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What every farmer should know about FSA




This document is in regard to the actions taken by Farmers Home
Administration (FmHA), [(now known as Farm Service Agency (FSA)], 
against Edward and Sandra Bennett.

http://www.fix.net/~ebennett/

When we first began doing business with FmHA "the Lender of Last
Resort" we were like a lot of other farm families who needed
funds and wanted to better their farm operation.  Since
commercial banks were not willing to take a chance on what they
perceived as a "risky" operation, we qualified under the lending
guidelines of FmHA, and they were willing to finance our
operation.  We knew nothing about the inner workings of FmHA, but
as time passed we found it almost a necessity to learn as much as
we could about an organization that held our future in its hands.
When the problems started we knew it was mandatory to learn as
much as possible, the rules and laws which govern their
operation.

We entered into a contract with the United States Government, the
Department of Agriculture (USDA) and Farmers Home Administration
(FmHA).  FmHA was to administer that contract.  Under the law our
rights concerning this contract must be preserved by the
Administrator and again, the rights and interests of the
government must also be preserved by that same Administrator. 
Unfortunately for us, serious problems developed during the
Administration of our contract.

In February 1986, FmHA sent us a Notice of Intent to take Adverse
action, a preforeclosure notice, with the approval and under the
direction of George Dones and Maureen Reilly, loan officer and
county supervisor, respectively and of D. Zerger the State
Director of Farm Operations.  Their actions were known to them,
at the time, to be illegal and a violation of the United States
Code, the CFR and of the USDA regulations.  Using the weight of
the federal government, they fully knew their demands would be
met especially when combined with the threat of foreclosure.
Initially, when we received this notice we called to question
this action.  Upon questioning their action they referred us to
the back of the 19-24-25 preforeclosure notice, which they sent
to us, which gave us options.  The only option that seemed to
suit us was the option of rescheduling.  We were not aware at
this time that our loan account which had been rescheduled in
1985 indicated that we were not delinquent.  Even though we
specifically requested information regarding our "supposed"
delinquency, the truth concerning our status was withheld from
us.  Our telephone conversations with George Dones, our loan
officer, by law, are required to be logged in on a written
running record which becomes part of our case files.  Our
telephone conversation with Mr. Dones questioning the sending of
the preforeclosure notice is one of the many documents missing
from our files.

Up to this point one would ask, if we were not delinquent and not
in need of a rescheduling and three officers of FmHA knew this,
and our loan officer was being questioned as to the validity of
the preforeclosure notice, why was this notice sent to us, and
why were we led to believe that our recent 1985 rescheduling had
no bearing on our status; and that our only hope would be to
check a box on the illegal preforeclosure form requesting a
Hearing, which would also be illegal.  Why did our questions go
unanswered?  Why was a Hearing authorized by George Dones, our
loan officer, Ms. Reilly, the County Supervisor, and approved by
D. Zerger, State Farmers Program Director? According to FmHA
Regulations, before a Hearing is convened, the Hearing Officer
must check all the information in the files to determine if a
Hearing is warranted.  Mr. Anderson, the Hearing Officer
appointed by the State Office's Mr. Zerger, was in the Arroyo
Grande office on a two day stay; so Mr. Anderson had ample time
to check our files as required by law, specifically, Regulation
1900.55; and to ask questions regarding our case prior to our
Hearing.  Instead, in violation of that law, which states... "to
limit the need for Appeals...(a) FmHA personnel should carefully
check that all documentation and/or calculations used in the
determination to indicate Adverse Action are accurate and
complete", Mr. Anderson ignored his obligation to the law, to
us, the borrowers, and to the government.  Why didn't Anderson
follow the law?  The reason, and only reason, is because Anderson
was told what to do by his superiors at the State Office. 
Maureen Reilly and George Dones of the local office had no
authority to give such instructions, but Anderson's superiors at
the State Office who appointed him to conduct the illegal hearing
did have this authority.  Zerger, as State Director of Farmers'
Programs, and his staff were fully aware of the law when the
illegal Hearing was authorized, as all paper work concerning
foreclosures goes through staff meetings prior to Hearings.  Upon
conferring with Reilly and Anderson, Zerger chose to ignore the
law and the rights of the borrower and he authorized an illegal
hearing.

During the opening of the hearing, Anderson calls us delinquent
and in need of rescheduling.  Where did he get his facts from? 
We know he never checked the files, as he was required to do by
law.  If he had, he would have found that we were not delinquent.
Does Anderson just wander around the State walking into FmHA
offices and say, let's have a delinquency hearing?  No, he must
get our name and facts and permission from someone.  Anderson
arrived at the Arroyo Grande FmHA office with a message.  A
message that Maureen Reilly and George Dones had already been
given.  That message was to begin foreclosure proceedings against
the Bennetts.  Reilly and Dones could not dispute the message
from Zerger's office.  Although they had plenty of time to think
about it, Reilly succumbed to the pressure of the State Office. 
She spent the days prior to the Hearing writing a dissertation of
lies defending the actions of FmHA and the State Office when all
she had to do was look in the files and show Anderson the law. 
This dissertation of lies was read at the hearing by Reilly, and
when we later requested a copy under the Freedom of Information
laws (FOIA), it was missing.  Legally this document must become
part of our case files, where it was supposed to be placed as a
part of our business with FmHA.

Reilly, Anderson, and Zerger all knew we were not delinquent, and
not in need of rescheduling.  The regulations governing
delinquency and foreclosure is a must know for all officers of
FmHA.  If there is any doubt about the wording of the law in each
FmHA office they will find an up to date set of FmHA Regulations
covering every aspect of the law relating to the operation of an
FmHA office, and if any doubts persist the State Office, which
Zerger runs is there to clarify all such doubts.  Reilly,
Anderson and Zerger, as officers of FmHA have many years of
service and have worked with the laws before in the course of
their work; but they chose to continue the Hearing as we sat
listening to their false allegations in their attempt to solidify
their position.

Prior to the hearing, it was decided that Ms. Janice Vaughn would
be utilized to write the minutes of the Hearing.  This written
record would be a verbatim copy of what had transpired at the
Hearing and by law would become part of what had transpired at
the Hearing and by law would become part of our Federal files. 
Vaugh, whose job it is to process the paperwork prior to the
hearing, for accuracy, told the Office of Inspector General (OIG)
in a sworn statement "I cannot review every transaction to see
that it has been processed properly" is referring to the most
devastating piece of paperwork a farmer can receive... the
preforeclosure Notice; and again, the law states that the utmost
of care must be taken prior to sending this notice.  This
attitude, in itself, should have given the OIG an indication that
something was basically wrong.  Instead, they accepted it with no
problem.  Vaughn's minutes of the hearing are also missing, and
in no part are they included in our Federal files, which is also
mandated by law.  This was also not questioned by the OIG, nor
were the 100 or more missing items missing and/or altered
documents questioned by the OIG.

According to the Federal Regulations, the State and local offices
must in concert check all information concerning the delinquency
of the borrower and the Code 540.  The Code 540 is the paperwork
sent from the National Finance Center to all offices of FmHA. 
The local office must check the Code 540 to see if any borrowers
are not delinquent, which is then rechecked by the loan officer,
George Dones, and the County Supervisor, Maureen Reilly.  All
delinquencies are then reported to the State Office and to D.
Zerger, who also has a copy of the Code 540; all cross-checked
prior to authorizing a preforeclosure Notice.  According to the
law all paperwork is checked and crosschecked.  This function is
important in order to avoid infringing upon the rights of the
borrower; and to avoid the chance of an illegal Hearing. 
Obviously all of these stop gap measures were bypassed, as they
intended to execute their own agenda.  The State Office, under
the direction of Zerger and his staff, and Reilly and her staff
called us delinquent and later conspired to have us believe that
this was only a rescheduling Hearing in order to introduce the
wording and threats of foreclosure in an effort to illegally
close out our loan account.  Later, in 1988, George Dones stated
"...We should have told them (the Bennetts)..."  He should have
told us, but he did not, even when we initially asked him about
our status, and was again asked by us prior to the Hearing.  He
lied to us.  He should have told us, as he should have told
Anderson prior to the Hearing.  Since he admitted that he should
have told us and did not, why did he put us through this ordeal? 
Once again, we can only assume that this was done in order to
coerce us into a premature closing of our loan account through
illegal methods.

The State Office authorized the Hearing.  It really does not
matter who called Anderson, the local office or the State Office.
What matters is that Anderson carried a great deal of false
information and carried out an illegal Hearing contrary to the
law.  When he arrived in Arroyo Grande for his two day stay, he
referred to our account as delinquent and in need of
rescheduling.  This is false information, which he knew was
false.  He never got this information from the files and never
looked at our files, because he knew he would not find a
delinquent account if he did look at our files.  Just the act of
not checking our Federal case files is a violation of Federal
Regulation 1900.55.  Reilly and Dones did not tell Anderson that
we were delinquent, they did not have such authority, but Zerger
did have the authority as Director of Farmers' Programs.  Zerger
has total control over the local office, and total control over
rescheduling/delinquency Hearing in violation of the law with D.
Zerger's sanction.

During the Hearing Anderson received permission from all
attending to record the Hearing.  All recorded Hearing tapes are
the property of the government and are to be treated in
accordance with Federal laws as covered by the CFR and USDA
Regulations.  All paperwork generated by the Hearing and all
decisions must also be duly protected.  The Hearing tape was in
the possession of Anderson when the Hearing concluded.  When we
requested a copy of this tape, in accordance with the FOIA
regulations, we were directed to Anderson's office by Reilly, as
he held the only copy of our Hearing tape.  Upon receipt of the
tape, we noticed that our copy contained numerous irregularities
and did not match the transcript furnished to us by the State
Office (partially handwritten transcript), nor did it match a
typed manuscript provided to us.  Anderson was to send a copy of
the tape to the State Office, which he did.  Anderson did not
anticipate that we would request copies and transcripts of the
tape from tapes and documents in our files from All offices
connected with our illegal Hearing.  Anderson was concerned about
the statements and responses he gave us during our Hearing. 
Especially his statement in response to my saying "...If things
don't work out are we going to be out on the street.."  His
response was "...that's basically what we are here for..." 
Anderson knew that this is considered a threat and a violation of
the law, and has no place in a "so-called" rescheduling hearing,
legal or not.  The copy of the Hearing tape Anderson sent to us
under FOIA has this and other parts removed from the copy he sent
to us.  Yet another violation of the law.  Federal law was again
broken when Anderson removed the Hearing tape (a Federal
document) and took it to his home to do his "creative"
alterations on other parts of the tape as well.  This is
evidenced by the accidental recording of his child's voice
yelling "DAD" as if he is being called for dinner.  During the
Hearing and in the second paragraph of the OIG typed
transcription of that Hearing, Anderson casually says,  "I'm
just...right now it's like fact gathering.  I'm getting
information on this.  I'm looking in the file and from you.  And
then based upon what I see and the... and our procedure, then
I'll render a decision."

On the surface Anderson's statements seem believable to the
unsuspecting.  But when you begin to learn the basics of the
world of FmHA you can be easily appalled at the double talk, the
lies, and the violations of the law.  Anderson isn't gathering
any facts.  All the facts are in the files.  He is looking for
material to create lies.  If he were honestly looking for facts,
he would have read our case files in accordance with the law
(Regulation 1900.55).  He was conducting an illegal Hearing, so
how could anyone give him any information to make a decision
upon?  His next statement "Looking in the files and from you..."
again sounds officially believable.  If Anderson had looked in
the files to "gather" facts, why then didn't he see the fact we
were not delinquent, and not in need of a rescheduling?  Again,
he was not looking for facts, he was looking for material to
create lies that would support his orders from the Farmers'
Programs Director at the State Office, Darrell Zerger.  Those
orders were to just have a Hearing, legal or not and close out
the account and get rid of the Bennetts.  Time and time again
during the Hearing and after the Hearing Anderson totally botched
his mission.  In his decision letter following the illegal
Hearing he fortifies his decision with lies and half truths. 
Isn't it strange how after the Hearing he finds us not to be
delinquent and not in need of rescheduling?  He casually mentions
this fact, but then unbelievably continues with the Hearing
decision.

Anderson is now trying to justify the Hearing.  He brings forward
facts which he thinks will give credence to his efforts.  He
begins to offer preposterous allegations, such as, we paid FmHA
$78,000 and used FmHA borrowed money to do it.  The fact of the
matter is we did not and could not pay $78,000 to FmHA.  In his
decision letter Anderson again assumes we paid eight years ahead
on our Beneficial Finance loan and did so with FmHA loans.  We
did not pay eight years ahead while with FmHA nor did we use
their funds for such massive repayment.  In fact, we repaid this
loan five years in advance PRIOR to our signing our first loan
with FmHA in 1982.  If any extra money was used to repay this
loan it was from off farm income and never was FmHA funds used,
as Anderson's decision letter states.  In fact, Anderson's
Decision Letter contains many lies and distortions of the law. 
Probably the most outrageous is his closing remarks.  "You have
until December 31, 1986 to work out your financial problems with
the County Office.  At which time they will be required by
procedure to initiate foreclosure action."  What Anderson is
doing here is cleverly building a lie on a truth.  Earlier in his
Decision Letter Anderson says "FmHA only sends Form 1924-25
Notice of Intent To Take Adverse Action to Borrowers who are
delinquent on or before December 31, 1985."  This also means
before December 31, 1986, December 31 1987 and so on.  December
31st of any year of a DELINQUENCY is the key date and the law. 
Why then did Anderson cleverly tell us to work out our problems
before December 31, 1986.  The reason is that Anderson is going
to (and although he said it was sent in error) use the illegal
foreclosure Notice as a basis for foreclosure.  This is not
discussed until, and only after they become delinquent, and we
would not become delinquent until January 1, 1987.  Anderson's
and Zerger's plan to begin foreclosure proceedings against us a
full year and a half early failed, and unfortunately for us we
almost believed them because we were unaware of the law.
Our next step in the process was to defend ourselves from an
illegal decision made at an illegal Hearing.  Under the law we
are allowed to appeal the Anderson Decision Letter of our
Hearing, which illegally threatened us with confiscation of
funds, mismanagement of government loan money and foreclosure,
among other charges.  We thought this next appeal would correct
the record, as it was being sent to the State Director of FmHA at
the State Office.  We were wrong, our response from Larry J.
Smith, Acting State Director, dated October 8,1986 continues the
conspiracy with confusing double talk designed to mislead the
reader and continues to cover up the illegal acts of his
subordinates.  He admits the foreclosure Notice, the basis of the
Hearing, was sent in error.  But he too is basing his decision on
the foreclosure form.  What Smith doesn't see or doesn't want to
see is the fact that we did not need rescheduling in addition to
the fact that we were not delinquent.  The only reason we checked
the box on the back of the rescheduling form was not because we
were in need of rescheduling but because we were under the threat
of foreclosure by FmHA if we did not respond to the form.
Smith, after admitting the error of his organization and instead
of correcting the problem by dropping the matter, he continues to
fortify the position that Anderson put forth, and agrees with
Anderson's position which is to tell us to work out our problems
(what problems??) by December 31, 1986 or they will be required
by procedure to initiate foreclosure actions.  Smith and Anderson
both know, or should know that this is not procedure.  Why then
is Smith "concurring with the previous decision"?

THE OFFICE OF THE INSPECTOR GENERAL, USDA

After many requests and many denials, the OIG agreed to
investigate our allegations of wrongdoing by FmHA, USDA.  There
are many questions that come to mind concerning this
investigation.  The main criticism is directed at the OIG itself.

The OIG is mandated to preserve the laws of this country, and in
this mandate they were not given the right to chose which laws
were worth following and which were not.  They totally ignored
our allegations of violations of the law by members of FmHA at
all levels.  Their neglect in responding to a complaint of a
citizen resulted in an investigation lacking any real
professional enthusiasm and can only lead one to believe they
have joined those who have violated the USC and the CFR and made
a mockery of the real intended purpose of their office by
covering up the problem to save the face of FmHA.