http://www.latimes.com/business/la-fi-1120-military-food-fraud-20101116,0,6883535.storyTexas businessman settles military food mislabeling case for $15 million
By P.J. Huffstutter and Andrew Blankstein, Los Angeles Times
A Texas businessman has agreed to pay $15 million to settle federal allegations that he and his company cheated the government by selling old and potentially dangerous food to the U.S. military to supply combat troops serving in Iraq and elsewhere. Prosecutors had alleged that Samir Mahmoud Itani and his company American Grocers Ltd. profited from the Middle East conflict by ripping off taxpayers and shortchanging U.S. soldiers in the mess hall. According to the government, Itani's firm bought deeply discounted products whose freshness dates had expired or were nearing expiration. His workers then altered those dates and resold those supplies to the government for hefty markups.
On Friday, Department of Justice officials announced that Itani, his wife, Suzanne, his brother Ziad and the company agreed to pay the penalty to settle the false-claim charges in this federal whistle-blower case... Samir Itani could not be reached for comment. According to property records, he owns a $2.2-million, 9,931-square-foot mansion with two elevators in an upscale Houston neighborhood. Prosecutors said that Samir Itani, 51, and a tightknit group of family and business acquaintances sold at least $36 million worth of mislabeled food products to the government.
The shopping list was long and included potato flakes, salad dressing, produce, peanut butter, lobster and hamburger patties, according to the federal complaint. The supplies flowed out of Texas and to bases across the Middle East from about 2003 to 2006 during the Iraq war. As the U.S. military presence grew in the Middle East, Itani's business boomed. American Grocers shipped so much stale merchandise that the company bought paint solvent by the barrel and set up assembly lines to wipe out the old labels to make room for the phony dates...
According to the complaint, Itani's privately held American Grocers purchased staples nearing or past their "use by" dates from some of the country's leading food manufacturers. After trucks unloaded the goods at the company's warehouse, an assembly line of as many as 30 employees used buckets of acetone — a key ingredient in paint thinner and nail polish remover — black spray paint or a small tool to erase the expiration dates. New dates were then printed out or stamped onto new stickers showing that the food had an additional nine to 18 months of shelf life, prosecutors alleged. The food was then packed into air freight or sea containers and sent overseas. So much acetone was used inside the firm's Houston warehouse that it "smelled strong" like being inside a nail salon, recalled Delma Pallares, a former sales manager and the whistle-blower in the civil case...
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