Word got around quickly: Those good-old-boys driving the battered truck loaded with burlap bags of good-looking tobacco had an offer that couldn't be refused around the auction warehouses--a chance to make quick, easy money.
With that, the bait was laid for Tobacco Sting, a Department of Agriculture investigation into abuses of the federal tobacco price support and marketing program during the last year in North Carolina and Kentucky.
The net cast out by agents from USDA's Office of Inspector General has resulted in at least 22 indictments. Ten of the indictments, involving several of the country's largest independent tobacco dealers and a former Kentucky assistant agriculture commissioner, were handed up this week.
Tobacco Sting has been aimed at ferreting out farmers and warehousemen who circumvent the complex regulations that prohibit growers from selling more than their allotted amounts of flue-cured and burley tobacco. These unauthorized sales, apparently widespread in the industry, upset the production control system and eventually affect all farmers by forcing reductions in the overall marketing quotas.
Coincidentally, the probe has come at a time when the tobacco support program is under unprecedented attack on Capitol Hill. Critics are trying to change the system of government-granted acreage and poundage allotments, which they say pushes up prices and undercuts U.S. export capabilities.
"The success of the tobacco support program is based on the integrity of the participants," explained Otto Collins, who directed Tobacco Sting from the inspector general's office here. "The program has worked well because the vast majority is honest. But there are some crooks."
In the view of Richard Benton, head of USDA investigations in Raleigh, N.C., the Tobacco Sting "made a marked difference, and people are more reluctant to take the bait. But it hasn't stopped the illegal practices."
"The tobacco program is predicated on the idea that farmers will abide by the rules and regulations and the price of tobacco holds at a high level because this production is controlled," Benton said. "Most farmers abide by the rules, but whenever there is excess tobacco on the market it nibbles away at the system and the secretary of agriculture has to adjust quotas downward."
Benton and Collins decided last year to have agents from the inspector general's office pose as farmers who had not filled their quotas. When the word circulated, other farmers with excess leaf--which could be sold only under penalty--might approach them and offer a deal.
The Ag-men, dressed in jeans and work-shirts, drove around in a battered pickup and, using counterfeit marketing quota cards, sold tobacco that USDA had obtained for them from government-held stocks. Then they let out the word that their bogus quotas had not been filled, meaning that if they had more tobacco, it could be marketed legally.
Collins and Benton said that a common circumvention of the marketing regulations occurs in this situation. A farmer who is under quota will "loan" his unfilled remainder to a farmer who has excess tobacco. Marketing rules are easily skirted and the two farmers split the profit.
"Our agents let it be known that they had not filled their quotas, and sure enough, after word got around, some people with excess tobacco went to them with offers. We didn't entrap--they came to us after we put out the word," Collins said. "They then sold the tobacco illegally, using our marketing cards."
The sting lost some of its bite when North Carolina papers got wind of the undercover investigation this year, but the probe continues. "This year when we approached some people they referred to the indictments and they'd say, 'Hell, don't you read the papers?'," Benton said. "But there's still a substantial amount of this going on and it will go on as long as there's a tobacco market."