Federal investigators seeking to crack down on corruption in California’s tomato-processing sector have apparently secured guilty pleas from two industry employees, one with a tomato paste supplier and the other with a processed tomato purchaser. Jennifer Dahlman, who worked for a California company under investigation for alleged bribery, price-fixing and mislabeling, reportedly pleaded guilty to causing the introduction of adulterated and misbranded food into interstate commerce with intent to defraud.

Dahlman apparently mislabeled products that should have been discarded because of high mold content, purportedly at the direction of company managers, thus giving her company an unfair advantage over competitors and leading to increased consumer prices for processed tomato products, such as sauces, soups and salsas. While she is cooperating with authorities, Dahlman faces up to three years in prison.
According to U.S. attorneys involved in the investigation, the mislabeled products posed no health hazard to consumers.

James Wahl, who formerly worked as a purchasing manager for a Texas-based food manufacturer, pleaded guilty to accepting bribes from a sales broker with Dahlman’s company to which he steered contracts. He is also cooperating with the Justice Department’s investigation, but faces up to 20 years in prison. As we reported in issue 276 of this Update, the nationwide investigation involves alleged artificial inflation of prices for tomato products. Prosecutors, who are also looking into similar allegations involving the egg, fertilizer, cheese, milk, and citrus-fruit industries, are referring to the alleged graft as a “racketeering enterprise,” although companies targeted by the investigation claim they have done nothing wrong. See San Francisco Chronicle, February 19, 2009.

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For decades, manufacturers, distributors and retailers at every link in the food chain have come to Shook, Hardy & Bacon to partner with a legal team that understands the issues they face in today's evolving food production industry. Shook attorneys work with some of the world's largest food, beverage and agribusiness companies to establish preventative measures, conduct internal audits, develop public relations strategies, and advance tort reform initiatives.