A Philip businessman named in a federal lawsuit has responded to allegations that he and others defrauded the government by falsifying the sales of trees damaged in a 2004 hailstorm.

In a response filed this week in U.S. District Court, Donald Burns, who owns Western Hills Tree Farm as well as Philip Motor Inc., and Dakota Auto Supply, denied there was any such conspiracy and said that, in fact, the government erred by failing to explain restrictions on resale of the trees.

The response came to a civil suit filed by the federal government against Burns and his companies, Black Hills Tree Farm and BHTF partners Jerry Roseth, Luetta Roseth, Carrie Roseth Lurz, Paulette Combs Roseth and John Combs. Badger Tree Movers is also named in the suit.

According to the lawsuit, Black Hills Tree Farm owners collected $901,000 on the trees through crop-loss insurance. They then received permission from Rural Community Insurance Service to sell the salvageable trees for 50 cents each, with the understanding that all revenues be returned to the Federal Crop Insurance Corp.

Prosecutors say Western Hills Tree Farm bought the trees for 50 cents each, then resold them for an average of $82.54 per tree. The government says customers who bought the trees received several invoices that were designed to hide the actual sale price of the trees. Total sales were around $270,000.

According to court documents, the FCIC received about $5,100 from sale of the trees.

In the response filed Monday, Burns said he was not part of the arrangement between Black Hills Tree Farm and the government and that he is unfamiliar with the Federal Crop Insurance Act and administration of the government program.

"Defendant Burns did not receive payments under the losses giving rise to this lawsuit," the document states.

Burns admitted he was "aware, through BHTF, that there were certain conditions on BHTF, under the indemnity settlement with RCIS." But he said he was not given the details of the terms and conditions of that settlement, and he should have been.

"Plaintiff, by and through its agent, RCIS, authorized directly and indirectly the sale of salvageable trees to Burns and other purchasers at 50 cents per tree," the document states. "Plaintiff and RCIS knew that such purchasers would be removing the trees for possession and resale."

Burns said RCIS and the government "had a duty to disclose restrictions to purchasers on the use and resale of the trees when the Government consented to the sale of salvageable trees to Burns and others."

"The Government breached its duty to disclose, and Burns relied upon the inaction of the Plaintiff when Burns acquired the trees for possession and subsequent sale," the document states.

Others named in the suit have not filed written responses to the government's complaint.

Prosecutors have requested a jury trial.

Contact Heidi Bell Gease at 394-8419 or heidi.bell@rapidcityjournal.com