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Tomato king Frederick Scott Salyer's journey from boardroom to jail cell

The former head of SK Foods awaits trial on 12 counts of corruption in an alleged scheme that ripped off consumers. It's the latest chapter in a saga of family infighting.

June 17, 2010|By P.J. Huffstutter, Los Angeles Times

Scott Salyer stepped into the federal courtroom in Sacramento, his trim frame swimming in an orange prisoner jumpsuit, his legs shackled, his wrists restrained.

It was a humiliating moment in February for the 54-year-old agribusiness mogul, the last prince of one of California's cotton farming dynasties. The tomato processing outfit he started with his father, Fred Salyer, was in bankruptcy. Scott was being blamed for running SK Foods into the ground — and far worse.

Salyer clenched his jaw as the prosecutor reeled off the allegations: that he and SK Foods tricked supermarkets and big food companies into buying substandard tomato products to put into brands found in almost every American cupboard.

Scott and SK Foods, the government said, conspired to inflate prices on millions of pounds of processed tomatoes sold to 55 companies in 22 states. It was an alleged scheme that ripped off consumers and reaped big profits for Salyer.

Behind him, in the crowded spectator seats, attorneys for angry creditors slapped high-fives. Fred, 86, was not there. Neither was any of the rest of the Salyer clan.

From humble Southern roots, the Salyers became one of the most powerful agricultural families in the West. And Scott's legal woes are rooted in a litigious family tradition.

For three generations, the Salyers fought one another in court to control multimillion-dollar corporations and, at its peak, oversaw a land empire three times the size of San Francisco. Yet the dynasty ultimately couldn't withstand the infighting, particularly the falling-out between Scott and Fred.

Fred declined to be interviewed for this story. So did Scott, who pleaded not guilty in May to 12 counts of corruption, including racketeering, wire fraud, obstruction of justice and violating federal antitrust laws. He remains in jail because he can't make his $6.3-million bail.

It's the latest chapter in a family saga that's unfolding through court documents, public records and interviews with colleagues, former workers and others.

No one has suggested Fred is complicit in the tomato debacle. If anything, investigators say, the real trouble started after he left.

Long before produce tore the family apart, the Salyers were known as one of the best cotton growers in the Central Valley. From the family's dusty ranch home in Corcoran, about 50 miles south of Fresno, they snapped up marginal land with access to water and pushed it to yield crops. Their cotton gins cranked out fibers used in products as varied as car tires and designer T-shirts.

Along with his brother Everette, Fred ran the business that their father built from nothing. Fred was a farmer's farmer, a tall, balding and bespectacled man who spent more time in the fields than behind a desk. A child of the Great Depression, he possessed frugal sensibilities that shaped his views from national politics to family affairs.

Scott was born Frederick Scott Salyer. He grew into an outgoing man with a movie-star smile and a penchant for racing cars and flying planes.

After Scott came home to Corcoran in 1977 with a degree in agribusiness from Cal Poly San Luis Obispo, Fred groomed him to take over the family business. At school, Scott had learned that success was achieved through growth, and growth came by leveraging what you own to borrow money.

By the early 1980s, Scott took the lead at Salyer American.

"There's an old saying: You give a horse its head," said Thomas Foley Jr., Fred's attorney. "Fred gave Scott his head."

Scott borrowed money from banks, using the family farmland as collateral, Foley said. Costs mounted as floods battered the Central Valley and oversupply sent cotton prices plummeting.

Fred tried to step back in, Foley said, but by 1987, Salyer American was more than $100 million in debt. Father and son turned over more than half of the family's farmland — 40,000 acres — to its main lender, Bank of America, to clear the debt.

Tensions grew. A business consultant was hired to be a buffer between Fred and Scott. Together, they agreed to get into the tomato business.

The plan started simply: Grow tomatoes on Salyer land, broker deals with other farmers to ensure plenty of supply, and build factories to process it all.

By the summer of 1990, the first SK Foods plant was running in Lemoore, Calif., said Richard Jennings, a former president of SK Foods. "We only used the best produce and the best equipment," Jennings said.

But, he added, "Scott was always asking, 'Why are we going to all this trouble? Who's going to know the difference?'"

The strain between Fred and Scott continued. At board meetings, Scott would scream and belittle anyone who disagreed with him, Jennings said, while Fred would stew quietly.

Scott wanted to run SK Foods, so he bought out his family's interest in 1996, Foley said. But he still had ties to Salyer American Fresh Foods, the family's produce-growing and -selling firm.

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