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Starbucks Among Victims of Alleged Scam

November 13, 1996|Times Staff and Wire Reports

Starbucks Corp. was among the victims of an alleged $75-million scam in which a Berkeley wholesaler is accused of selling Central American coffee beans as the more expensive Hawaiian variety, the U.S. attorney's office in San Francisco said. Federal agents arrested Michael Norton of Kona Kai Coffee of Berkeley last week, according to a statement from U.S. Atty. Michael Yamaguchi. Norton allegedly repackaged cheaper coffee from Panama and Costa Rica as Kona coffee and sold it to Seattle-based Starbucks, Hills Bros. of San Francisco and Peet's Coffee of Berkeley, among other companies. The alleged scheme operated for at least three years and cost coffee buyers as much as $75 million, according to the statement. Norton was charged with 12 counts of wire fraud and 12 counts of money laundering in a grand jury indictment handed down Oct. 24 and unsealed last week. A hearing is scheduled for Nov. 20. Starbucks bought "a minuscule amount of coffee from Kona Kai," said Jeanne McKay, a company spokeswoman. The beans were used in blends, she said.

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