New Jersey Man Charged in Tomato Industry Probe with Racketeering, Money Laundering, and Antitrust Violations
SACRAMENTO, Calif.—A New Jersey
processed-tomato products broker has been charged with participating in conspiracies
involving racketeering, price fixing, bid rigging and contract allocation,
and with money laundering in the processed-tomato products industry, U.S. Attorney
for the Eastern District of California, McGregor W. Scott, and Acting Assistant
Attorney General for the Department’s Antitrust Division, Deborah A.
Garza, announced today.
Randall Lee Rahal, 61, of Ramsey, N.J., has agreed to plead guilty to the
racketeering, money laundering, and antitrust charges. In addition, he has
agreed to cooperate in the government’s investigation and to forfeit
over $600,000. He is expected to appear in U.S. District Court in Sacramento
in the near future to enter his guilty pleas. Rahal’s plea agreement
is subject to court approval.
A three-count felony information (a charging instrument) was filed today
in U.S. District Court in Sacramento, Calif. against Rahal, 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 with operations in Monterey, Williams, Ripon, and Lemoore, Calif.
In his capacity as a broker, Rahal oversaw the negotiation and execution of
contracts between SK Foods and many of its customer companies and served as
an advisor and director for SK Foods. SK Foods’ customers included food-product
manufacturers, distributors, and retail outlets throughout the United States.
“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,” said U.S. Attorney Scott.
According to the charges, SK Foods and its related corporate entities constituted
a racketeering enterprise, an organization that Rahal and other SK Foods leaders
and 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 accomplish the following: 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.
These acts of mail and wire fraud deprived SK Foods’ customers of their
respective rights to the honest services of their own purchasing agents. The
money laundering charges against Rahal also stem from these illicit bribery
payments. Rahal, assisted by others at SK Foods, created and transmitted fraudulent
financial and business information to some of SK Foods’ customers in
order to ensure that those customers continued to do business with SK Foods.
Moreover, it is alleged that between January 2004 and April 2008, Rahal helped
to direct the sale of processed-tomato products to some of SK Foods’ customers
that did not meet the quality and content specifications bargained for in those
customers’ contracts. Rahal and others further directed the falsification
of both internal and customer-bound documentation in order to conceal the nature
of the inferior product and to defraud those customers of SK Foods.
The information further alleges that Rahal conspired to fix prices, allocate
contracts and rig bids for the sale of processed-tomato products on behalf
of SK Foods between February 2006 and April 2008, in violation of the Sherman
Antitrust Act.
“This conduct deprived the purchasers of processed-tomato products
of the benefits of a competitive marketplace, ultimately causing American consumers
to pay higher prices for these everyday staples,” said Acting Assistant
Attorney General Deborah A. Garza. “The Antitrust Division will continue
to prosecute vigorously those who defraud American consumers.”
The maximum statutory penalty on the racketeering charges is 20 years in
prison, while the money laundering charges carry a 10-year maximum sentence.
The charges for violating the Sherman Antitrust Act carry a maximum penalty
of 10 years in prison. For the Sherman Act violations, the maximum fines may
be increased to twice the gain derived from the crime or twice the loss suffered
by the victims of the crime, if either of those amounts is greater than the
statutory maximum fine.
Today’s charge is the first in a joint, ongoing investigation by the
U.S. Attorney’s Office for the Eastern District of California in Sacramento,
the Department of Justice Antitrust Division’s San Francisco Field Office,
the Federal Bureau of Investigation in Sacramento and the Internal Revenue
Service. Assistant United States Attorneys Benjamin B. Wagner, Sean C. Flynn,
and Anne E. Pings are prosecuting the case with Barbara Nelson and Richard
Cohen of the Antitrust Division’s San Francisco Field Office.
Anyone with information concerning racketeering or money laundering in the
processed-tomato industry should contact the U.S. Attorney’s Office for
the Eastern District of California at 916-554-2700. Anyone with information
concerning bid rigging or other anticompetitive conduct in the processed-tomato
industry should contact the Antitrust Division’s San Francisco Field
Office at 415-436-6660.
Press inquiries to the U.S. Attorney’s Office should be directed to
Lauren Horwood at 916-554-2706. Press inquiries regarding the Department’s
Antitrust Division should be directed to Gina Talamona at 202-514-2007. Press
inquiries regarding the FBI should be directed to Steve Dupre at 916-977-2245.
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