Rotten tomatoes

The arrest earlier this month of Frederick Scott Salyer on charges of racketeering, fraud and obstruction of justice got some attention, but oh, what a backstory. Salyer, who lives in Pebble Beach and had owned Monterey-based SK Foods, is allegedly part of a wide-ranging scheme to bribe the purchasing managers at Frito-Lay, Safeway and B&G Foods (maker of Ortega Mexican foods). The bribes allowed him to sell tainted tomato products at jacked-up prices. From the NYT:

The scheme, as laid out by federal prosecutors, has two parts. Officials say that Mr. Salyer and others at SK Foods greased the palms of a handful of corporate buyers in exchange for lucrative contracts and confidential information on bids submitted by competitors. This most likely drove up ingredient prices for the big food companies. In addition, prosecutors say that for years, SK Foods shipped its customers millions of pounds of bulk tomato paste and puree that fell short of basic quality standards -- with falsified documentation to mask the problems. Often that meant mold counts so high the sale should have been prohibited under federal law; at other times it involved breaching specifications in the sales contracts, such as acidity levels or the age of the product.

The tainted shipments went out to more than 55 companies (almost all of the nation's tomatoes are processed in one of four companies in California). Some of the companies detected problems and sent the products back. Others didn't. It's the kind of activity that has been taking place in China - and which caused outrage a couple of years ago. Well, apparently it also happens a lot with American companies. Prosecutors allege that Salyer would routinely order products to be mislabeled - say, stamping "organic" on a regular can of whole tomatoes, and then charging more for them. Salyer ran the fraud along with Randall Rahal, who acted as a food broker for SK. Rahal pleaded guilty and has been cooperating.

It was Mr. Rahal who made the contacts with the four buyers who took bribes. He was caught on a wiretap in April 2008, promising to help Mr. Watson with his tax payment, according to court papers. In another conversation, reported by a witness, Mr. Rahal explained the art of ascertaining whether a person would be susceptible to bribery. According to court papers, Mr. Rahal recounted how he would drop a $100 bill on the floor, then bend to pick it up, saying: "You must have dropped this. Is it yours?" If the person said yes, Mr. Rahal considered him receptive.

The FBI has been conducting a five-year investigation dubbed, Operation Rotten Tomato. SK declared bankruptcy last May and has since been acquired by another company. Here's the FBI release.