Industry News | December 11, 2008

Corruption Uncovered in Tomato Industry

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A processed-tomato products broker was charged yesterday for conspiracy innvolving price fixing, money laundering, and racketeering, according McGregor W. Scott, U.S. attorney for the eastern district of California.

Randall Lee Rahal is the owner and president of Intramark USA Inc., a New Jersey-based wholesaler of food ingredients, including processed-tomato products. The information alleges that Rahal served as a sales broker for SK Foods, L.P., a grower and processor of tomato products and other food products in California.

According to the charges, SK Foods and its related corporate entities constituted a racketeering enterprise, which Rahal, other SK Foods leaders, and SK Foods employees helped to further through a variety of illicit activities. Specifically, it is alleged that Rahal, with the knowledge and consent of other SK Foods leaders and employees, routinely paid bribes to the purchasing agents of some of SK Foods' customers in order to: ensure those customers bought product from SK Foods rather than from its competitors; ensure that its customers paid an inflated price for such product; and induce the purchasing agents to turn over to SK Foods the bidding information of SK Foods' competitors.

It is also alleged that between January 2004 and April 2008, Rahal helped to direct the sale of processed-tomato products to some of SK Foods' customers which did not meet the quality and content specifications bargained for in those customers' contracts.

"A large portion of the tomatoes used by food product manufacturers nationwide are harvested and processed here in the eastern district of California. We must ensure that the tomato processing industry is free of corruption, kickbacks, and illegal collusion," Scott says.

Rahal plans to plead guilty to the racketeering, money laundering, and antitrust charges, and has pledged to cooperate in the investigation as well as forfeit more than $600,000. He is expected to appear in U.S. District Court in Sacramento in the near future to enter his guilty pleas.

--Blair Chancey

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