Paying For Fraud

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In a long-running scam aimed at American farmers, federal inspectors lined their pockets by cheating the very people they were supposed to protect. Will the government cover the farmers' losses? As CBS News Correspondent Wyatt Andrews reports, don't count on it.

In a bribery scheme that lasted for 20 years, wholesale buyers at the Hunts Point market in the Bronx, N.Y., the largest produce market in the U.S., were paying off U.S. Department of Agriculture inspectors. The idea was to rip off the farmers who supplied the market.

"The buyers up there were bribing the federal inspectors to downgrade our fruit," says citrus grower Nat Roberts. "We counted on the inspectors being honest. They weren't."

Roberts was victimized dozens of times. His grapefruit would leave Florida in good condition, but then at Hunts Point, an inspector would label it rotten. The wholesaler would call, demanding a discount.

"It became a tool to get a lower price," says Roberts.

And when Roberts complained to the USDA, he said he was told, "We're the federal government, it's a safe inspection system; you should trust us."

Eight of those inspectors have pleaded guilty to the scam, which cost farmers nationwide more than $100 million. But to the growers, the cheating isn't the only scandal.

"Right now nobody has shown me where it's likely we're going to get money back," says Roberts.

An embarrassed USDA is now offering to help farmers file claims for their Hunts Point losses. However, it's the farmer who has to dig up all the false inspection reports, and guess who's supposed to pay back the money? It is not the government, but the crooked wholesaler.

See Part 1
- It was a scheme so slick, even the victims call it brilliant. See Wyatt Andrews' first report.
"That wholesaler will just declare bankruptcy, be out of business. And, I'll have a piece of paper that says I have a legitimate claim, but I won't get any money," says Roberts.

The problem as farmers see it is that under this system, the U.S. government avoids its responsibility for the scandal. All repayments would have to come from the wholesalers who offered the bribes, while the government, whose inspectors were the ones on the take, pays nothing.

"We are devastated by this," says USDA spokesman Bob Keeney. He says the USDA is doing what it can to reover from the scandal. Inspections of damaged fruit now require a backup inspector, and digital photos confirming the damage are uploaded to the farmer.

"We are very concerned about the situation, and we are going to be helping the farmers and shippers out as much as we can," says Keeney.

However, the USDA is not offering to compensate farmers.

"I know in the end an employee who works for us who does something wrong, I'm responsible for. I'm not understanding why it is (that) the federal government is not responsible for the actions of a federal employee," says Roberts.

The bribery investigation has spread beyond Hunts Points and grower confidence in the USDA is fading. The growers wonder why an agency that betrayed them in the inspections should be trusted now to process their claims.