08/12/2009

News / Man Sentenced to Prison in Tomato Industry Corruption Case

Former Kraft Foods Purchasing Manager Sentenced for Accepting Bribes

SACRAMENTO, CA—United States Attorney Lawrence G. Brown announced today that ROBERT L. WATSON, 59, of White Plains, N.Y., was sentenced by United States District Judge Lawrence K. Karlton to two years and three months in prison to be followed by two years of supervised release, and ordered to pay $1,858,000 in restitution to his former employer, Kraft Foods. WATSON pleaded guilty on January 27, 2009 to two counts of honest services mail fraud in connection with a scheme in which he accepted over $158,000 in bribes from a supplier of tomato products to the company.

This case is the product of a joint investigation by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation, and the United States Department of Justice's Antitrust Division.

According to Assistant United States Attorneys Benjamin B. Wagner, Sean C. Flynn, and Anne E. Pings, who are prosecuting the case together with Barbara Nelson and Richard Cohen of the San Francisco Field Office of the Antitrust Division, between 2004 and 2008, WATSON served as a senior purchasing manager for Kraft Foods Inc., in Northfield, Ill. In his plea agreement, WATSON admitted to receiving approximately $158,000 in personal bribe payments from RANDALL LEE RAHAL, 61, of Ramsey, N.J., a former sales broker and director of SK Foods L.P., a California-based grower and processor of tomato products and other food products for sale to manufacturers, food service distributors and marketers, and retail outlets nationwide.

"By accepting bribes in making his purchasing decisions, Robert Watson defrauded both his employer and ultimately the consumer," stated United States Attorney Brown.

WATSON admitted to depriving Kraft Foods of its right to his honest services by steering contracts for processed tomato and other food products to SK Foods rather than industry competitors in return for the bribes, and by securing contracts between his employer and SK Foods for the sale of certain food products at inflated prices.

WATSON is the first defendant to be sentenced as a result of the ongoing federal investigation into fraud and corruption in the tomato products industry. RAHAL pleaded guilty to participating in racketeering, price fixing, bid rigging, and contract allocation conspiracies, among other charges, on December 16, 2008. JAMES WAHL, 58, of Dallas, and ROBERT TURNER, 59, of Randolph, N.J., former purchasing managers at Frito-Lay Inc. and B&G Foods Inc., respectively, have also admitted to receiving illicit payments from RAHAL. They each pleaded guilty to two counts of honest services fraud on February 18, 2009 and May 5, 2009 respectively.

On February 18, 2009, former SK Foods Records and Business Analyst, JENNIFER LOU DAHLMAN, 48, of Lemoore, Calif., pleaded guilty to causing the shipment to SK Foods' customers of processed tomato products that were adulterated and unsaleable domestically due to their excessive mold content. DAHLMAN further admitted to routinely falsifying the various grading factors and results of required laboratory testing contained on "Certificates of Analysis" and other quality control documents that accompanied customer-bound shipments of tomato product. DAHLMAN admitted that her actions were conducted at the express instruction and direction of senior leaders and directors of SK Foods.

ANTHONY RAY MANUEL, 57, of Turlock, Calif., formerly an employee of Morning Star Packing Company and then of SK Foods, pleaded guilty on January 27, 2009 to embezzling approximately $975,000 from Morning Star and to filing a false tax return.

Each of those defendants is awaiting sentencing. The investigation is ongoing.

http://sacramento.fbi.gov/dojpressrel/pressrel09/sc081109.htm

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