Federal authorities filed new charges Thursday in their case against tomato scion Frederick Scott Salyer, alleging a wider conspiracy that set inflated prices for tomato products.
The indictment charged Salyer, who had been head of agribusiness giant SK Foods, with five new felony counts and alleged that he conspired with others to fix prices or rig bids on products sold to three of the company's customers — McCain Foods USA, ConAgra Foods Inc. and Kraft Foods Inc.
Though the indictment doesn't name Salyer's co-conspirators, it could signal a push by the U.S. Justice Department to broaden its ongoing investigation into California's tomato processing industry.
The new action replaces a prior grand jury indictment, but includes the same seven counts of wrongdoing from the earlier filing. The latest charges come as Salyer, who is being held at Sacramento County Main Jail, is appealing the bail set by U.S. District Court Judge Lawrence K. Karlton.
The government has been ramping up its scrutiny of the food sector, driven by mounting concerns that, as the industry becomes increasingly consolidated, the public's grocery bills are getting bigger in part from corrupt or monopolistic practices in the industry
The grand jury's superseding indictment alleged that Salyer, 54, and unnamed others conspired to "suppress and eliminate competition by raising and fixing prices of tomato paste to be sold in the United States."
Nearly 95% of all tomatoes grown in the U.S. are processed by five companies in California, including SK Foods, which has two Central Valley plants.
Defense attorney Malcolm Segal said the allegations are without merit and "we intend to litigate this to conclusion."
Though Salyer's co-conspirators are not named in Thursday's indictment, the allegations closely track a civil suit that former customers brought in federal court in Sacramento.
Under the guise of participating in a federal export effort, Salyer and executives of rivals Ingomar Packing Co. in Los Banos and Los Gatos Tomato Products in Huron created the California Tomato Export Group, according to the civil complaint. But the case alleges that the real aim was to use the group as a forum to fraudulently set tomato product prices in the U.S.
At the time the group was formed in 2005, the three firms processed more than half of all tomato products in the U.S., according to the civil complaint.
Officials from Ingomar and Los Gatos declined to comment on the allegations Thursday.