Executive Convicted In Conspiracy

A Post Falls executive who once ran a multimillion dollar insurance company faces up to 40 years in prison and a $1 million fine for laundering campaign contributions in a conspiracy to gain influence with former Agriculture Secretary Mike Espy.

John J. Hemmingson, who was chairman of Crop Growers Corp. when it was based in Great Falls, Mont., was found guilty of three counts of laundering $20,000 and moving the money across state lines to pay off debts of Mississippi politician Henry Espy. Henry Espy, who is Mike Espy’s brother, made a failed run for Congress in 1994.

The verdict was issued by a jury Dec. 19 in U.S. District Court in New Orleans. Nearly 50 witnesses testified during the eight-day trial.

Hemmingson’s sentencing is scheduled for March 5.

Crop Growers, now based in Kansas, keeps its regional office at 524 Sherman Ave. in Coeur d’Alene.

It was from those offices that Hemmingson guided Crop Growers to become one of the nation’s largest providers of crop insurance until his resignation last summer. Hemmingson, who also keeps a $1,500-per-month suite at the Spokane Club, could not be reached for comment.

Hemmingson was on trial in Louisiana with another Espy fund raiser, New Orleans attorney Alvarez Ferrouillet Jr.

Ferrouillet was convicted of 10 counts of money laundering, lying to investigators and transporting the money he received from Hemmingson across state lines.

The pair are the latest in a string of convictions brought by independent counsel Donald Smaltz, who is investigating influence peddling during Michael Espy’s troubled two years in the Clinton cabinet.

Espy resigned in late 1994 amid allegations that he accepted gifts from companies regulated by the U.S. Department of Agriculture.

“Hemmingson and Ferrouillet,” Smaltz said, “defrauded the shareholders of Crop Growers, who were the true owners of the $20,000, by disguising the payment as a legal fee to defendant Ferrouillet.”

Hemmingson faces a second trial Jan. 23 in Washington, D.C., on similar charges.

A grand jury last fall indicted Hemmingson, Crop Growers and another company executive on 18 counts of defrauding the U.S. Federal Elections Commission, the Securities and Exchange Commission and investors. All but three of the counts have been dropped.

The defendants, however, still face the most serious charge: conspiracy to launder company money to Henry Espy’s bank account under the guise of individual campaign contributions.

Hemmingson and Crop Growers have pleaded not guilty to the charges.

Smaltz said evidence in the Louisiana case showed that Hemmingson conspired to gain influence with Secretary Espy concerning federal crop insurance reforms that might have benefited Crop Growers.

Indictments in the upcoming trial alleged that Hemmingson reimbursed $1,000 contributions from 19 Crop Growers officers, directors and family members, including his mother, to Henry Espy’s campaign. It is against the law to reimburse campaign contributions.

In the months following the “contributions,” Hemmingson was invited to meet with Secretary Espy at least three times, investigators said. Henry Espy was present at each meeting.

Hemmingson is Crop Grower’s largest shareholder. But the company is attempting to distance itself from the convicted executive. Crop Growers, which employs 450 people, has agreed to buy back Hemmingson’s shares at a premium to reduce his stake to less than 10 percent.

Crop Growers in September paid Hemmingson $743,280, or $9.78 per share, for 76,000 shares in the company. The stock closed Tuesday on Wall Street for $6.50 per share.

In a recent statement to shareholders, Crop Growers said that conviction of the company in federal court could jeopardize its ability to handle federal crop insurance, which is regulated by the USDA.

, DataTimes