Calif. Exec Pleads Guilty to Tomato Price-Fixing
A former California food company owner pleaded guilty to racketeering Thursday in a national tomato price-fixing plot.
Frederick Scott Salyer, 56, was charged with bribing purchasing managers to buy tomato products from his company, Monterey-based SK Foods. Prosecutors said he fixed prices and rigged bids for the sale of tomato products to McCain Foods USA Inc., ConAgra Foods Inc. and Kraft Foods Inc.
Salyer pleaded guilty in federal court in Sacramento to two charges: racketeering and price fixing. The charges carry maximum 20-year prison sentences, although Salyer is expected to face four to seven years behind bars at his sentencing scheduled for July 10. He remains free on $6 million bail.
Salyer and his lawyer, Malcolm Segal, declined to comment outside the courtroom.
Salyer was accused of being at the center of price-fixing ring that helped SK Foods capture 14 percent of the processed tomato market and rise to the second largest tomato processor in the state before investigators raided the company in 2008.
He also admitted that SK Foods routinely falsified lab test results for its tomato paste and that he ordered former employees to falsify information including the product’s mold content and whether it qualified as “organic,” the U.S. attorney’s office said.
“Salyer and his co-conspirators manipulated prices on millions of pounds of processed tomatoes and improperly influenced supermarkets and big food companies into buying substandard tomato products put into brands found in almost every American home,” said Rick Goss, the assistant special agent in charge of the Internal Revenue Service’s criminal investigations unit. “Salyer and the defendants’ scheme ripped off consumers and reaped big profits.”
Herbert M. Brown, special agent in charge of the FBI’s Sacramento field office, said it took authorities more than six years to unravel the “web of lies and bribes that Salyer and his cohorts wove.”
Authorities said their investigation began in August 2006. Salyer was indicted in 2010 on 12 counts, including bribery, conspiracy and obstruction of justice.
Buyers from Kraft, Frito-Lay Inc., Safeway Inc. and B&G Foods Inc. have pleaded guilty to accepting bribes in the case. In all, 10 former employees or customers of SK Foods have pleaded guilty in the investigation.
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In addition, several lawsuits have been filed against SK Foods, which filed for bankruptcy protection in May 2009. Olam International of Singapore purchased the company two months later for $39 million.