May 24, 1996

GRAND JURY INVESTIGATING MIKE ESPY INDICTS FARMERS HELPED BY HIS AIDE

By ROBERT GREENE
AP Farm Writer

WASHINGTON (AP) -- The grand jury investigating former Agriculture Secretary Mike Espy has turned its attention to his former chief of staff.

On Wednesday, it indicted a Mississippi farmer and his son, for whom the aide had intervened in a subsidy dispute.

The four-count indictment against Brook Keith Mitchell Sr., his son, Brook Keith Mitchell Jr., and their farming company says they fraudulently collected $777,000 in farm subsidies from 1992 to 1995. The indictment is the first to come out of an independent counsel's 20-month investigation of Espy.

The charges also involve the conduct of Ron Blackley, a Mississippi farm consultant who was a congressional aide to Espy, a former Mississippi congressman, and became his chief of staff after Espy became agriculture secretary in January 1993.

Espy resigned in December 1994 because of questions about his conduct, including accepting favors from Tyson Foods and other agribusiness firms. Blackley was removed from the chief of staff position earlier in 1994, then quietly left the department.

Court documents unsealed Wednesday show that independent counsel Donald C. Smaltz was recently empowered by the U.S. Court of Appeals for the District of Columbia to investigate Espy and Blackley's conduct in handling requests for subsidies.

The senior Mitchell had close ties to Espy. He had been appointed by Espy to serve on the Mississippi Agricultural Stabilization and Conservation Service Committee, the state body that oversees federal subsidy programs.

Blackley, though only identified as unindicted co-conspirator No. 2, had intervened with the Agriculture Department on behalf of the Mitchells, of Greenville, Miss., and their company, Five M Farming Enterprises, when some of their subsidy payments were denied, according to the indictment.

Both Mitchells declined comment when reached by telephone.

The indictment says the Mitchells made false statements about the son's eligibility for subsidies for three of the five farming companies that operated under the umbrella of Five M in 1992. The family farmed 4,700 acres.

The local and state farm offices said the son, then a college student, and another unindicted co-conspirator could not show they were actively involved in farming or carried any financial risk. A national hearing officer upheld the position of the local and state offices.

Blackley, who had represented the family before joining the Agriculture Department, personally intervened for them as Espy's chief aide, the indictment says. The Mitchells made a new, fraudulent, application to a Washington official newly chosen to review their case, the indictment says.

As a result, Five M allegedly received checks worth $777,000 for crop years 1992 through 1995.

Blackley, who now works at the Agency for International Development, did not immediately return a phone call from a reporter seeking comment.

Although this was his first indictment, Smaltz directly brought charges last fall against Republican lobbyist James H. Lake. Lake, who is cooperating with the investigation, pleaded guilty to charges he arranged $5,000 in illegal corporate contributions to the congressional campaign fund of Henry Espy, Mike Espy's brother.

The Mitchells, if convicted, face up to five years in prison and $250,000 in fines for each of the conspiracy, false statement and false entries counts. The company could be fined up to $500,000.