Tomato bribery probe just the beginning, prosecutors say

Los Angeles Times / latimes.com ^ | February 8, 2010 | 5:46 p.m. | By P.J. Huffstutter

[thecodont]

Reporting from Sacramento - To his friends, Randall Lee Rahal was just a food salesman, someone who routinely left his home on Shadyside Road in Ramsey, N.J., to crisscross the country hawking California tomatoes.

The 61-year-old sold them pureed. He sold them crushed. He sold them roasted and mashed into paste. His clients were food manufacturers, supermarket chains and other commercial buyers who turned his products into soup, ketchup and salsa.

But in the eyes of the Justice Department, Rahal was Tomato Enemy No. 1 -- a produce scofflaw who allegedly peeled off $100 bills and carried cash-stuffed envelopes to bribe buyers from leading food companies in a decade-long racketeering scheme that may have led to higher prices for consumers at the grocery store.

In a series of court filings starting in 2008, federal prosecutors in Sacramento allege that Rahal, nine others and SK Foods of Monterey, Calif., used more than $330,000 in bribes from 1998 to 2008 to subvert competition and nail down deals to sell the company's tomato paste, peppers and other products to Kraft Foods Inc., Safeway Inc., Frito-Lay North America and B&G Foods, among others.

All but one of the individuals have pleaded guilty to offenses typically associated with organized crime: racketeering, collusion, bribery, money laundering and bid-rigging. Five of the people worked for SK Foods; four were employed by its customers. SK Foods' sales plummeted as the case unfolded and it was sold out of Bankruptcy Court last year to a Singapore firm.

Rahal -- who pleaded guilty to racketeering, money laundering and conspiring to eliminate competition -- faces up to 20 years in prison at his scheduled sentencing in May. Neither Rahal, who was a sales broker and a director of the company, nor his attorney could be reached for comment.

[thecodont]

"Some of the kickbacks were paid in cash or checks, handed off at a rural diner in one instance and at a secret meeting outside a Bay Area transit station in another, the complaint alleges. Others were less direct, such as offering to pay for medical insurance for a buyer's child, prosecutors say."

[hsalaw]

Sounds a lot like the way Congress works.

[kcvl]

Through Intramark, RAHAL worked on behalf of SK Foods as a sales broker. In that capacity, RAHAL oversaw among other things the negotiation and execution of contracts between SK Foods and many of its customer companies. Through Intramark, RAHAL also acted as an advisor and director of SK Foods, giving direction to and receiving periodic reports regarding various aspects of SK Foods’ business from SK Foods employees, including certain co-conspirators.

Bribery payments to the purchasing agents of SK Foods’ customers were made with the knowledge and at the direction of SK Foods’ owners, leaders, employees and associates.

******

government announced a plea agreement with Robert C. Turner, Jr., a B&G Foods, Inc. employee who acknowledged accepting bribes from independent food broker Randall Lee Rahal and Rahal’s company Intramark USA, Inc.

Randall Lee Rahal, was never an officer, employee or director of SK Foods LP, and instead was an independent commissioned broker. He himself has plead guilty to numerous federal violations and owes SK Foods, LP substantial sums of money for unearned commissions he received from the company.

******

James Richard Wahl Jr. admitted receiving $160,000 “on behalf of SK Foods” from former SK broker and director Randall Lee Rahal between 1998 and April of last year.
...
In return, Wahl admitted, he ensured that Frito-Lay purchased SK’s products and he provided SK with information that allowed it to sell to Frito-Lay at inflated prices.

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

Wahl, 58, is the second senior purchasing manager for a national company to admit receiving bribes to steer contracts to SK Foods and to buy its processed tomato and other food products at inflated prices.

Frito-Lay was unaware of the bribes.

Rahal, Dahlman and Wahl have all agreed to cooperate with prosecutors and agents in the ever-widening probe.

[kcvl]

US: No bail for ex-CEO of SK Foods

2/8/2010

Scott Salyer, the Monterey agribusiness executive accused by the federal government of overseeing 10 years of corrupt practices in the processed tomato industry, had no plans to flee the country to avoid prosecution, his attorney said Friday.

“I was astounded they came to that conclusion,” said Malcolm Segal, a Sacramento defense attorney who represents Salyer, the former owner and CEO of the SK Foods group.

Salyer, 54, of Pebble Beach, was arrested by the FBI Thursday on a warrant charging him with 20 counts of mail and wire fraud after he got off a flight from London at New York’s John F. Kennedy Airport.

Salyer’s arrest was the most recent development in a five-year federal probe of fraud and bribery in the processed tomato industry. Several former SK Foods employees and food buyers for its major customers have pleaded guilty and agreed to work with prosecutors.

Prosecutors obtained a sealed arrest warrant for Salyer in early January, saying in court documents that they feared he was going to flee the country and was transferring millions of dollars to overseas banks.

[kcvl]

Scott Salyer, Alleged Big Tomato Racketeer, Nabbed at JFK While Fleeing Felony Charges

By Ward Harkavy, Friday, Feb. 5 2010

Federal agents playing catch-up with alleged tomato racketeer Scott Salyer scooped him up Thursday at JFK as the California millionaire facing fraud charges was supposedly scheming to flee the U.S.

Not only is Salyer, 54 and the former CEO of SK Foods, allegedly the most rotten tomato in the country — he’s accused of knowingly selling hazardously moldy tomato paste, for cryin’ out loud — but he’s also heir to one of the biggest land empires in California history.

http://blogs.villagevoice.com/runninscared/archives/2010/02/scott_salyer_al.php

Photo at link above...

[kcvl]

FBI and IRS agents executed a search warrant on the offices of SK Foods Wednesday morning in Monterey.

April 16, 2008

Statement From Scott Salyer, CEO of SK Foods

We want to reassure our customers, employees and friends that we clearly stand behind the quality of our products and employees and reassure our customers of the absolute safety of our products.

Our company was established based on the principle of integrity; producing a product of the highest quality and dedication to our customer relationships.

Our investment in our employees, their training and in our widespread facilities represents our commitment to the future and to our long-term success.

We look forward to resolving this situation that is a business issue unrelated to our products' quality and safety."

[familyop]

If the Feds are going after such bribery and graft all over our country, they have a long way to go. I hope that they do. :-)

[JLS]

... more than $330,000 in bribes from 1998 to 2008 to subvert competition ...

It better have been a $30,000 a year for 11 years to bribe and entire industry before I believe anything serious happened here.

[Persevero]

It’s only ok if our elected Senators and Reps do it. See: the Louisiana Purchase, etc.

[count-your-change]

No matter how you slice these tomato stories, they can be taken with a grain of salt.

[Scotsman will be Free]

Their mistake was in competing with the govt. That isn’t allowed. Ever.

[RoadKingSE]

a decade-long racketeering scheme that may have led to higher prices for consumers at the grocery store.

I'll bet the higher prices for tomatoes don't come anwhere close to the cost of Harry Reid's healthcare bribes to the whores in Louisiana and Nebraska. Them Senators got purty mouths don't they?

[DainBramage]

Was there an FBI ..uhm...plant?

[tubebender]

Major scandal in the Tomato Patch...