10/02/12 — Broker pleads to insurance scheme

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Broker pleads to insurance scheme

By From staff reports
Published in News on October 2, 2012 1:46 PM

A Seven Springs man is facing up to five years in prison and a $250,000 fine after his guilty plea on charges of conspiring to make false statements, to make material false statements and to commit mail and wire fraud.

Tobacco broker John H. Raiford, 67, entered his plea Monday in U.S. District Court in Raleigh.

He is scheduled for sentencing during the Jan. 1 term of court in Raleigh.

According to court records, Raiford, along with others, owned and operated Southern Leaf Trade, LLC. In business since 2005, the company bought and sold tobacco.

From 2005 to 2009, Raiford conspired with others to profit through the filing of false and fictitious insurance claims, the sale of "hidden" tobacco, and hiding the criminal proceeds through the use of check-cashing facilities.

The scheme consisted of a co-conspirator farmer who would take out federal crop insurance policies. The farmer would file false crop insurance claims, hiding some or all of his tobacco production by selling it in nominee names or for cash to a co-conspiring tobacco broker.

Raiford assisted co-conspirators in arranging the resale of the tobacco to Universal Leaf North America and obtained payments in nominee names.

Raiford would then give the checks in those names to another co-conspirator who made arrangements with a convenience store owner to cash the checks without properly verifying the identity of the payee.

The co-conspirator would take the cash back to Raiford, who would pay the co-conspirator between $1,500 and $2,000 for each set of checks cashed.

Raiford would then arrange for tobacco to be hauled from Wilson to Mullins, S.C., to be sold, and for the check from the sale of the tobacco to be transported back to Raiford.

The farmer profited because payment was received twice for each pound of tobacco.

Other co-conspirators profited through this double-sale scheme through the original insurance commission, collecting a share of the hidden tobacco's second sale, or from profit margins derived from subsequent sales to larger tobacco companies.