Espy Chum Faces 3-Year Prison Term John Hemmingson Sentenced In Corporate Corruption Case

Insurance executive John Hemmingson, convicted for his role in buying access to former Secretary of Agriculture Mike Espy, will spend the next three years in federal prison.

On Wednesday, U.S. District Court Judge Edith Brown Clement in New Orleans sentenced the former chairman of Crop Growers Corp. to prison on two counts of laundering $20,000 in campaign contributions and one count of interstate wire fraud.

Hemmingson, who earlier this year sold his stake in Crop Growers for $11 million, also was fined $50,000.

Hemmingson was convicted by a jury last December in the Eastern District of Louisiana. He had faced up to 40 years in prison and a $1 million fine.

Until recent months, Hemmingson had kept his executive office in downtown Coeur d’Alene, owned a house in Post Falls and leased a suite at the Spokane Club for $1,500 per month. Crop Growers was based in Great Falls, Mont., until last summer, when it moved to a Kansas City, Mo., suburb.

Independent counsel Donald Smaltz, who prosecuted Hemmingson, called it “a classic case of corruption of the corporate boardroom. Hemmingson’s sentence demonstrates that individuals who buy access to senior government officials through illegal means … can expect to spend time in prison.”

Smaltz was assigned by the Justice Department to investigate allegations that individuals and companies regulated by the U.S. Department of Agriculture funneled illegal gifts and money to Espy prior to his resignation in late 1994.

In the Louisiana case, Hemmingson was found guilty of laundering corporate funds to the campaign of Henry Espy, an unsuccessful congressional candidate and brother of the agriculture secretary.

Following the contributions, Hemmingson and Henry Espy met three times in private meetings with Mike Espy. The meetings occurred when Espy and the USDA were reforming the federal crop insurance program.

Smaltz argued that the money had been obtained from dummy campaign contributions ostensibly made by Crop Growers employees and relatives, including Hemmingson’s mother.

Crop Growers officials, however, said that none of the donors knew Henry Espy prior to making $1,000 contributions, raising suspicions that Hemmingson used their names to cover up an illegal corporate contribution in excess of federal election laws.

But in February, during a separate trial that focused on those allegations, a jury declared Hemmingson innocent. However, Crop Growers agreed to pay $2 million to settle similar charges of falsifying records to defraud the Federal Elections Commission.