Thread: CA:Bribery alleged in action against SK Foods

Bribery alleged in action against SK Foods
By Joe Johnson
jjohnson@HanfordSentinel.com

Conspiracy, racketeering and bribery were just a few of the crimes mentioned in a federal lawsuit filed in Sacramento late last week accusing Monterey-based SK Foods -- which has a large shipping plant in Lemoore as part of its facilities -- of offering bribes to corporate insiders at several major food companies across the country.

The 42-page document alleges that Randall Rahal, president of New Jersey company Intramark USA, Inc., was working as a broker for SK Foods roughly between January 2004 and April 2008 and was paying bribes to purchasing agents at food companies to ensure that they purchased their goods from SK Foods, rather than the competition. The document also alleges that SK Foods Chief Executive Officer Scott Salyer was encouraging the deals and had direct contact with Rahal several times to discuss the crimes being committed.

The court filings included a detailed affidavit from FBI Special Agent Paul Artley that outlined the ongoing investigation in SK Foods business dealings, which started in August 2005.

According to statements made in the suit, it appears that Rahal would approach employees at industry giants like Kraft Foods Inc., Safeway Inc. and Frito-Lay and drop a $100 bill in front of them. He would then say, "You must have dropped this, is it yours?" If they agreed, he knew they were open for a "business offer," which typically included money paid for inside information on competitors' bids. In some cases, the bribes were paid for an assurance that SK Foods would win the bid -- even if they were offering a higher price for their tomato-products than their competitors.

In April, the Internal Revenue Service seized more than $600,000 held in two separate accounts of Intramark USA, Inc. which was to be used in further bribery activities.


An unnamed witness is cited in the documents as saying that the bribes were to be paid through Intramark so as to insulate SK Foods from potential lawsuits. The witness went on to say that while the scheme was discussed, Chief Executive Officer Salyer was present.

The lawsuit is seeking an order to forfeit the seized money based on the criminal findings found thus far in the investigation. No official charges have been filed yet against any of the named parties in the suit.

The case is being jointly investigated by the FBI, the Criminal Investigation Division of the IRS, the Office of the Inspector General, the Food and Drug Administration and the Antitrust Division of the Department of Justice.

On April 17, just one day following the money seizure, the SK Foods plant in Lemoore was the target of an FBI search warrant. One employee at the scene said that SK Foods was "in dispute with governmental agencies" and that the agents were merely there to gather records.

SK Foods is in the middle of a pending federal class action lawsuit that alleges the company hired more than 5,000 illegal immigrants in a period between 2002 and 2006, which is a violation of the Racketeering Influence and Corrupt Organizations act.

Calls to the SK Foods Executive Offices in Monterey were not answered on Thursday.

SK Foods was named Lemoore's Business of the Year in 2007.

The reporter can be reached at 583-2425.

(Aug. 22, 200
http://www.hanfordsentinel.com/articles ... 259347.txt

2 plead guilty in food industry corruption case
By Denny Walsh
dwalsh@sacbee.com
Published: Wednesday, Jan. 28, 2009 | Page 3A

Two former senior managers of national food companies pleaded guilty Tuesday in Sacramento federal court to charges growing out of an ongoing nationwide investigation of bribery and price-fixing that could be jacking up the cost of groceries.

At the center of the California portion of the corruption probe is Monterey-based SK Foods, L.P., one of the nation's largest growers and processors of tomato products. It has plants in Williams, 50 miles north of Sacramento, and Lemoore, south of Fresno.

As part of his guilty plea, Robert L. Watson, 59, of White Plains, N.Y., once a senior purchasing manager at Kraft Foods' Northfield, Ill., headquarters, admitted receiving $158,000 in bribes from former SK broker and director Randall Lee Rahal. Kraft was unaware of the scheme.

In return, Watson admitted, he ensured that Kraft purchased SK products and provided SK with information allowing it to secure Kraft sales contracts at elevated prices for approximately 230 million pounds of tomato products between 2004 and 2008.

In pleading guilty, Anthony Ray Manuel, 57, of Turlock admitted embezzling approximately $975,000 from Morning Star Packing Co., a manufacturer and marketer of bulk tomato products with facilities in Williams and Los Banos, in western Merced County. Manuel left Morning Star in 2005 to work for SK Foods, where he was terminated Monday. Morning Star was not aware of Manuel's criminal conduct.

He also admitted cheating the Internal Revenue Service by filing income tax returns in 2003 and 2004 that failed to disclose the stolen funds.

A third senior manager, James Richard Wahl Jr., 58, of Dallas, has been charged with depriving Frito-Lay, Inc., of his honest services. Wahl, who was the senior group manager for ingredients purchasing at Texas-based Frito-Lay, has agreed to plead guilty, according to prosecutors Benjamin Wagner and Sean Flynn. Frito-Lay was not aware of Wahl's alleged crimes.

Manuel, Wahl and Rahal have agreed to cooperate with the government's investigation, the prosecutors said.

They said Wahl will admit receiving about $160,000 in bribes from Rahal on behalf of SK Foods between 1998 and 2008 and will admit steering contracts to SK and furnishing information that enabled SK to inflate prices for goods sold to Frito-Lay.

Rahal, 59, of Ramsey, N.J., pleaded guilty last month in Sacramento to racketeering, price fixing, bid rigging, and contract allocation conspiracies on behalf of SK.

The cooperation of Manuel, Wahl and Rahal is not good news for others who have drawn the interest of FBI and IRS agents and antitrust investigators, prosecutors noted. The inquiry was sparked by reports of collusion among farmers, processors and retailers that may be helping drive grocery prices to all-time highs, they said.

As part of his guilty plea, Rahal claimed his racketeering was carried out with the knowledge, encouragement "and in some instances at the direction of" SK Foods.

"Despite the fact search warrants were executed on SK Foods premises almost a year ago, no charges have been filed against the company in this matter," attorney Malcolm Segal, who represents the firm and founder Scott Salyer, 52, said Tuesday in an interview. "Nor did those who pleaded guilty today indicate they had direct dealings with SK Foods.

"The allegation of the independent broker … that SK Foods is somehow implicated is simply incorrect," Segal said.

On a related front, customers and competitors of SK Foods have filed at least five restraint-of-trade or unfair-competition civil lawsuits over the past seven weeks in Sacramento federal court against SK Foods, Rahal and others.

Call The Bee's Denny Walsh, (916) 321-1189.

http://www.sacbee.com/capitolandcalifor ... 78476.html

An older related story:

Williams wary of immigration trouble after cannery raid
By Susan Ferriss
sferriss@sacbee.com
Published: Sunday, Jun. 01, 2008 | Page 3B

WILLIAMS – News that federal agents raided a big tomato cannery here six weeks ago hit residents like ketchup splattering on a white shirt.

Java Stop café owner Carol Ornbaun said that while the agents were hauling boxes of documents out of SK Foods, family and friends were frantically ringing cannery workers' cell phones to see what was up.

"I also heard," Ornbaun said, "that half the next shift didn't come in."

The FBI and the Internal Revenue Service have not said why they visited the plant – or SK Foods' headquarters in Monterey or a second cannery the company owns in Lemoore. Warrants used for the April 16 searches have been sealed.

Company representatives said only that the probe isn't about food quality or food safety. Some in Williams worry that immigration agents will come next.

In this speck of a city surrounded by gold and green farm fields about 45 minutes north of Sacramento, undocumented workers labor alongside legal workers and U.S. citizens and are sometimes related by blood.

"This is an agricultural area. That's who works in agriculture," said Monica Ordaz, who owns El Campesino, a store just down the road from the SK Food cannery. "I'm telling you, if they start doing immigration raids here, there might be 10 workers left in canneries."

Last month, federal agents carried out two high-profile immigration raids elsewhere, fueling fears in Williams of a similar crackdown.

Immigration and Customs Enforcement agents detained 63 undocumented employees of a Bay Area taqueria chain in early May. A year before that raid, IRS agents had used a search warrant to investigate the El Balazo chain.

In Iowa, immigration agents detained 389 workers at a meatpacking plant on May 12 in a raid that federal officials say is the largest criminal enforcement operation ever carried out by immigration authorities at a workplace.

Also contributing to the speculation in Williams is a civil lawsuit against SK Foods that accuses the company of violating racketeering laws by allegedly "conspiring" to hire illegal immigrants to depress wages.

Robin Brewer, a former employee at the company's Lemoore plant, filed the suit in U.S. District Court in Fresno two years ago. In April, a judge denied a motion to make Brewer's claim a class-action suit.

SK Foods has denied Brewer's claim, contending it has a policy of not hiring illegal immigrants and follows federal hiring laws.

Brewer's Chicago-based lawyer, Howard Foster, said he doesn't know why the FBI and IRS raided SK Foods, and that neither agency has approached him.

If federal agents were to shut down SK Foods, which employs thousands at the peak of the canning season, the closure would have a ripple effect, said Ornbaun. "Growers have contracts," she said. "Truckers have contracts."

Ordaz, whose father works at the sprawling cannery, said, "Sometimes the cannery works six or seven days a week, with three shifts. That's a lot of house payments people are making."

Ordaz's customers are mostly Mexican American and Mexican workers, including many from SK Foods. They can wire money to Mexico from her shop, cash checks and get help filling out various types of insurance or employment paperwork.

SK Foods – and the town of Williams – are part of California's lucrative tomato empire, which supplies one-third of the world's processed tomatoes. More tomatoes for processing are grown in the Central Valley than anywhere else in the world.

With factories in New Zealand and Australia, SK Foods is one of the world's top vegetable processors. Two years ago, the company joined forces with two other tomato firms, Ingomar Packing and Los Gatos Tomatoes, to create the first federally licensed California Tomato Export Group.

Rodger Wasson, a Santa Cruz County-based consultant to the group, said he doesn't know why federal agents searched SK Foods.

Antonio Saavedra, who drives a truck for Morning Star, which operates a cannery right next to SK Foods in Williams and is based in Woodland, speculated on what would happen if the FBI-IRS raid led to an immigration raid at SK Foods or any other work site in town.

He recalled how he was caught and deported a few times until he received amnesty in 1986. "We don't feel angry at those without papers," he said. "We used to be like them."

Call The Bee's Susan Ferriss, (916) 321-1267.
http://www.sacbee.com/288/story/979705.html