USDA vs. Darwin Rice: Strange Case Becomes Even Stranger

10 — The Milkweed February 2009
by Pete Hardin

Loan No. Amount Delinquent Date of Loan Amount of Loan
04 $41,091.79 04/04/1994 $44,000.00
05 $238,036.28 10/23/2000 $200,000.00
95 $513,709.90 12/1/2008 $510,980.00
97 $339.49 07/07/2005 $300.00
98 $594.10 07/07/2005 $525.00
99 $850.32 06/16/2005 $750.00

This table details the loan amounts in arrears that USDA’s Farm Services Agency wants collect from Darwin Rice, according to a January 13, 2009 dunning letter. USDA is demanding payment in full, with interest, on all loans, by March 13, 2009.
How can USDA force a farmer to pay off a loan that he never applied for and never saw the money from?

Background: In our November 2008 issue, The Milkweed detailed the long-running battle by Iowa grain and livestock farmer Darwin Rice to stave off foreclosure of his 120-acre farm and home properties. Rice was convicted for crimes relating to a loan he obtained from USDA’s Farm Services Agency back in 2000. Darwin alleges a wide variety of misdeeds by USDA’s farm loan personnel. See article, “Vindictive Prosecution? Feds Hound Darwin Rice, Iowa Farmer.” Please review that article on this publication’s Web site: http://www.themilkweed.com/ Darwin%20Rice%20Nov%2008.pdf

The epic battle featuring the United States of America vs. Darwin G. Rice has taken some unfathomable turns in the past couple months. Why do unknown USDA personnel continue hounding this (now former) Iowa farmer and his lovely wife, Diane?
On December 4, 2008, the Greene County (Iowa) Sheriff sold three real estate parcels owned by Darwin and Diane Rice at auction. Those parcels consisted of a pair of 40 acres of farmland and a 40-acre patch that included the Rice’s home and farm buildings.
The bidding was strange. Commerce Bank
submitted the first bid – $327,502.13. And then USDA’s Farm Services Agency entered a competing bid of $510,980. USDA’s bid totaled $183,000 more than the only other bid. At that point, bidding ceased and Uncle Sam was the proud new owner of 120 acres of some of Iowa’s finest black soil – where the Rices had made their living since Darwin came out of the Army and started farming in 1971.
Two days later, according to the property records of the Greene County Assessor’s Page, title to the two parcels was transferred to Uncle Sam’s USDA Farm Services Agency. Done deal? No!
12/1/08: Secret $513,000 USDA loan to Rices
Imagine the shock for Darwin and Diane, in mid-January 2008, when they opened a letter dated January 13, 2009 from USDA’s FSA Financial Serv-ices Center in St. Louis, Missouri … and learned that on December 1, 2008, USDA had granted a loan of $513,980 to Darwin G. Rice! Darwin had never applied for, signed papers agreeing to, or even known anything about any such half-million-plus dollar loan from FSA. Given the fact that Darwin’s
farm properties and home would be on the Sheriff’s auction block in just three days, the notion that FSA would approve a half million dollar loan to Darwin G. Rice is absolutely preposterous!
That January 13, 2009 letter was actually a dunning notice, informing Darwin that this “secret” loan dated December 1, 2008 was due in full by March 13, 2009, with interest and penalties!
Ironically, that FSA loan for $513,980 was dated December 1 – three days before the Rice’s farm and home were lost at the sheriff’s sale – the EXACT amount that FSA bid at that same sheriff’s sale to acquire those properties on December 4! This curious situation got stranger! Four additional loans assigned to Darwin G. Rice were also listed as delinquencies and due for full payment on March 13, 2009:
* A delinquency totaling $41,091.79 from a loan dated April 4, 1994. (This one is disputed:
Rice’s original copy of the loan is unsigned and dated April 5, 1994.)
* A delinquency totaling $238,036.28 from a loan dated October 23, 2000. (That was the loan for which Darwin was convicted and his farm seized. How can FSA claim this amount is still due, when the farm properties’ titles were transferred to USDA???)
* A delinquency totaling $339.49 from a loan dated July 7, 2005.
* A delinquency totaling $594.10 from a loan dated July 7, 2005.
* A delinquency totaling $850.12 from a loan dated June 16, 2005.
Except for the $41,091.79 matter and $238,036 loan from October 23, 2000, Darwin Rice has no familiarity with any other loans that the FSA warn-ing letter claimed were delinquent and due for com-plete pay-out by March 13, 2009!
Certainly, FSA could not have issued Darwin loan totaling $510,980 on December 1, 2008 – three days before Rice’s properties were sold at the court-house by the county sheriff! Repeat: Darwin never applied for any such loan. Darwin never signed any such loan papers. And Darwin is completely puzzled as to how he’s supposed to pay off all those loans by mid-March 2009. Uncle Sam has already stolen most of his financial assets … and the government, in separate legal actions, is now trying to seize everything down the Rices’ boxes of cereal and their toilet plunger.
How can Uncle Sam collect on a loan for over half a million dollars that the person never applied for nor ever saw a penny of receipts? In Darwin’s case, the likelihood of “identity theft” is virtually impossible. That’s because two words light up warning buzzers at USDA’s FSA: Darwin Rice.
Seized properties’ revert to Rices!
FSA’s notice of all those delinquencies sends the Rice family back to square one. They next learned of another shocker in mid-January: title to the 40-acre property that included the house and barns that was purchased by USDA/FSA at the sheriff’s sale on December 4, 2008, had been transferred back to Darwin and Diane Rice!
WHY, Darwin and Diane wondered, would USDA go to the lengths to bid $183,000 more than the competing bidder at the auction, and then, one month later, revert title for the home and 40 acres back to the Rices? Admittedly, Uncle Sam has been giving away a lot of financial assets lately … but Darwin never imagined he’d be a beneficiary, after the shafting he’s been given by the federal government for nearly the past decade.
The Rices are completely stumped by these recent events.
What about IRS “gift tax” implications?
Lord have mercy! FSA’s reassigning titles for seized properties to Darwin and Diane may be a trap, designed to sic another federal agency – the Internal Revenue Service – on the Rices. (IRS’ reputation as a nasty federal agency is nothing compared to what USDA has put the Rices through.)
Here’s the potential trap: If those seized properties were “gifted,” or transacted at “below market value” by Uncle Sam back to Darwin and Diane Rice at the beginning of 2009, then are the Rices going to get into hot water with the Internal Revenue Service if the IRS considers deeding the farm prop-erties back to the Rices a “gift.” Egad, the tax bite on a gift worth more than $700,000 (market value according to Greene County tax records) would wipe out Darwin and Diane Rice … as if their favorite “Uncle” hadn’t already frisked them clean. The $513,709.90 “delinquency” listed by FSA on Darwin Rice’s January 13, 2009 dunning notice was for the farm that was sold off by the county sheriff on December 4, 2008. How many times does FDA want Darwin to pay for this farm???
Did USDA employees commit criminal fraud?
Somebody at USDA’s Farm Services Agency has committed multiple, criminal frauds against Dar-win and Diane Rice in recent months … without any mention to what all Rices have suffered through prior to December 1, 2008:
* Filing loans that were never requested or signed for by the recipients is financial fraud!
Where’d the money go??? What FSA personnel approved the loans? Who forged Darwin Rice’s signature to the loan papers???
* Transferring government assets (the Rices’ home and adjoining 40 acres) back to the folks from whom they were seized … without payment … would seem to be an illegal conversion of federal assets. But of course, with the U.S. Treasury Department throwing out hundreds of billions of dollars to banks and other institutions, what’s it matter if Dar-win
Rice of Jefferson, Iowa gets his farm back from Uncle Sam’s clutches in the most mystifying of circumstances? (Psst … nobody tell the IRS, or else the Rices could get in more trouble!)
Stay tuned! Uncle Sam has not heard the last from these folks … and their friends.