Former Kentucky election official gets prison time, $700K restitution in insurance fraud

A former Kentucky county official who admitted to lying to get crop-insurance payments was sentenced Thursday to two years and six months in federal prison.

The sentence for Randall D. Taulbee includes an order to pay $718,784 in restitution to cover losses caused by his conduct. Of that, he owes $458,104 to an agency of the U.S. Department of Agriculture and $260,680 to AgriSompo North America, a company that sells crop insurance.

Taulbee resigned as a magistrate in Bourbon County after pleading guilty June 22 to two charges of conspiring to commit an offense against the U.S., meaning fraud on crop-insurance claims.

Taulbee was first elected magistrate in 2018 and won reelection last year, according to Bourbon County Clerk Cynthia Santana Wilson.

A federal grand jury indicted Taulbee days later. He was charged with his brother-in-law, James McDonald, and his sister, Cherie Noble.

Taulbee, who grew tobacco and corn in Bourbon and Nicholas counties, admitted that between 2013 and November 2017, he used a variety of approaches to commit fraud.

Those included filing false loss claims; over-reporting his production; claiming more expenses than he had; claiming he was the sole owner of a crop when in fact he was a partner with McDonald, which meant they both got paid; and failing to report sales that would have offset his claimed losses, according to the court record.

In at least two years, Taulbee and McDonald sold corn in the name of McDonald’s minor son to hide the sales, Taulbee admitted in his plea.

Taulbee also involved his sister, Noble, in the fraud by having her take out insurance on tobacco crops owned by Taulbee and McDonald.

That meant they got higher payouts on losses claimed on those crops because Noble was listed as a new producer, according to Taulbee’s plea.

Taulbee and McDonald misled Noble and she wasn’t aware that what they were doing was illegal for several years, Noble’s attorney, Gerry L. Harris, said in a sentencing memo.

Of all the money involved in the scheme, Noble received just $3,028, Harris said.

The prosecutor, Assistant U.S. Attorney Andrea Mattingly Williams, said in a sentencing memorandum that Taulbee was the one who recruited McDonald and Noble to commit crimes with him.

Taulbee also pushed his sister to lie to investigators, and even impersonated his own father when speaking to investigators over the phone, according to a prosecution motion.

In that call, Taulbee, pretending to be his father, told an investigator that Noble owned cattle and grew her own tobacco, and told the agent to leave her alone, the motion said.

Taulbee also lied about his finances, the prosecution memo alleged.

Taulbee’s guilty plea required him to disclose financial information to the government.

Taulbee said in the disclosure that he had no checking account and didn’t have any interest in property, but that was false, according to the sentencing memo.

The government learned that Taulbee had transferred his home and some land into someone else’s name days after pleading guilty, and that that person later switched the property to Taulbee and his fiancée, the memo said.

Taulbee “has a pattern of being dishonest in this case,” the prosecutor said.

‘A real problem’

U.S. District Judge Karen K. Caldwell sentenced Taulbee during a hearing in federal court in Lexington.

Caldwell said farmers and agriculture are part of the backbone of the country.

It’s a difficult job, and taxpayers want to support farmers through programs like crop insurance, so abuse of the program is particularly disturbing, Caldwell said.

“Government insurance fraud, particularly agricultural insurance fraud, is a real problem,” Caldwell said.

The sentencing range envisioned in Taulbee’s guilty plea was 46 to 57 months, but those guidelines are advisory, not mandatory.

Caldwell said reason for her relatively “generous and merciful” sentence for Taulbee was the large amount of restitution he owes.

Noble and McDonald also pleaded guilty.

Caldwell sentenced Noble to perform 200 hours of community service and to be on probation for two years.

She sentenced McDonald to six months behind bars and ordered him to pay $718,784 in restitution, the same amount as Taulbee. They are jointly liable for the restitution.

The case against Taulbee, McDonald and Noble was part of a larger investigation of fraud involving crop insurance in recent years that prosecutors called “a severe and pervasive scourge” in Central Kentucky.

More than two dozen people have been convicted in the investigation, including farmers, a complicit insurance agent who facilitated more than $20 million in fraud and people associated with a tobacco warehouse, while others resolved allegations of fraud through civil settlements, court records show.