Scott Salyer, former owner of SK Foods LP, was sentenced to six years in prison for racketeering and price fixing in U.S. District Court in Sacramento, Calif.
Judge Lawrence Karlton passed sentence on the tomato grower and processor Feb. 12. Salyer faced 4-7 years after pleading guilty last March. Since then he has lived under house arrest in Pebble Beach, Calif. — time that will not count against his sentence.
Salyer, 57, is scheduled to begin the sentence April 9, according to U.S. Attorney Benjamin Wagner. The six years in prison are to be followed by three years of supervised release.
As expected, the judge also ordered Salyer to forfeit $3.45 million he’d deposited in an Andorra bank account.
Federal prosecutors had asked the judge for seven years plus a $1.25 million fine. Over their objections, Karlton declined to impose a fine. Salyer’s attorney Elliot Peters has described him as bankrupt. The judge postponed until March 9 a restitution hearing that could define sums beyond those forfeited.
“Mr. Salyer’s fall from grace is of ancient Greek tragic proportion,” the defense said in a court memo seeking leniency. He was contrite, it claimed, and had suffered from diabetes, glaucoma and alcoholism.
Prosecutors in turn noted Salyer’s plea already took the maximum penalties off the table — 20 years for racketeering, 10 for price fixing.
“Greek tragedy is a little too dramatic to characterize what happened here,” Wagner told the court a week before sentencing. “He makes too much out of his fall, which was inevitable given the way that he conducted his affairs. Defendant cheated his customers, creditors and ex-wives.”
The U.S. attorney disputed defense claims about Salyer’s finances and character.
Salyer is claiming he’s owed $52 million in the liquidation of Australia-based tomato processor Cedenco. Prosecutors argued the legal action in Australia means he may become able to pay fines in the U.S.
Prosecutors alleged a pattern of deceptive behavior continued while he was in a Sacramento jail for seven months before securing bail. They said Salyer smuggled in pornography and had “lascivious conversations” and unmonitored visits with a woman who’s an attorney but does not represent him.
“Salyer is simply the kind of person who seems never able to pass up an opportunity to take an angle through deceit,” Wagner said in the court record.
On the character issue, prosecutors also called Salyer an “unbashful bigot” who practiced discrimination at SK Foods. Transcripts of taped conversations include epithets for Jewish and Japanese people. In one transcript, Salyer asks a conspirator if an applicant for chief financial officer could be Jewish – with the intent to drop him if so.
Salyer was chief executive officer of Monterey, Calif.-based SK Foods as well as owner. The company, which declared bankruptcy in 2009 and was later purchased by Olam International, had additional facilities in Lemoore, Williams and Ripon.
In his plea, Salyer admitted to prompting broker Randall Rahal to pay bribes and kickbacks to purchasing officers for Kraft Foods, Frito-Lay, and B&G Foods — all customers of SK Foods — over a four-year period. The intent, according to court documents, was to induce Kraft’s Robert Watson, Frito-Lay’s Richard Wahl, and B&G’s Robert Turner to promote SK Foods’ interests over that of their employer.
Lab test results for tomato paste were routinely falsified at Salyer’s direction, according to the plea. Former employees Alan Huey and Jennifer Dahlman were ordered to falsify tomato paste grading factors, and SK Foods lied about its product’s percentage of natural tomato soluble solids, mold count, production date and status as organic or conventional.
An illegal target price agreement was discussed with other tomato paste sellers. According to the court record, Salyer got a co-conspirator to agree to withdraw a lower offer to a customer.
Federal law enforcement officials dubbed the probe of Salyer and his conspirators Operation Rotten Tomato. The name was later taken up by a pro-Salyer website. Ten other defendants have pleaded guilty in the case. Two were sentenced and the remaining eight are to be sentenced Feb. 26.
“Salyer and his co-conspirators ripped off consumers and reaped big profits by manipulating prices on millions of pounds of processed tomatoes,” Jose Martinez, special agent in charge of the Internal Revenue Service’s criminal investigation arm, said in a news release.
According to court documents, in 2009 Salyer moved more than $3 million to Andorra and made a $50,000 deposit on a condominium there. Andorra, a principality between France and Spain, has no extradition treaty with the U.S. Salyer was arrested in February 2010 upon arrival in New York on a flight from London.