ShareThisA former senior executive of a major California food company was charged this week in federal court with conspiring to provide consumers with mislabeled, inferior tomato products at inflated prices.
Jeffrey Sherman Beasley, who was a vice president of SK Foods LP, is the highest-ranking insider to be charged in the expanding tale of corruption in California's tomato industry.
Beasley has agreed to plead guilty and cooperate with the government in its ongoing investigation, according to prosecutors Benjamin Wagner and Sean Flynn.
Beasley, 63, of Lockeford in San Joaquin County, was vice president for industrial relations at SK Foods from 2004 to 2008. He worked at its then-headquarters in Monterey and at its offices in Ripon in San Joaquin County.
Acting U.S. Attorney Lawrence Brown vowed Wednesday that his office will continue to pursue those involved in what he called a "widespread fraud in the American marketplace." The long-running probe is a joint effort of the FBI, the IRS and the U.S. Department of Justice's Antitrust Division.
SK Foods LP, with two Central Valley plants, was a grower, processor and distributor of tomato and other food products for sale to manufacturers, distributors, marketers and retail outlets. In June the company, which was part of agribusiness tycoon Scott Salyer's SK Foods Group, was sold out of bankruptcy for $39 million to Olam International of Singapore.
Beasley is accused of plotting with others at the company "to defraud and deprive" customers of the honest services of their purchasing managers by bribing them.
It is further alleged he and other senior leaders at SK Foods routinely ordered the falsification of quality control documents. This made it appear customers, including retail outlets nationwide, were getting products with a nutritional value that complied with contractual specifications, when it did not.
In a January 2007 e-mail cited in the charges, Beasley informed fellow executives that the inventory of processed tomato product containing the required 31 percent of natural tomato soluble solids, or NTSS, was approximately 34.5 million pounds short of contractual obligations. He suggested mislabeling 7.9 million pounds containing NTSS levels of 25 percent and 28 percent.
Bribes ensured that customers purchased processed tomato products from SK Foods at inflated prices. The payments also induced purchasing managers to share competitors' bids and other proprietary data with SK Foods.
Former purchasing managers at Kraft Foods Inc., Frito-Lay Inc., and B&G Foods Inc. have pleaded guilty to receiving bribes from former SK Foods sales broker Randall Lee Rahal. The 60-year-old Rahal has pleaded guilty to racketeering, bid rigging, and contract allocation conspiracies.
According to Wednesday's charges, the bribes were paid with the knowledge of Beasley and his co-conspirators, and at the direction of SK Foods' top leadership.
Cited as an example is a recorded telephone conversation between Beasley and Rahal on April 3, 2008, during which Rahal said a purchasing manager for an SK Foods customer had recently turned over to Rahal a contract offer to the customer from Morning Star Packing Co. Beasley said the data would be useful at an upcoming SK Foods pricing strategy meeting.
Woodland-based Morning Star is the world's largest maker and shipper of processed tomato goods. It is suing SK Foods LP, Salyer and Rahal and his New Jersey food brokerage, Intramark USA Inc., alleging commercial bribery, antitrust violations, racketeering and unfair competition.
The civil suit is among a number filed over the past several months against SK Foods. Most of them seek class certification on behalf of customers and accuse the company of price fixing.
E-mail Denny Walsh at dwalsh(at)sacbee.com.
(Distributed by Scripps Howard News Service, www.scrippsnews.com.)
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