimination case all the way to a not-guilty verdict. In this case, though, the department also cooperated with the plaintiffs, making it ridiculously easy to take its money, rather than mount the many defenses available to it. The larger effect, of course, is to create and publicize yet another example of systemic racial discrimination. Every black crank and agitator has yet another scalp to nail to the wall, yet more proof that even the United States government is seething with racism.
As in almost all major discrimination cases, the press has report-ed next to nothing about the actual workings of the case or about specific wrongs inflicted on the plaintiffs. It says only that thousands of blacks are finally being compensated for years of discrimination. One reason for the silence is that the case is complicated. But another is that close examination shows that virtually all the discrimination for which blacks are being compensated is based solely on the word of the claimants. USDA put itself in the absurd position of agreeing to give money to thousands of blacks simply because they say they deserve it. This could be a very juicy story for an enterprising reporter, but the media are vastly more interested in trumpeting even dubious claims of discrimination than in showing them to be false even when the falsehoods lead to huge drains on the public purse.
Was there discrimination against black farmers? Perhaps there was. But Track A is hardly a procedure that proves it. Track B, with its more formal rules of evidence, may yet uncover some kind of wrongdoing, but these proceedings are closed to the public and their records are sealed. The public will probably never know the basis for the million-dollar judgments that could ensue.
There is, however, a faint stirring of interest in the case in certain quarters. In December, 2000, the General Accounting Office notified USDA that at the request of Rep. Larry Combest, R-TX, chairman of the House Agriculture Committee, it would be studying the Pigford case, as well as the individual settlements agreed to by the department outside the case. Something it is reportedly keen to understand is why so many of the people who got $50,000 payments under the lawsuit appear to have had no connection with agriculture.
There is another disturbing question about this case. When racist discrimination is discovered the perpetrators usually face quick and severe punishment. There have already been over 12,000 official Track A findings of racial discrim-ination. There must have been a lot of racists in the department pursuing racist policies. Aren't they going to be brought to book? The black claimants and their lawyers keep pushing this, insisting that heads must roll. Secretary Glickman obliged by repeatedly threatening to fire or otherwise discipline the racists, but this was mostly bluff. Any civil service or court action resulting from such a dismissal could very well establish that there had been no discrimination at all. On the other hand, most department employees cannot afford the huge legal fees it would take to clear their names, so the threat of retribution has created an atmosphere of quiet terror in USDA.
The department refuses to say whether or how many USDA employees have been disciplined in connection with Pigford. It will certainly not divulge names, though it might be quite interesting to hear what someone punished in this connection might have to say. So for the time being, a strange and troubling contradiction hangs over this case. The department has compensated over 12,000 black farmers for what must have been entrenched racism, if the claimants charges were true. But the department will not confirm it has fired a single practitioner of racist discrimination.
This report was condensed and reprinted from American Renaissance with permission. USDA employees who prefer not to be identified made an indispensable contribution to it.
DON'T FAIL TO READ "THE $600 MILLION BLACKS ONLY LOTTERY." IT'S AN ASTONISHING story, but true. It was published in the February 2001 issue of American Renaissance, a monthly journal that deals with race-related issues that the establishment media are afraid to touch. We have condensed the original article, updating some of the figures, and are printing it with the permission of the editor.
LET'S CALL IT "PARDONGATE." AFTER HAVING PROVEN HIMSELF TO BE THE TEFLON KID for so many years Bill Clinton finally did something in his last hours in the White House that has produced a scandal that he hasn't been able to bury. The pardon he gave to the fugitive billionaire Marc Rich has been the focus of most of the criticism, and even Clinton's most faithful apologists on Capitol Hill, such as Rep. Barney Frank, haven't tried to defend it. Today's Washington Post carries a front-page story that tells of a phone conversation that Arthur Levitt, the chairman of the Securities and Exchange Commission, had about the pardon with Deputy White House Counsel Bruce Lindsey, Clinton's confidant and close adviser. Lindsey, it said, called Levitt on January 19 to inform him that Clinton was considering pardoning Rich.
LEVITT DISCUSSED THIS WITH HIS STAFF AND CALLED LINDSEY BACK TO TELL HIM THEY strongly opposed granting the pardon. He told the Post that Bruce Lindsey "clearly signaled that he too thought it was a bad idea that would not get off the ground." He quoted Lindsey as saying, "This guy is a fugitive, and it seems this is an inappropriate use of the pardoning authority." The story added that both White House Counsel Beth Nolan and Chief of Staff John Podesta had also expressed reservations about granting Rich a pardon. Bill Clinton was determined to pardon Marc Rich, and he rejected the advice he was getting from his staff.
THAT IS ONE THING THAT REP. BURTON AND RICH'S ATTORNEY, JACK QUINN, AGREED ON. When Quinn appeared before Burton's committee, Burton brought up a phone call to Aspen, Colorado in which Clinton and his counsels at the White House had a discussion about Marc Rich. Rep. Burton said, "(H)e was having a difficult time convincing them that there ought to be a pardon and asked them to pray about it, which is kind of interesting. But the fact of the matter is, the president was engaged and was talking to his counsel, according to this memo and phone call, about the pardon. I think that's very important because we've heard time and again that he was not engaged and didn't have all the facts, but he was very definitely engaged all the way through this thing." And to that, Jack Quinn responded, "I agree with you, Mr. Chairman. That's my impression as well."
THERE IS BUT ONE PLAUSIBLE EXPLANATION FOR THIS. IT IS THE FACT THAT MARC RICH'S ex-wife had given large sums of money to the Democratic National Committee and the Clinton library fund plus expensive personal gifts to Bill and Hillary Clinton. On ABC's World News Tonight, on Feb. 14, Peter Jennings said, "The nation's capital was rife with sound and, to some extent, fury today. A panel of senators grilled some of those involved with President Clinton's decision to pardon fugitive billionaire Marc Rich. What did Justice Department officials know and when did they know it? Some of the senators raised the question: Should Bill Clinton tell his story in person? Some even used the "B" word, as in was there bribery involved?"
CLINTON WAS ILL-SERVED BY HIS FORMER COUNSEL, JACK QUINN, WHO PROVIDED HIM with what on the surface appeared to be a plausible case for Rich's innocence. Quizzed by the Burton committee's counsel, James C. Wilson, Quinn stumbled badly when asked to explain why Rich and his partner, Pincus Green kept a dummy set of books if they were not engaged in illegal activities. Here is the Q & A.
MR. WILSON: Okay. One of the big factual issues... the prosecutors this morning told us about how Mr. Rich set up duplicate bookkeeping. They set up fraudulent books to hide the transactions that were conducted back in the early 1980s. Tell us a little bit about the duplicate book arrangement and how that is okay in your eyes.
MR. QUINN: Well, my understanding of these transactions is that in fact they were structured lawfully and that --
MR. WILSON: No, I wanted to ask about the duplicate books, not the transactions so much but the duplicate books. Have you ever seen the duplicate books?
MR. QUINN: No, sir.
MR. WILSON: Did you ever ask?
MR. QUINN: No, but I -- again, this is an allegation that has been made by the Southern District. I do not think that it undercuts the argument that these transactions were lawfully structured and that, as the tax professors concluded, that there was in fact no further tax due and owing to the United States.
REP. BURTON: They had a duplicate set of books. As I understand it, they had one set of books that was handled in a pretty formal way and then they had a set of handwritten books where they put the money, and it was called "the pot." And the handwritten books were the ones that showed very clearly that they were trying to hide money so they wouldn't have to pay taxes on it. Have you seen — you haven't seen those books?
MR. QUINN: No, sir. But what was going on here was that oil companies like Arco and Rich —
MR. WILSON: If I can interrupt? We don't want a recitation of your theory of the case. I'm just asking you about the dummy books.
MR. QUINN: No, I understand that, and I'm not trying to filibuster by reciting the case.
MR. WILSON: You told us a moment ago there was an allegation about dummy books, but the prosecutors actually have the dummy books. They exist. I'm just asking you for the reason for the dummy books when you have fraudulent transactions set out in meticulous detail, why do you do that? I mean, it's one thing if you say you don't understand the Department of Energy regulations. Your lawyer's got it wrong. The law's bad. You had a bad day. All these things you can say. But when you go through a conspiracy with individuals to set up fraudulent bookkeeping techniques, I'm only asking you why did they set up the dummy books?
MR. QUINN: The bookkeeping they engaged in was, as I understand it, designed to facilitate the effort that they and Arco were engaged in to find ways to sell domestic oil, the price of which was regulated, let's say, down to $10 but that was worth $30 on the world market. And what they were doing was setting up, was linking domestic and foreign transactions through a series of tiered trades, the result of which would be that for, to simplify it, two barrels of oil they'd end up getting a total of $60. So they were trying to find ways around the price control regulations of the Carter years.
MR. WILSON: Well, I appreciate the simplification, but where are the dummy books coming into the story? That's all I'm asking about. I know your story because I've read everything you've written. But I want to know about the dummy books.
MR. QUINN: They well may have had records that kept track of these linked transactions.
MR. WILSON: So you don't even know that they had these records?
MR. QUINN: (pause) The prosecutors alleged that these were designed to facilitate a fraud. As I understand it from them, they were designed to keep track of money that was owed for linking one transaction to another. But let me repeat that even if that's evidence of their doing something in violation of those energy department regulations, it doesn't undermine the tax analysis of the professors.
MR. WILSON: But apparently the tax professors didn't know about that. I mean, we've been through this already. The tax professors did an analysis based on the facts that were provided to them, stated very clearly.
THE NEW YORK TIMES IN REPORTING CLINTON'S DECISION TO RENT OFFICE SPACE IN Harlem, said that he had recalled that when he was a student at Oxford in the 1960's he flew to New York on several occasions, "and every single time I did, I took the public transportation to 125th Street on the West Side — I mean the East Side — and I would walk125th all the way west in Harlem....People would come up to me and ask me what I was doing here, and I said, ‘I don't know.' I just liked it. I felt at home." The Times didn't report that he added, "And it's a lot of what I want to do in my post presidential years — bringing economic opportunity to people in places that don't have it, here at home and around the world, and bringing people of different races and religions together."
THIS IS A LOT LIKE A TALK HE GAVE IN 1997 TO A LARGELY BLACK AUDIENCE IN LITTLE Rock. NewsMax.com found this report in the Arkansas Democrat-Gazette: "I remember when I was at Georgetown, I used to come home for Christmas vacation. I'd take a day off and just drive to the Delta and ride around by myself, drive through the country roads and look at the sharecroppers' shacks they were living in and try to figure out what was still going on, what else we had to do. And I promised myself when I was a young man, if I ever had a chance to do anything about this, to try and make it better, to try to make it work, that I would do anything I could."