A federal jury in Richland has found a Kennewick insurance agent and four Mid-Columbia potato growers and processors innocent of defrauding the federal government over potato insurance.
They were accused of conspiring to collect more than $9.6 million in insurance payments and charged in U.S. District Court with overvaluing crops on insurance forms.
After a trial that started April 15, the jurors reached their verdict Wednesday on one count and deadlocked on three others: one count of conspiracy and two more counts of false applications to overvalue crops for insurance purposes.
Six other charges of false application, one charge of mail fraud and one charge of making false statements were dismissed by U.S. District Court Judge Ed Shea during the trial.
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Those originally charged were: potato growers or processors Lynn J. Olsen II, Blake T. Bennett and Jeffrey J. Gordon, all of Pasco; and Mark G. Peterson of Richland; and insurance agent Fred F. Ackerman.
The indictment also named companies that the farmers and processors either owned or had ties to: Olsen Ag, Tri-Cities Produce and Poco.
On Wednesday, the jurors found Olsen, Peterson, Bennett, Tri-Cities Produce and Ackerman innocent of one count of false application to willfully overvalue crops for insurance purposes in January 2002. They began deliberating Friday.
Shea said in court after speaking to the jury that two of the 12 jurors could not agree with the majority on throwing out the remaining three counts. And one of those jurors could not reach agreement with the majority on only one of the remaining counts.
The U.S. Attorney's Office will have two weeks to decide whether to retry the defendants. Joseph Harrington, first assistant U.S. attorney in Spokane, said since it is an ongoing case, the office could not discuss Wednesday's verdict.
One of the defense attorneys, Rick Smith, said after the verdict that it was disappointing all the charges were not thrown out after the jury came so close. He said it was a complicated case because each defendant's situation was different.
In 2003-06, civil arbitration and litigation about similar issues were decided in the defendants' favor, he said.
"We have tremendous respect for the effort and attentiveness of the jury in an exceptionally long trial," said Irwin Schwartz, another defense attorney. "They exemplify the reason why we have jury trials in the United States."
The farmers were accused of overvaluing their expected potato crop revenue each year knowing that they would get a much lower price for the crop under their contracts. They also were accused of falsely claiming the potatoes had suffered heat damage, so they didn't meet the requirements of the contracts.
Court documents say this created the appearance of large losses to the farmers, and allowed them to apply to receive insurance indemnity payments since they were forced to sell at bargain-basement prices, documents said.
The defense argued that in most years in the past three decades, fresh potato growers in the region broke even or lost money on their crops and that farmers need to protect themselves against bad market years.