Scott Salyer, former owner of Monterey, Calif.-based SK Foods LP, has pleaded guilty to federal charges of racketeering and price fixing.
Salyer, 56, entered his plea March 23 before U.S. District Judge Lawrence Karlton in Sacramento, Calif.
Court documents and a news release from U.S. Attorney Benjamin Wagner outlined details of the plea agreement.
According to the agreement, Salyer encouraged broker Randall Rahal to pay bribes and kickbacks to purchasers for SK Foods customers Kraft Foods, Frito-Lay and B&G Foods from 2004 to 2008, in pursuit of preferential treatment. The buyers were Robert Watson of Kraft; Richard Wahl of Frito-Lay; and Robert Turner of B&G.
Salyer also admitted to ordering former employees Alan Huey and Jennifer Dahlman to falsify tomato paste grading factors.
SK Foods lied about its product’s percentage of natural tomato soluble solids, mold count, production date and status as organic, according to the agreement.
Salyer also admitted discussing an illegal target price agreement with other sellers of tomato paste. He induced a co-conspirator to agree to withdraw an offer made to a customer at a lower price, according to the agreement.
The plea deal secures a sentence of four to seven years. Otherwise Salyer could have faced maximum penalties of 20 years in prison for racketeering and 10 years for price fixing, plus fines up to $1.25 million. The former chief executive officer is scheduled to be sentenced July 10 by Karlton.
“The Antitrust Division has made antitrust enforcement in the agriculture sector a priority,” Sharis Pozen, acting assistant attorney general in charge of the Department of Justice’s Antitrust Division, said in the release. “The division is committed to continuing to work with its law enforcement partners to crack down on illegal price fixing conspiracies that affect products used by consumers in their everyday lives.”
“Corruption in any form is despicable, but when such occurs within the food industry, it erodes public trust in products and threatens the industry as a whole,” Herbert Brown, special agent in charge of the Sacramento field office of the Federal Bureau of Investigation, said in the release.
Salyer’s guilty plea is the 11th in an investigation begun in 2006. He was arrested by FBI agents Feb. 4, 2010, at New York’s John F. Kennedy International Airport as he returned to the U.S. from London. At the time, prosecutors described him as a flight risk.
A federal grand jury indicted him the same month. He was released from jail in September 2010 but remained confined to his Pebble Beach home under court supervision.
SK Foods declared bankruptcy in 2009 and was later purchased by Olam International.