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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT
OF 1934
Date of Report (Date of Earliest Event Reported): January 21, 1997
CROP GROWERS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-23830 81-0491497
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
10895 LOWELL, SUITE 300
OVERLAND PARK, KANSAS 66210
(Address of principal executive offices) (zip code)
(913) 338-7800
(Registrant's telephone number, including area code)
1
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ITEM 5: OTHER EVENTS
On January, 21, 1997, the court in the matter of UNITED STATES OF AMERICA V.
CROP GROWERS CORPORATION, JOHN J. HEMMINGSON AND GARY A. BLACK (Crim. No.
96-0181 (GK)) accepted Crop Growers Corporation's (the "Company") plea of
NOLO CONTENDERE to two charges brought against it by the Independent Counsel
("IC") appointed to investigate former Secretary of Agriculture Mike Espy.
Pursuant to an agreement with the IC, the Company also agreed to pay a fine
of $2 million, $1.5 million of which is payable by February 4, 1997 and the
balance of which is payable by April 21, 1997. The Company will accrue the
full amount of the fine as a charge for the fourth quarter of 1996.
The Company plead NOLO CONTENDERE to Counts One and Four of the charges filed by
the IC. Count One alleged conspiracy to make and conceal illegal campaign
contributions. Court Four (to which the Company waived venue) alleged the
making and keeping of false records and accounts. A NOLO CONTENDERE plea is
neither an admission nor a denial of guilt. The Company's agreement with the IC
concludes federal criminal prosecution of the Company and its subsidiaries for
any and all matters of which the IC is presently aware.
By its terms, the Company's agreement with the IC does not compromise or
preclude civil actions by other governmental regulatory authorities, such as
the Federal Election Commission, Securities and Exchange Commission, the
United States Department of Agriculture, or state insurance regulatory
authorities, or shareholders as a result of the allegations made by the IC
and the Company's NOLO CONTENDERE plea to Counts One and Four of the
indictment. The Company does not believe that its NOLO CONTENDERE plea will
adversely affect its ability to continue to participate in the federal
multi-peril crop insurance program, although no assurance can be given as to
what action the USDA or other regulatory authorities might take in response
to the Company's plea and its agreement with the IC.
The trial of the Company's former President and Chief Executive Officer John
Hemmingson and its former Executive Vice President Gary Black on charges brought
by the IC is currently scheduled to begin on or about January 23, 1997.
A copy of the Company's press release dated January 21, 1997, and the agreement
between the Company and the IC are filed as exhibits hereto.
On January 3, 1997, the court dismissed other previously filed charges
against the Company. See the Company's Form 8-K filed on January 14, 1997.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit No. Description
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99(1) Press Release dated January 21, 1997
99(2) Letter agreement dated January 17, 1997
between Crop Growers Corporation and
the Office of Independent Counsel
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Crop Growers Corporation
By: /s/ David E. Hill
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David E. Hill
Chief Financial Officer
January 23, 1997
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Exhibit Index
Exhibit No. Description Page
- ----------- ----------- ----
99(1) Press Release dated January 21, 1997 5
99(2) Letter agreement dated January 17, 1997
between Crop Growers Corporation and the
Office of Independent Counsel 6
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CROP GROWERS SETTLES INDEPENDENT COUNSEL INVESTIGATION
FOR IMMEDIATE RELEASE
Tuesday, January 21, 1997
Contact: Bob Rousey
Crop Growers Corporation
913-323-5612
Overland Park, KS -- Crop Growers Corporation (Nasdaq: CGRO) announced
today that the United States District Court for the District of Columbia has
accepted its plea of NOLO CONTENDERE to two charges brought against it by the
Independent Counsel appointed to investigate former Secretary of Agriculture
Mike Espy. Pursuant to an agreement with the Independent Counsel, the company
also agreed to pay a fine of $2 million. The settlement concludes matters
between the company and the Independent Counsel.
Commenting on the announcement, Crop Growers' CEO Larry Martinez said, "We
are pleased to end this matter. It was important that we resolved this issue to
allow us to focus all of our energy on serving our customers."
As part of its agreement, the company entered a plea of NOLO CONTENDERE to
Counts One and Four of the charges filed by the Independent Counsel. A NOLO
CONTENDERE plea is neither an admission nor a denial of guilt. Count One
alleged conspiracy to make and conceal illegal campaign contributions. Count
Four (to which the company waived venue) alleged the making and keeping of false
records and accounts. The company will accrue the full amount of the fine as a
charge for the fourth quarter of 1996.
Crop Growers markets and services federal multi-peril crop insurance, and
crop hail insurance for third party insurance companies and its own insurance
company subsidiaries. Crop Growers is the nation's second largest servicer of
crop insurance. The company also develops, markets and sells farm management
software and related mapping products.
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OFFICE OF INDEPENDENT COUNSEL
DONALD C. SMALTZ
IN RE SECRETARY OF AGRICULTURE ESPY
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P.O. Box 26356
103 Oronoco Street, Suite 200
Alexandria, VA 22313
(703) 706-0010
(FAX) 706-0076
January 17, 1997
Via Facsimile Transmission Via Facsimile Transmission
to 202/887-0689 to 406/727-3638
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Barry William Levine, Esquire Keith Strong, Esquire
Dickstein, Shapiro, Morin & Oshinsky Dorsey & Whitney
2101 L Street, N.W. 8 Third Street, Suite 507
Washington, D.C. 20037 Great Falls, MT 59401
Re: UNITED STATES OF AMERICA V. CROP GROWERS
CORPORATION, #96-0181 (GK)
Dear Messrs. Levine and Strong:
This letter sets forth the agreement entered into between the Office of
Independent Counsel ("OIC") and your client, Crop Growers Corporation
("Defendant"). The agreement is as follows:
1. PLEA
Defendant will plead NOLO CONTENDERE to Counts One and Four of the
above-referenced Indictment, charging violations of Title 18, U.S.C. Section
371 and Title 15, U.S.C. Sections 78m(b)(2)A and 78ff(a). With respect to
Count Four, the Defendant waives venue and agrees that Count Four be
reinstated for the purposes of this plea. This plea agreement will conclude
federal criminal prosecution of the Defendant, and its subsidiaries, for any
and all matters of which the OIC is presently aware.
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2. MAXIMUM PENALTIES
The maximum penalty for Count One is a $500,000 fine. The maximum
penalty for Count Four is a $2.5 million fine.
3. SENTENCING GUIDELINES
The parties agree that the guidelines do not apply to Count Four and to
that portion of Count One charging a conspiracy to commit the violation
alleged in Count Four, except as noted in U.S.S.G. Section 8C2.1 and 18
U.S.C. Sections 3553 and 3572.
4. BINDING PLEA AGREEMENT/SENTENCE RECOMMENDATION
Defendant's plea will be tendered pursuant to Fed. R. Crim. P.
11(e)(1)(C). Defendant reserves all rights set forth in Fed. R. Crim. P.
11(e)(3) and (4). The parties agree that the appropriate sentence is a total
fine of $2-million and a total special assessment of $400.00, and no order of
restitution. The fine shall be paid as follows: $1.5-million within 14 days
of imposition of sentence and then a payment of $500,000 within 90 days after
imposition of sentence. The parties agree, pursuant to 18 U.S.C. Section
3572(d), that in the interests of justice this payment schedule is
appropriate. Defendant shall remain on probation until the entirety of the
fine is paid.
5. REJECTION OF PLEA
Pursuant to Section 6A1.1 of the Sentencing Guidelines, the
parties agree there is information in the record sufficient to enable a
meaningful exercise of sentencing authority pursuant to 18 U.S.C.
Section 3553, and therefore a presentence report is not required, and
sentence may be imposed at the time of the plea. Unless the sentencing judge
rejects the plea agreement, Defendant shall not withdraw its plea. If the
sentencing judge rejects the plea agreement, this
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agreement shall be null and void at the option of either the OIC or the
Defendant. In this regard, the Defendant hereby waives any defense to any
charges which it might otherwise have under any statute of limitations or the
Speedy Trial Act.
6. MANDATORY SPECIAL ASSESSMENT
Defendant agrees to pay the mandatory special assessment of $200.00 per
count for a total of $400.00 to the Clerk of the Court on or before the date
of sentencing, unless affirmatively relieved of this obligation by the
District Court.
7. CIVIL LIABILITY
By entering into this agreement, the OIC does not compromise any civil
liability which Defendant may have incurred or may incur as a result of its
conduct and its plea to the charges specified in paragraph one of this
agreement.
8. WITHDRAWAL OF PLEA AGREEMENT/DENIAL OF ALLEGATIONS
Should Defendant's plea later be withdrawn on motion of Defendant, this
agreement shall be null and void at the option of the OIC. Defendant agrees
not to make or permit to be made any press statements concerning its NOLO
CONTENDERE plea denying, directly or indirectly, any allegation in the
Indictment or creating the impression that the Indictment is without factual
basis. CF. 17 C.F.R. Section 202.5(e). Nothing in this provision affects
Defendant's testimonial obligations or right to take legal positions in
litigation or administrative proceedings in which the OIC is not a party.
9. BREACH OF AGREEMENT
If the OIC determines that Defendant has failed to meet its obligations
set forth herein, or if Defendant has committed any crime from the date
hereof through the completion of Defendant's probation, the OIC may, at its
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sole option, be released from its commitments under this agreement in their
entirety by notifying Defendant, through counsel or otherwise, in writing.
The OIC may also pursue all remedies available to it under the law,
irrespective of whether it elects to be released from its commitments under
this agreement. Defendant recognizes that no such breach by it of an
obligation under this agreement shall give rise to grounds for withdrawal of
its plea. Defendant understands that should it breach any provision of this
agreement the OIC will have the right to use against Defendant before any
grand jury, at any trial, hearing, or for sentencing purposes any statements
made by it, and any information, materials, documents, or objects provided by
it to the OIC pursuant to this agreement without any limitation. In this
regard, the Defendant hereby waives any defense to any charges which it might
otherwise have under any statute of limitations or the Speedy Trial Act.
10. COMPLETE AGREEMENT
This agreement is the complete and only agreement between the parties.
No promises, agreements or conditions have been entered into other than those
set forth in this letter. This agreement supersedes prior understandings, if
any, of the parties, whether written or oral. This agreement cannot be
modified other than in a written memorandum signed by the parties or on the
record in court.
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If this letter accurately reflects the agreement entered into between
the OIC and the Defendant, please have Defendant sign the Acknowledgment of
Plea Agreement below. Please also sign below as Witness. Return the original
of this letter to Independent Counsel Donald C. Smaltz.
Sincerely,
/s/ Donald C. Smaltz
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DONALD C. SMALTZ
Independent Counsel
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ACKNOWLEDGMENT OF PLEA AGREEMENT
I have read this letter of agreement in its entirety and discussed it
with my attorney(s). I hereby acknowledge that it fully sets forth my
agreement with the Office of Independent Counsel. I further state that there
have been no additional promises or representations made to me by any
officials of the Office of Independent Counsel in connection with this matter.
CROP GROWERS CORPORATION
By /s/ Larry Martinez
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[Authorized Representative of Crop
Growers Corporation]
Dated: 1/17/97
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I certify that this plea agreement letter has been read by the
Defendant and that Defendant's Authorized Representative has stated that he
understands its terms.
Witnesses by:
/s/ Keith Strong
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Counsel for Crop Growers Corporation
