Ex-owner of SK Foods Indicted in Tomato Scandal

Sacramento--A federal grand jury indicted former SK Foods owner Frederick Scott Salyer on racketeering and six other counts of corruption for allegedly directing a decade-long scheme to quash competition and sell tomato products at inflated prices. The practice led to consumers paying more at the grocery store.

Salyer, a member of one of the state's most powerful farming families, was accused Thursday of violating the Racketeer Influenced and Corrupt Organizations Act, as well as conspiracy, obstruction of justice and four counts of wire fraud. If convicted on all counts, Salyer could face at least 20 years in prison. 

Among other things, prosecutors alleged that Salyer, SK Foods' onetime chief executive, organized and led a conspiracy to use more than $330,000 in bribes from 1998 to 2008 to subvert competition and get deals to sell his company's tomato paste, peppers and other products to Kraft Foods Inc., Safeway Inc., Frito-Lay North America Inc. and Gerber Products Co., among others.

Nearly 95% of all tomatoes grown in the U.S. are processed by four California firms. SK Foods, with its two Central Valley plants, was one of these tomato giants. When the investigation of SK Foods began in 2007, the company controlled 10% to 20% of that market, according to prosecutors.

Prosecutors claimed that Salyer and other SK Foods officials tricked food makers into buying a lesser-quality tomato paste, which had been mislabeled to appear of a higher grade, and then shut out rivals on deals with big processors and supermarket chains.

In the end, prosecutors say, the conspirators were able to sell the paste at a markup of 30% or more. For the plan to work, Salyer allegedly directed that some employees of the company's customers be bribed to take the orders and look the other way.

Read the full story by P.J. Huffstutter at LA Times.