Storm clouds roil in this time-lapse video taken over Baca County in southeastern Colorado, where rain is scarce and where for years a criminal enterprise damaged rain gauges to fool the federal government into thinking drought was even worse than it was. (Mike Sweeney, Special to The Colorado Sun)
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Over the winter of 2016 into the spring of 2017, U.S. weather experts watching southeastern Colorado noticed something they’d never seen before.
Storm clouds would gather over the thirsty sagebrush ranges surrounding tiny Colorado and Kansas towns like Springfield and Coolidge.
On a normal day, the promising storms produced snow or rain that would fall onto a system of official weather stations at airstrips or town halls, into heated “tipping buckets.” When the teeter-totter buckets filled with a thimbleful of water, the seesaw tilted, dropping one miniature metal bucket downward to close an electrical circuit.
One “tick” of the bucket, and a signal went out to National Weather Service sensors around the world that the parched High Plains had recorded one hundredth of an inch of welcome water.
What bewildered the trackers is that on many of these stormy days, those buckets were not tipping. No tipping buckets pointed toward a severe spring drought. All cumulus, no accumulation.
That same winter and spring, weather agency field technicians started phoning in a series of repairs to Colorado and Kansas rain gauges, also unlike anything their Pueblo bosses had ever seen.
On New Year’s Day 2017, United States Geological Service crews charged with maintaining field weather stations made a routine check at Syracuse, Kansas, pop. 1,761, and found signaling wires from the rain gauge had been cut.
In February, 15 miles to the west, in Coolidge, more wires were cut.
In March, in La Junta, a National Weather Service employee found a gauge with a hole punched in the brass rain collector.
Later in March, back in Syracuse, a funnel directing rainwater for measurement had been filled with silicone.
The next day, in Springfield, the NWS rain gauge had been covered by a cake pan.
Through April, from Elkhart, Kansas, to Ordway, Colorado, more than a dozen repair tickets appeared reporting silicone plugs, baking pans and metal plates acting as umbrellas obstructing precipitation readings. One gauge had all its bolts loosened so that the rain bucket would tip over without being recorded.
When the Pueblo weather office finally got a phone call from crop insurance fraud investigators at the U.S. Department of Agriculture, local director Jennifer Stark felt her bewilderment give way to a gutted sense of betrayal.
Local farmers, authorities came to believe, were systematically destroying vital weather data in order to falsely claim millions of dollars in taxpayer-funded crop insurance, for a drought they made up.
The precipitation gauge at the U.S. Dept. of Agriculture’s Little Washington weather station near Springfield is shown in this Aug. 29 photo. In 2017, ranchers conspired to tamper with the gauge, along with a number of others in Colorado and Kansas, resulting in false insurance claims totaling over $3 million. (Mike Sweeney, Special to The Colorado Sun)
“It was shocking to me,” said Stark, meteorologist in charge of the National Weather Service Boulder office, who in 2016 oversaw the service’s Pueblo regional office for southern Colorado. “We take great pride in delivering objective, quality-controlled precipitation data to the public, to researchers, to climatologists. Personally, I just never thought that individuals would seek to damage that record, or the quality of that record. It’s kind of fundamental to the core of the National Weather Service that we deliver high quality data.”
Investigators found good cause to elevate the bureaucratic review into a high stakes criminal probe.
“There’s a program that the federal government has set up to benefit taxpayers. And when someone in the government got evidence that taxpayers were defrauding that program, it’s important for several reasons,” said assistant U.S. Attorney Matt Kirsch, in the Denver district office. “No. 1, it’s wrong. And in a just society, we want to hold people accountable when they break the rules. And we want people to see that there are consequences to breaking the rules.”
The Denver U.S. Attorney’s Office did not have a file drawer full of crop fraud cases to draw on. But when the Agriculture Department asked them to join the case, they dug in.
By the time they were done, two longtime farmers in southern Colorado were under investigation for tampering with federal installations and defrauding the government. Investigators settled criminal and civil cases against the farmers for $6.6 million in bogus insurance payouts. A disgruntled farmhand tasked with tampering with some of the rain gauges sent his girlfriend to demand tens of thousands in hush money from the farmers. Then, facing jail for other crimes, the farmhand turned whistleblower, telling the government the tampering went back 10 years and he wanted a piece of any fraud settlement. The Sun pieced together the long story of the fraud and its aftermath from court filings, interviews with attorneys and weather officials, and watchdog accounts of profligate crop subsidy programs. Attorneys for the farmers said their clients didn’t want to talk about the case.
The former farmhand escaped from Otero County Jail, and the farmers asked for federal protection in case he tried to harm their families. A weeks-long FBI manhunt ended with the escapee’s partially mummified body found in an abandoned farmhouse near Rocky Ford in August 2023.
The farmers from Springfield spent the first part of 2024 in federal prison.
Temptations from government payments
Modern agriculture in America can look like a gambling career with a gardening hobby.
The price of a farm commodity, whether beef on the hoof or corn by the bushel, may have little to do with whether a given farmer makes enough revenue to keep going. The most reliable farm income often comes from not growing things, or subsidies for growing things that other people are already growing too much of: government insurance against bad weather, price floors for surplus commodities, payments to leave land fallow, cash for not using water.
Adding direct crop payments of $15 billion in 2022 to the $19 billion in subsidized crop insurance premiums creates well over $30 billion a year in taxpayer-funded farming subsidies each year, according to reviews by Environmental Working Group, which tracks crop programs.
Raising cattle or wheat south of the Arkansas River without irrigation takes a lot of hope and a lot of paperwork.
Patrick Esch, 73, and Ed Dean Jagers, 62, raised cattle and grew animal fodder on ranches near each other around Springfield, in Baca County on the border with Kansas. Dryland ranching and farming — without extra irrigation from Colorado’s overdrawn rivers and aquifers — is a marginal proposition. Baca County gets 16 to 17 inches of rain and snow a year to grow alfalfa or forage grasses. At lower altitude on the eastern edge of Kansas, at a town like Olathe, farmers get 40 inches of natural rain.
U.S. crop insurance programs are a key backstop. In 2022, the federal government paid back private insurers for more than $19 billion in crop-related claims nationwide.
One insurance program of choice for grass growers on marginal soil is the Pasture, Rangeland and Forage product. Where other forms of crop insurance pay out for multiple hazards, from hail to drought to tornadoes, the pasture forage policy is based solely on measured precipitation in a given growing season.
Farm payouts based purely on a rainfall index quickly became one of the most popular subsidy programs across the U.S. when they were rolled out in 2007, said Nathan DeLay, assistant professor of livestock economics at Colorado State University. Land enrolled in the rain insurance grew from 98 million acres in 2018 to 291 million acres last year, DeLay said.
“It can be a difference-maker in those really dry years, to get you through,” he said.
The far corners of Colorado and Kansas are divided by government weather observers into 17-mile-by-17-mile grids. Each of those grids has at least four reliable weather stations monitored by the government. A farmer works with an authorized local insurance agent to shape a policy: The farmer picks two important months out of the season for the given crop as their benchmark. April and May, for example, for hay.
Average annual rainfall in that grid is a matter of national record. The farmer picks his or her breaking point: If precipitation in the coming season, for example, falls at 80% or less of the longtime annual average, the crop insurance pays off. The judgment is not based on whether the grass grows; if rainfall misses the mark, the farmer gets paid, even if the grass actually grew tolerably well.
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(In other crop payouts, the farmer must prove their yield in a given season is far short of their historic production, or that they fetched a ruinously low price because of national surpluses.)
The premium for such a rainfall protection policy might be about $200 for each $2,000 of potential payout. The grower must pay only about half that premium, with the U.S. government picking up the other half.
The premiums are not due until the end of the season, a big concession to farmers: If the policy pays off, they can pay the premium from the payout. If more than enough rain has fallen, and the policy does not trigger, they’ve raised fat cattle or a decent crop for the price of only a small risk fee.
Cheating can further boost the payoff.
If the farmer gets enough rain to grow a good crop, at the same time the government was convinced little rain fell at all and insurance should pay out, that’s like getting paid overtime.
But that would involve changing the results at weather stations spread out over thousands of square miles in Colorado and Kansas. And it would mean no field staff had discovered the damage until cumulative readings from tampered gauges fell well below seasonal averages.
Silicon plugs, cake pans and punch holes
The weather service field staff who began discovering the gauge-gaming recorded an increasingly bizarre series of tamperings. Besides the silicon gel blocking the tops of rain funnels, and the cut wires to electronic recording relays, and the tipped buckets, they found loose harrowing discs placed awkwardly like shields over gauge tops. At one measuring station, the rain thieves had used a hammer and punch to poke holes in a catchment vessel.
Waste and mistakes have been inherent in crop subsidy programs, to the tune of hundreds of millions of dollars a year. Outright fraud is much more rare, and the U.S. Department of Agriculture’s Risk Management Agency, which oversees crop insurance of all kinds, says it has worked diligently to eliminate fraud in recent years.
In a recent report, the risk agency said a statistical sample of more than 2 million total crop policies estimated “overpayments” of $289 million, or 2.45% of $19.3 billion in payouts in 2022. For 2022, “no fraud related errors were disclosed during the improper payment review process,” said Risk Management Agency spokesperson Amy Robertson, in an email response.
Colorado’s weather service managers didn’t know what to make of the gauge vandalism even when it became clear that it was human tampering across southwestern Kansas and southeastern Colorado, not just a series of accidents. But agents in the inspector general’s office of the USDA had also seen red flags on the insurance side and reached out to the weather service in early 2017.
“We actually had somebody from the USDA crop insurance program come visit us in the office, and we had a pretty thorough discussion about what we were seeing and what they were seeing,” Stark said.
Stark, who in 31 years of working for the weather service has never seen another case of gauge tampering, had to take a leap of understanding.
“Maybe it was something with the tipping bucket rain gauge, you know, just not doing what it needed to do,” Stark said. “It really did not occur to me or any of our staff to think that humans were doing this.”
The USDA called in the Justice Department, and that’s when Denver District U.S. attorneys got involved. FBI agents and the U.S. attorneys could access the crop insurance policies written in the area in 2016 and 2017.
They also could use public records of bitter legal disputes between government agencies and local farmers that played out in courts over more than 20 years. The Esch family in the 1980s and ‘90s had signed up for conservation reserve payments to take 12,000 acres out of production, get a USDA loan for a farmhouse and receive subsidies for growing specific crops. The agreements totaled in the millions of dollars.
But the government eventually withheld payout on one subsidy, saying the Esch arrangements had more partners than USDA allowed. A cascading series of withholdings, settlements and liens was interrupted by a bankruptcy filing by one of the Esch partnerships.
Finally, in 2006, a decade before the alleged tampering conspiracy peaked, the Esch family filed a federal claim for about $6 million in subsidies allegedly withheld unlawfully by the government. On Feb. 1, 2007, a federal judge dismissed the claim, ruling that all the relevant facts had already been decided in earlier cases and appeals.
Zeroing in on the conspirators
More than 10 years later, looking through histories of subsidy payments in Baca County in the weather tampering investigation, federal agents had to be careful to not draw in innocent growers. Someone with an insurance policy in the same tampered grids might have unknowingly benefited from payouts from the faked drought.
The crop insurance fraud had paid off quickly. After spending February through April of 2017 fanning out to attack the weather gauges, by the end of June the conspirators had collected insurance payouts of about $3 million because they had placed their bets on the precipitation totals for the spring months.
The conspirators spent years knowing someone might be on to them. Jagers’ son, Ed “Trey” Jagers III, was the one who placed a cake pan over the Springfield rain gauge in March 2017. He came back after the storm to retrieve it, but it was gone, and he later told investigators he “presumed his tampering had been noticed.”
Suspects interviewed about the tampering were apparently talking about each other to investigators. Trey Jagers, was first arrested in 2022, and reached a plea agreement that year, long before his father and Esch.
Trey Jagers had first been approached in April 2021 by FBI agents and inspectors from the Department of Commerce. He agreed to wear a wire and gather information by talking to a co-conspirator the agents hadn’t heard about yet. But Trey Jagers pointed out the listening device when he met with the other suspect, and obstructed the government’s case, his plea agreement says.
Esch was the one using a flat harrowing disc to cover up the rain gauges he agreed to handle, but he also used the silicon gel and cut wires, the plea agreements say. Jagers used the agricultural discs at a Lamar gauge, according to the co-defendants’ plea agreements. One of the unindicted co-conspirators, who apparently was also talking to investigators, used a pie plate.
Farmhand Mark Fox, who worked for Esch, was initially another unnamed co-conspirator. He was sent out to cover his own sector of gauges just before rainstorms, and was involved in detailed conversations with Esch and Jagers about how the insurance fraud worked.
As investigators dug in, they realized how badly the erratic Fox had been trying to burn Esch.
It really did not occur to me or any of our staff to think that humans were doing this.
— Jennifer Stark, U.S. Department of Agriculture’s local director Pueblo
Fox worked for Esch from 2016 to 2017. Sometime in 2016, Esch told investigators, Fox stole one of the farm’s four wheel ATVs. When Esch confronted him, Fox warned if Esch turned him into authorities he would blow the whole crop insurance and tampering scheme.
Fox eventually told investigators he had hooks into Esch because of his deep knowledge of the fraud. “When he was first told about the tampering of the rain gauges by Esch, this tampering was presented as something that had been ongoing for quite a while,” U.S. attorneys wrote in a court filing.
In frequent conversations with Esch, Jager and another unindicted co-conspirator at various farm and ranch locations, Fox said he learned the fraud schemes had been going on at least since 2010, and continued after he left the farmhand job in 2017. At one point, Fox claimed, Esch told him the fraud dated back to when Esch was first buying the Baca County land in 2001.
In January 2019, long after leaving the farm job, Fox was in county jail on unrelated offenses. His state records include domestic violence charges, protection orders, driving while suspended and other offenses. He sent his girlfriend to Esch demanding the farmer post a $3,000 bond to bail him out, or Fox would uncover the crop fraud. Esch then wrote up affidavits for them to sign, in which they denied Esch conspired to tamper with gauges and that if they were ever heard saying so, it would be “lies and false and should not be believed.”
By May 2019, Fox was in jail again. He demanded Esch pay a $10,000 bond to bail him out this time. A day after posting bail with Esch’s money, Fox upped his request: Now he wanted $21 million to keep quiet. Esch said he didn’t have it.
Jail letters from Fox arrived again in August and September 2020. This time he needed $46,000 for bail, and threatened to reveal Jagers’ part in the conspiracy, too, if it wasn’t paid. Fox sent a girlfriend — a different girlfriend, “GIRLFRIEND 2” in the plea agreement — to meet Esch at a truck stop in Lamar. Esch again wrote up affidavits for the extorters to sign, and bonded Fox out the first week of October.
Fox’s letters from jail extorting Esch at first said Fox would be willing to lie and pin the whole scheme on Jagers if Esch would put up bail money. “Also, your phone and truck are HOT. I can fix this Boss, Believe in me. . . Come get me Boss.”
Fox’s extortion wasn’t just during jail time. He would periodically demand cash for silence, and Esch frequently paid it: $8,000 in cash handed to Fox and GIRLFRIEND 2 at a Lamar truck stop. Then $4,000 to GIRLFRIEND 2 at a Las Animas gas station, followed by $3,000 at a Springfield truck stop. Esch once tucked $3,000 inside Fox’s pickup while it was parked in Ordway.
Fox had another threat to dangle: Somehow he’d learned about the federal False Claims Act, where whistleblowers can win part of the government’s recovery take if they help investigators prove fraud involving taxpayer money. He told Esch he would become a whistleblower unless the payments continued.
Then he told on everybody anyway.
In another letter from jail in 2021, Fox wrote Esch that he’d teamed up with “the feds” on a whistleblower suit, “you probably already know.” Still he offered to turn against Jagers only, if Esch would again provide bail. “They are from what I gathered going back to all your claims, from 2001 . . . they’ll be taking conspiracy approach. Carries 10-life sentence (sic). Don’t ignore this!”
Whistle blown, suspects flown
The government had filed its qui tam case — suing on behalf of another — in December 2020, with Fox as the “relator” or official whistleblower.
The facts of the scheme seemed clear. The details in Fox’s whistleblower filing match up with everything Esch and Jagers pleaded guilty to in their parallel criminal cases. The government pursued suspicions of crop fraud in the years before and after 2016 and 2017, for which they could get information directly from employee Fox, but bumped up against statutes of limitations, assistant U.S. Attorney Kirsch said.
In building charges against Esch and Jagers, though, Fox looked less and less like a responsible watchdog for taxpayers and more and more like a key part of the criminal conspiracy.
Winding their way through the investigation and legal scheduling barriers thrown up by COVID’s arrival in spring 2020, federal agents piled up what they needed for both civil cases and criminal charges against the two farmers. Esch and Jagers were formally indicted in May 2023, and were talking with investigators about a plea in the criminal case and a dollar amount for settling the civil suit. Jagers’ son, Trey, was also charged.
Somewhere along the way, Fox again refused to stick to the plan. He found himself in jail again for unrelated charges in the summer of 2023, after the farmers had already been arraigned.
Hardworking farmers and ranchers depend on USDA crop insurance programs, and we will not allow these programs to be abused.
— Cole Finegan, U.S. Attorney
Fox, 46 at the time, and three other inmates were being held in a part of the Bent County jail that had previously been a kitchen. They broke through the sheetrock ceiling, crawled above an adjoining bathroom, and escaped through the bathroom’s roof, on July 23, 2023.
Esch and Jagers told authorities they feared for their families with Fox on the loose. Their status as charged suspects in pretrial supervision meant they weren’t allowed any firearms or other weapons to protect themselves.
Taking the potential threat seriously, the U.S. Marshals Service in Colorado led a manhunt that included the FBI and the Bent County Sheriff’s Office. Two of the four escapees were caught on July 25, and a third was found dead that day in Pueblo from a possible drug overdose, according to KOAA News5.
Fox’s body was found Aug. 12 in an empty farmhouse, when the owner returned to retrieve some belongings, about 5 miles south of Rocky Ford in Otero County. The Otero County coroner said Fox’s body had apparently been there for some time and had deteriorated, making toxicology or specific conclusions impossible. There were no wounds or broken bones on the partially mummified body, Coroner Bob Fowler said.
A reckoning, and a settlement
Talks with investigators and lawyers for Esch and Jagers continued. They eventually agreed to pay $3.5 million to settle civil allegations of making false claims to receive money from government programs. They also pleaded guilty in their criminal cases, agreeing to a combined $3.1 million in restitution. Total tab for the two: $6.6 million.
Denver’s U.S. Attorneys said they did not try to dive deep into the motives or recent troubles of Esch or Jager. Once it became clear they were negotiating settlements and plea agreements, they did not need to develop a storyline that would have made the facts easier to explain to a trial jury, the attorneys said.
On Jan. 16 of this year, Esch was ordered to report to the Federal Correctional Institution Englewood’s prison camp and served two months.
Jagers served six months, starting at the federal prison camp in Florence in late January and finishing his sentence at a halfway house in June. His son, Trey Jagers, was sentenced in March, after all his cooperating information had been used, to three years of probation and $11,000 in restitution.
Because the whistleblower case was successful, and despite the criminal indictment of Fox that was dismissed after his death, Fox’s estate received $500,000 of the federal settlement, the U.S. Attorney’s Office said.
“Hardworking farmers and ranchers depend on USDA crop insurance programs, and we will not allow these programs to be abused,” said U.S. Attorney Cole Finegan said in February, when the settlements were announced. “This case also shows the full measure of justice that can be achieved when our office uses both civil and criminal tools to protect vital government programs.”
Agriculture agents work “steadfastly to uphold the integrity of federal programs, and we’ll relentlessly investigate those who defraud the American taxpayers and the federal government,” said Special Agent-in-Charge Shawn Dionida with the U.S. Department of Agriculture Office of Inspector General.
Changing the weather still a rare fraud
Government programs offering the chance at millions of dollars in payouts have always been the target of persistent — and creative — fraud.
More common prosecutions for crop subsidy fraud involve falsely inflating historic production to make current production look worse. Or hiding the fruits of one season’s success in order to trigger insurance for low production.
Robert Stokes, a North Carolina insurance agency owner, was sentenced to 30 years in prison and $16.6 million in restitution in 2011, for allegedly masterminding a conspiracy of local tobacco farmers. The farmers bought crop insurance policies, then hid the tobacco they actually produced. They’d get paid for selling the hidden tobacco to off-the-books brokers, then get paid again by the government for claiming a failed crop.
In another North Carolina case prosecuted by U.S. Attorneys, a husband and wife raising tomatoes were sentenced along with associates for a conspiracy that took in $9 million between 1997 and 2001. The conspirators, including a local insurance agent, drew up false histories of past tomato production before buying potentially lucrative indemnities. They then staged a hail storm at the farm, throwing buckets of ice cubes into fields, beating down the tomato plants, and taking pictures of the faked aftermath.
But the southeastern Colorado rain gauge massacre remains an outlier even in the rich history of defrauding taxpayers.
“It’s good that these things are rare,” said DeLay, the CSU ag economist. “But when they happen, it’s just bad for everybody. It’s a really important part of the Farm Bill, and Congress is now almost a year overdue on a new Farm Bill. It doesn’t help with confidence in the program.
Stark’s National Weather Service colleagues regularly head out to fix frayed wires or cracked weather station equipment, but they haven’t lately found silicon gel plugs. Or carefully placed pie tins.
It’s impractical to build fortresses around the hundreds of Western U.S. weather gauges scattered from mountain to prairie. Some are safely inside airport boundaries, others are tended by amateur volunteers on private property.
Still, Stark said, weather watchers for a time considered making a concession to human nature and adding some protection to remote stations, such as those standing alone in the vast Comanche National Grassland.
“We were talking about building a fence around the Springfield site.”