A Texas businessman has agreed to pay $15 million to settle federal allegations of defrauding the government by selling old and potentially dangerous food to the U.S. military to supply combat soldiers serving in Iraq, according to a new federal complaint.
Prosecutors had alleged that Samir Mahmoud Itani and his company American Grocers Ltd. profiteered off the war in Iraq by buying food products with a short shelf life, paying a deep discount for them -- and changing the labels to make them seem fresher than they really were.
Itani's privately held American Grocers bought core staples from some of the country's leading food manufacturers, including Kraft Foods International Inc., the Hershey Co., Frito-Lay North America, Sara Lee Corp. and ConAgra Foodservice, according to the civil complaint filed in the U.S. District Court in Houston and interviews with the whistleblower in the case.
Itani allegedly ordered employees to alter the packaging of a long shopping list -- which included boxes of potato flakes, salad dressings, containers of lobster and ground hamburger patties among other things -- in order to meet military procurement contractor requirements for freshness. And as the country's military presence grew in the Middle East, Itani's business boomed.
Prosecutors said that Itani, 51, two family members and a tight-knit group of business acquaintances used this scheme to sell at least $36 million worth of adulterated food products to the government from about 2003 to 2006 during the Iraq War, also known as Operation Iraqi Freedom.
"All it took," according to the complaint, "was false promises, a warehouse and a few hundred buckets of nail polish remover."
After semi-trucks loaded with pallets of raw Jennie-O turkeys, blocks of Kraft cheese and vats of J.M. Smucker's peanut butter arrived at the warehouse and unloaded the goods, employees used acetone, spray paint or a small drill to erase the expiration dates on the product labels, according to court filings unsealed this week.
New dates were then printed out or stamped onto new stickers, according to the filings. The new labels falsely showed that the food would remain fresh for an additional nine to 18 months, depending on the product and how much shelf life it had left, according to federal court records.
"Companies that provide supplies to our men and women in uniform must be held to a high standard," said Tony West, assistant attorney general for the civil division of the Department of Justice said in a statement. "We will be vigilant in protecting taxpayer funds from fraud, especially where the fraud relates to contracts meant to support our troops."
Suzanne Itani, chief executive of American Grocers and Samir's wife, said in a statement that the company still disputes the allegations asserted against it.
However, Itani said, the company is "proud of the service and products it delivers to its customers" and they "look forward to returning our full attention to serving our many loyal customers throughout the world."
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