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Agribusiness exec pleads not guilty in tomato racketeering case

Former SK Foods owner Frederick Scott Salyer is accused of paying more than $330,000 in bribes to get corporate customers to sell his products. He remains in federal detention without bail.

February 27, 2010|By Marc Lifsher and P.J. Huffstutter

Reporting from Los Angeles and Sacramento — Former SK Foods owner Frederick Scott Salyer pleaded not guilty Friday to federal racketeering and corruption charges for allegedly directing a decade-long scheme to quash competition, pay bribes and sell tomato products at inflated prices.

The agribusiness executive, who entered his plea in a federal courtroom in Sacramento, is charged with violating the Racketeer Influenced and Corrupt Organizations Act, as well as conspiracy, obstruction of justice and four counts of wire fraud.

Salyer remained in federal detention without bail. But U.S. Magistrate Edmund F. Brennan agreed to continue the hearing next week in order to allow the defense team to question an FBI agent whose report concluded that Salyer was a flight risk and should not be freed on bail to await trial.

Prosecutors opposed releasing Salyer. They contended that he had spent months living in southern France, moving money into overseas banks and making plans to flee extradition in connection with the charges.

But standing next to the shackled executive, defense attorney Malcolm Segal urged the judge to release his client on bail.

The lawyer argued that the FBI had conducted a sloppy investigation and that prosecutors were relying on false information provided from a disgruntled former Salyer employee.

Segal told the judge that Salyer had been living and traveling abroad to look for investment opportunities. He said Salyer wasn't trying to sneak back into the country when he was arrested. Instead, he said, Salyer had planned to fly back to California to be with his daughter after the birth of his grandchild. "Why on God's earth would he get on a plane if he intended to flee?" asked Segal.

The bail fight marks the latest chapter in a lengthy investigation that FBI investigators dubbed "Operation Rotten Tomato."

Among other things, a federal grand jury indictment charged that Salyer, 54, organized and led a conspiracy to pay more than $330,000 in bribes from 1998 to 2008 to subvert competition and get deals to sell his company's tomato paste, peppers and other products to Kraft Foods Inc., Safeway Inc. and Frito-Lay North America Inc., among others.

The government also said the company falsified documents in order to pass off tomato paste with higher levels of mold to these corporate customers.

Salyer was arrested at John F. Kennedy International Airport in New York on Feb. 4 upon his arrival from Switzerland. He had booked a return ticket to Europe for the following day, according to court documents.

The judge said he "had very strong concerns" that Salyer was a flight risk, but agreed to consider the matter further on Wednesday afternoon.

marc.lifsher@latimes.com

p.j.huffstutter @latimes.com

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