U.S. Department
of Justice
Plea and Cooperation Agreement
| |
IN THE UNITED STATES DISTRICT COURT
I. INTRODUCTION A. Scope of Agreement: The Information to be filed in this case charges the defendant, Randall Lee Rahal ("Rahal"), with conspiring to conduct the affairs of an enterprise through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(d); money laundering in violation of 18 U.S.C. § 1957; and participating in, and aiding and abetting a conspiracy to suppress and eliminate competition by allocating contracts, fixing prices, and rigging bids in unreasonable restraint of interstate trade and commerce, in violation of the Sherman Act, 15 U.S.C. § 1, and 18 U.S.C. § 2. This document contains the complete Plea and Cooperation Agreement between the United States Attorney's Office for the Eastern District of California and the United States Department of Justice, Antitrust Division (the "government"), and the defendant regarding this case. This Plea and Cooperation Agreement is limited to the United States Attorney's Office for the Eastern District of California and the United States Department of Justice, Antitrust Division, and cannot bind any other federal, state, or local prosecuting, administrative, or regulatory authorities. B. Court Not a Party: The Court is not a party to this Plea and Cooperation Agreement. Sentencing is a matter solely within the discretion of the Court, the Court is under no obligation to accept any recommendations made by the government, and the Court may in its discretion impose any sentence it deems appropriate up to and including the statutory maximum stated in this Plea and Cooperation Agreement. If the Court should impose any sentence up to the maximum established by the statute, the defendant cannot, for that reason alone, withdraw his guilty plea, and he will remain bound to fulfill all of the obligations under this Plea and Cooperation Agreement. The defendant understands that neither the prosecutor, defense counsel, nor the Court can make a binding prediction or promise regarding the sentence he will receive. II. A. Waiver of Indictment and Guilty Plea: The defendant will waive indictment by grand jury, waive venue, and plead guilty to a three-count Information, substantially in the form attached hereto as Exhibit B, charging him with conspiring to conduct the affairs of an enterprise through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(d); money laundering in violation of 18 U.S.C. § 1957; and price fixing in violation of 15 U.S.C. § 1. The defendant agrees that he is in fact guilty of those charges and that the facts set forth in the Factual Basis attached hereto as Exhibit A are true and accurate. B. Restitution: The Mandatory Victim Restitution Act requires the Court to order restitution to the victims of certain offenses. If such restitution is ordered, payment should be by cashier's or certified check made payable to the Clerk of the Court. The defendant understands that this Plea and Cooperation Agreement is voidable by the government if he fails to pay the restitution as ordered by the Court. Defendant further agrees that he will not seek to discharge any restitution obligation or any part of such obligation in any bankruptcy proceeding. C. Special Assessment: The defendant agrees to pay a special assessment of $300 at the time of sentencing by delivering a check or money order payable to the United States District Court to the United States Probation Office immediately before the sentencing hearing. D. Agreement to Cooperate: The defendant agrees to cooperate fully with the government and any other federal, state, or local law enforcement agency, as directed by the government. As used in this Agreement, "cooperation" requires the defendant: (1) to respond truthfully and completely to all questions, whether in interviews, in correspondence, telephone conversations, before a grand jury, or at any trial or other court proceeding; (2) to attend all meetings, grand jury sessions, trials, and other proceedings at which the defendant's presence is requested by the government or compelled by subpoena or court order; (3) to produce voluntarily any and all documents, records, or other tangible evidence requested by the government; (4) not to participate in any criminal activity while cooperating with the government; and (5) to disclose to the government the existence and status of all money, property, or assets, of any kind, derived from or acquired as a result of, or used to facilitate the commission of, the defendant's illegal activities or the illegal activities of any conspirators. If the defendant commits any crimes or if any of the defendant's statements or testimony prove to be knowingly false, misleading, or materially incomplete, or if the defendant otherwise violates this Plea and Cooperation Agreement in any way, the government will no longer be bound by its representations to the defendant concerning the limits on criminal prosecution and sentencing as set forth herein. The determination whether the defendant has violated the Plea and Cooperation Agreement will be under a preponderance of the evidence standard. If the defendant violates the Plea and Cooperation Agreement, he shall thereafter be subject to prosecution for any federal criminal violation of which the government has knowledge, including but not limited to perjury, false statements, and obstruction of justice. Because disclosures pursuant to this Agreement will constitute a waiver of the Fifth Amendment privilege against compulsory self-incrimination, any such prosecution may be premised on statements and/or information provided by the defendant. Moreover, any prosecutions that are not time-barred by the applicable statute of limitations as of the date of this Agreement may be commenced in accordance with this paragraph, notwithstanding the expiration of the statute of limitations between the signing of this Agreement and the commencement of any such prosecutions. The defendant agrees to waive all defenses based on the statute of limitations or delay of prosecution with respect to any prosecutions that are not time- barred as of the date of this Agreement. If it is determined that the defendant has violated any provision of this Agreement or if the defendant successfully moves to withdraw his plea: (1) all statements made by the defendant to the government or other designated law enforcement agents, or any testimony given by the defendant before a grand jury or other tribunal, whether before or after this Agreement, shall be admissible in evidence in any criminal, civil, or administrative proceedings hereafter brought against the defendant; and (2) the defendant shall assert no claim under the United States Constitution, any statute, Rule 11(f) of the Federal Rules of Criminal Procedure, Rule 410 of the Federal Rules of Evidence, or any other federal rule, that statements made by the defendant before or after this Agreement, or any leads derived therefrom, should be suppressed. By signing this Agreement, the defendant waives any and all rights in the foregoing respects. E. Civil Forfeiture: The defendant agrees to sign a Stipulation for Final Judgment of Forfeiture in the pending civil action, U.S. v. Approximately $415,000.00 in U.S. Currency seized from Sun National Bank, et al., 2:08-CV-01899-GEB-GGH, forfeiting to the United States all of his and Intramark USA, Inc.'s ("Intramark") right, title, and interest in the defendant funds. This stipulation must be signed at least seven days prior to sentencing. F. Payment of Fine: The defendant agrees to pay a criminal fine if so ordered. The government's recommendation with respect to any such criminal fine is set forth in Section III.D of this Plea and Cooperation Agreement. III. A. Incarceration Range: The government will recommend that the defendant be sentenced to the bottom of the applicable guideline range for his offense as determined by the United States Probation Office. B. Acceptance of Responsibility: The government agrees that a three-level reduction in defendant's offense level for his full and clear demonstration of acceptance of responsibility is appropriate under U.S.S.G. § 3E1.1, will not oppose such a reduction and will so move under § 3E1.1(b), so long as the defendant pleads guilty, meets with and assists the probation officer in the preparation of the pre-sentence report, is truthful and candid with the probation officer and the Court, and does not otherwise engage in conduct that constitutes obstruction of justice within the meaning of U.S.S.G. § 3C1.1, either in the preparation of the pre-sentence report or during the sentencing proceeding. C. Reduction of Sentence for Cooperation: The government agrees to recommend at the time of sentencing that the defendant's sentence of imprisonment be reduced to reflect his substantial assistance to the government in the investigation and prosecution of others, pursuant to U.S.S.G. § 5K1.1. The defendant understands that he must comply with paragraph II(D) of this Plea and Cooperation Agreement. The defendant understands that the government's recommended reduction in his sentence will depend upon the level of assistance the government determines that the defendant has provided. The defendant further understands that a motion pursuant to U.S.S.G. § 5K1.1 is only a recommendation and is not binding on the Court. Other than as set forth above, the government agrees that any incriminating information provided by the defendant during his cooperation will not be used in determining the applicable guideline range in his case, pursuant to U.S.S.G. § 1B1.8. D. Fine: The government agrees to recommend that any criminal fine imposed on the defendant be no higher than the midpoint of the applicable fine range, given the defendant's offense level and sentencing range. E. Other Considerations: To the extent the defendant enters a guilty plea and is sentenced on Counts One, Two and Three of the Information to be filed in this matter, the government, to include the United States Attorney's Office for the District of New Jersey, will not initiate any further criminal charges against the defendant arising out of the same facts and circumstances as the instant charges. IV. With respect to Count One of the Information to be filed in this matter, which charges the defendant with conspiring to conduct the affairs of an enterprise through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(d), at trial the government would have to prove beyond a reasonable doubt the following elements: First, that certain leaders, employees and associates of SK Foods, L.P., and its related corporate entities ("SK Foods"), a manufacturer and marketer of bulk tomato and other food products with principal places of business in Monterey, Williams, Ripon, and Lemoore, California, constituted an enterprise, that is, a legal entity, a partnership or group of individuals associated in fact; Second, that SK Foods was engaged in interstate commerce; Third, that no later than January 2004 and continuing through at least April 2008, there was an agreement between two or more persons employed by or associated with SK Foods to conduct SK Foods' affairs through a "pattern of racketeering activity" as defined by Title 18, United States Code, Section 1961(a) & (5), namely, multiple acts indictable under Title 18, United States Code, Sections 1341, 1343 and 1346; N.J. Stat. Ann. § 2C:21-10 (2008); Cal. penal code § 641.3 (2008); and Tex. Penal Code § 32.43 (2008), the last of which was to occur within ten years after the commission of a prior such act; Fourth, the defendant was employed by or associated with SK Foods; and Fifth, the defendant joined in the illegal agreement referenced above, knowing of its object and intending to help accomplish it. With respect to Count Two of the Information to be filed in this matter, which charges the defendant with money laundering in violation of 18 U.S.C. § 1957, at trial the government would have to prove beyond a reasonable doubt the following elements: First, that the defendant knowingly engaged in a monetary transaction; Second, that the defendant knew the transaction involved criminally derived property; Third, that the property had a value greater than $10,000; Fourth, that the property was, in fact, derived from specific acts otherwise indictable under Title 18, United States Code, Sections 1341, 1343 and 1346; N.J. Stat. ANN. § 2C:21-10 (2008); Cal. Penal Code § 641.3 (2008) ; and Tex. Penal Code § 32.43 (2008); and Fifth, that the transaction occurred in the United States. With respect to Count Three of the information to be filed in this matter, which charges the defendant with price fixing in violation of 15 U.S.C. § 1 and aiding and abetting in violation of 18 U.S.C. § 2, at trial the government would have to prove beyond a reasonable doubt the following elements: First, that the defendant entered into or aided and abetted a conspiracy; Second, that the conspiracy was an unreasonable restraint of trade; and Third, that the conspiracy was in or affected interstate commerce in the United States. V. A. Maximum Penalty: With respect to Count One of the Information to be filed in this matter, which charges the defendant with conspiring to conduct the affairs of an enterprise through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(d), the maximum sentence that the Court can impose is twenty years of incarceration; a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; a three-year period of supervised release; and a special assessment of $100. With respect to Count Two of the Information to be filed in this matter which charges the defendant with money laundering in violation of 18 U.S.C. § 1957, the maximum sentence that the Court can impose is ten years of incarceration, a fine of $250,000 or twice the amount of the criminally derived property involved in the transaction, a three-year period of supervised release, and a special assessment of $100. With respect to Count Three of the Information to be filed in this matter, which charges the defendant with price fixing in violation of 15 U.S.C. § 1 and aiding and abetting in violation of 18 U.S.C. § 2, the maximum sentence the Court can impose is ten years incarceration; a fine in an amount equal to the greatest of (1) $1,000,000, (2) twice the gross pecuniary gain the conspirators derived from the crime, or (3) twice the gross pecuniary loss caused to the victims of the crime by the conspirators; a three-year period of supervised release; and a special assessment of $100. B. Violations of Supervised Release: The defendant understands that if he violates a condition of supervised release at any time during the term of supervised release, the Court may revoke the term of supervised release and require the defendant to serve up to two additional years of imprisonment. VI. A. Statutory Authority: The defendant understands that the Court must consult the Federal Sentencing Guidelines (as promulgated by the Sentencing Commission pursuant to the Sentencing Reform Act of 1984, 18 U.S.C. §§ 3551-3742 and 28 U.S.C. §§ 991-998, and as modified by United States v. Booker and United States v. Fanfan. 543 U.S. 220, 125 S.Ct. 738 (2005)) and must take them into account when determining a final sentence. The defendant understands that the Court will determine a non-binding and advisory guideline sentencing range for this case pursuant to the Sentencing Guidelines. The defendant further understands that the Court will consider whether there is a basis for departure from the guideline sentencing range (either above or below the guideline sentencing range) because there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the Guidelines. The defendant further understands that the Court, after consultation and consideration of the Sentencing Guidelines, must impose a sentence that is reasonable in light of the factors set forth in 18 U.S.C. § 3553(a). B. Stipulations Affecting Guidelines Calculations: The government and the defendant agree that there is no material dispute as to the following sentencing guidelines variables and therefore stipulate and agree to the following:
VII. A. Waiver of Constitutional Rights: The defendant understands that by pleading guilty he is waiving the following constitutional rights: (a) to plead not guilty and to persist in that plea if already made; (b) to be tried by a jury; (c) to be assisted at trial by an attorney, who would be appointed if necessary; (d) to subpoena witnesses to testify on his behalf; (e) to confront and cross- examine witnesses against him; and (f) not to be compelled to incriminate himself. B. Waiver of Appeal and Collateral Attack: The defendant understands that the law gives him a right to appeal his conviction and sentence. He agrees as part of his plea, however, to give up the right to appeal the conviction and the right to appeal any aspect of the sentence imposed in this case so long as his sentence is no longer than the top of the Sentencing Guidelines range determined by the Court consistent with the stipulations set forth above about the Sentencing Guidelines variables. Regardless of the sentence he receives, the defendant also gives up any right he may have to bring a post-appeal attack on his conviction or his sentence. He specifically agrees not to file a motion under 28 U.S.C. § 2255 or § 2241 attacking his conviction or sentence. If the defendant ever attempts to vacate his plea, dismiss the underlying charges, or reduce or set aside his sentence on any of the counts to which he is pleading guilty, the government shall have the right (1) to prosecute the defendant on any of the counts to which he pleaded guilty; (2) to reinstate any counts that may be dismissed pursuant to this Plea and Cooperation Agreement; and (3) to file any new charges that would otherwise be barred by this Plea and Cooperation Agreement. The decision to pursue any or all of these options is solely in the discretion of the United States Attorney's Office. By signing this Plea and Cooperation Agreement, the defendant agrees to waive any objections, motions, and defenses he might have to the government's decision. In particular, he agrees not to raise any objections based on the passage of time with respect to such counts including, but not limited to, any statutes of limitation or any objections based on the Speedy Trial Act or the Speedy Trial Clause of the Sixth Amendment. C. Waiver of Attorneys' Fees and Costs: The defendant agrees to waive all rights under the "Hyde Amendment," Section 617, P.L. 105-119 (Nov. 26, 1997), to recover attorneys' fees or other litigation expenses in connection with the investigation and prosecution of all charges in the above-captioned matter and of any related allegations. VIII. Other than this Plea and Cooperation Agreement, no agreement, understanding, promise, or condition between the government and the defendant exists, nor will such agreement, understanding, promise, or condition exist unless it is committed to writing and signed by the defendant, counsel for the defendant, and counsel for the United States. IX. A. Defense Counsel: I have read this Plea and Cooperation Agreement and have discussed it fully with my client. The Plea and Cooperation Agreement accurately and completely sets forth the entirety of the agreement, and I have no reason to believe that my client's plea of guilty should not be entered.
B. Defendant: I have read this Plea and Cooperation Agreement and carefully reviewed every part of it with my attorney. I understand it, and I voluntarily agree to it. Further, I have consulted with my attorney and fully understand my rights with respect to the provisions of the Sentencing Guidelines that may apply to my case. No other promises or inducements have been made to me, other than those contained in this Plea and Cooperation Agreement. In addition, no one has threatened or forced me in any way to enter into this Plea and Cooperation Agreement. Finally, I am satisfied with the representation of my attorney in this case.
C. Attorney for United States: I accept and agree to this Plea and Cooperation Agreement on behalf of the government.
EXHIBIT "A" At trial, the government would prove the following facts beyond a reasonable doubt: Since 1990, Randall Rahal ("Rahal") has served as the president of Intramark USA, Inc. ("Intramark"), a New Jersey based company that holds itself out as a wholesaler of food ingredients, including tomato products, and an importer of juice concentrates. Since at least 1993 until April 2008, Rahal was an agent of, a partner of, or was associated with SK Foods, L.P., a limited partnership with principal places of business in Monterey, California, and Williams, Ripon, and Lemoore, California, in the Eastern District of California. SK Foods, L.P., and its related corporate entities ("SK Foods") is a grower and processor of tomato products and other food products, for sale to food product manufacturers, food service distributors and marketers, and retail outlets. Rahal acted as a kind of advisor and supervisor for SK Foods, giving direction to and receiving periodic reports regarding various aspects of SK Foods' business from SK Foods employees. Since at least 2004 until April 2008, Rahal formally served on SK Foods' board of directors. SK Foods, including Rahal and other of its leaders, employees and associates, constituted an enterprise as defined in Title 18, United States Code, Section 1961(4), that is a legal entity that was engaged in, and whose activities affected, interstate and foreign commerce. Through Intramark, Rahal served as a broker for SK Foods. In that capacity, Rahal oversaw among other things the negotiation of contracts between SK Foods and many of its customers, such as Kraft Foods, Inc. ("Kraft"), ConAgra Foods, Inc. ("ConAgra"), B&G Foods, Inc. ("B&G") and Frito-Lay, Inc. ("Frito-Lay"). The Racketeering Conspiracy Beginning no later than January 2004 and continuing until at least April 2008, there was an agreement between Rahal and other leaders, employees and associates of SK Foods to conduct SK Foods' business and affairs through a pattern of racketeering activity in the Eastern District of California and elsewhere. Specifically, Rahal, on behalf of SK Foods, routinely paid bribes to the purchasing agents of many of SK Foods' customers in order to ensure that those customers purchased tomato-based products, and other products, from SK Foods rather than from its competitors. In other instances, Rahal paid bribes to purchasing agents so that those agents would provide bidding and other proprietary information from SK Foods' competitors. Between January 2004 and April 2008, Rahal, with the knowledge, and in some instances at the direction of certain leaders of SK Foods, paid bribes in this fashion to certain purchasing agents of, among others, Kraft, B&G and Frito-Lay, in violation of applicable state bribery laws, and 18 U.S.C. §§ 1341, 1343 and 1346. In addition to the bribery of its customers' purchasing agents, between January 2004 and April 2008, SK Foods, with the assistance of Rahal, constructed and transmitted to its customers fraudulent financial and business information with the goal of inducing those customers to do business with, and release funds to SK Foods. For example, as part of a scheme to defraud ConAgra in June 2007, Rahal arranged for SK Foods to fabricate and backdate an invoice between SK Foods and Hatch Foods ("Hatch"), a ConAgra competitor (without Hatch's knowledge), which reflected a false and inflated price paid by Hatch for tomato product from SK Foods. The fraudulent invoice, which falsely reflected that SK Foods was charging Hatch for canned tomato product at a rate 39% higher than it actually was, was transmitted to ConAgra in an effort to ensure ConAgra signed a three-year contract for tomato paste with SK Foods, at a price of approximately $74,570,000. Furthermore, between 2004 and April 2008, SK Foods, with the assistance of Rahal, knowingly and routinely sold processed tomato product to customers that did not meet customer specifications and falsified both internal documentation, and customer-bound product labels, quality control documents, bills of lading, and "Certificates of Analysis" ("COA"), in order to make it appear as if the processed tomato product shipped to customers was compliant with contract requirements. SK Foods' falsification of documentation involved various misstatements to its customers concerning both the quality and content of the product. This practice of providing customers with noncompliant and mis-marked product was done with knowledge and at the direction of Rahal and other leaders of SK Foods, and was in violation of 18 U.S.C. § 1341. Rahal and his co-conspirators at SK Foods conspired, among other things, to commit the following predicate offenses: Racketeering Act #l: Honest Services Mail Fraud and Commercial Bribery with Respect to B&G Foods. Inc. B&G is a multinational manufacturer, seller and distributor of various food products with a principal place of business in Parsippany, New Jersey. B&G is a regular customer of SK Foods with respect to tomato-based products, and other products. Between January 2004 and April 2008, Bribe Recipient #1 served as a purchasing manager at B&G, working out of the company's Parsippany, New Jersey headquarters. In that capacity, Bribe Recipient #1 was vested with the authority to negotiate and enter into contracts, with the approval of his employer, for the purchase of certain food products from processors, such as SK Foods. In performing these functions, Bribe Recipient #1 owed a duty of honest services to B&G. In May 2007, SK Foods and B&G entered into a "cost-plus" contract whereby SK Foods agreed to sell B&G 13,000,000 pounds of chile and jalapeno peppers at a price of $0.22 per pound. Subsequent to entering into the agreement, and at the direction of another leader of SK Foods, Rahal and Bribe Recipient #1 agreed to increase the price per pound that B&G would pay SK Foods under the agreement. Rahal and another leader of SK Foods further agreed that they would provide Bribe Recipient #1 with a fictitious justification for the increased contract price, namely that SK Foods was experiencing increased agricultural costs in connection with the peppers, and that Bribe Recipient #1 would provide this justification to his employers. As a result of Rahal, the other leader of SK Foods, and Bribe Recipient #1's actions, the contract price for the sale of the first 6,500,000 pounds of peppers to B&G was increased to $0.25 per pound. The contract price for the remaining 6,500,000 pounds of peppers was increased to $0.285 per pound. In exchange for his efforts in helping to secure the pepper contract between SK Foods and B&G, as well as its price, Rahal promised Bribe Recipient #1 a personal bribe payment in the approximate amount of $65,000 - equating to $.005 per pound on the entire contract. On July 12, 2007, in an intercepted wire communication, Rahal confirmed the amount of the bribe payment with Bribe Recipient #1. On or about December 12, 2007, Rahal directed a check in the amount of $9,689.80 from Intramark's Sun National Bank account number XXXXXX5624 to Bribe Recipient #1's wife, via United states mail, in partial satisfaction of the agreed to bribe payment. Between January 2004 and April 2008, Bribe Recipient #1 received at least $14,698.80 in bribe payments from Rahal. One such additional bribe payment occurred on or about July 11, 2007. On that date, Rahal directed a check in the amount of $2,000 from Intramark's Sun National Bank account number XXXXXX5624 to Bribe Recipient #1's wife, via United States mail. Assisted by Rahal, Bribe Recipient #1's actions violated a duty of fidelity owed to B&G, which is outlined in Section 2 of B&G Foods, Inc.'s Code of Business Conduct and Ethics. Such conduct violated 18 U.S.C. §§ 1341 and 1346, and N.J. Stat. Ann. § 2C:21-10. Racketeering Act #2: Honest Services Mail Fraud with Respect to Kraft Foods Kraft is a multinational food company with a principal place of business in Northfield, Illinois. Kraft is a regular customer of SK Foods with respect to tomato paste and other tomato-based products. From at least January 2004 until April 2008, Bribe Recipient #2 served as a purchasing manager for Kraft, working out of the company's Northfield, Illinois headquarters. In that capacity, Bribe Recipient #2 was vested with the authority to negotiate and enter into contracts, with the approval of his employer, for the purchase of certain food products from various processors, such as SK Foods. In performing these functions, Bribe Recipient #2 owed a duty of honest services to Kraft. In the normal course, Kraft and Bribe Recipient #2 received bids for the sale of tomato-based products from processors to Kraft by way of what was intended to be a secret and competitive bidding process. As part of a scheme to defraud Kraft of its right to Bribe Recipient #2's honest services and to secure contracts with Kraft for the Bale of tomato products at elevated prices, beginning in 2004 Rahal began making bribe payments to Bribe Recipient #2 on behalf of SK Foods. As part of the scheme to defraud Kraft, between January 2004 and April 2008, Rahal paid Bribe Recipient #2 approximately $158,000 in bribes on behalf of SK Foods in order secure Kraft's business, and to induce Bribe Recipient #2 to provide SK Foods with certain proprietary information of SK Foods' competitors. These bribe payments were made with the knowledge and encouragement of other leaders and employees of SK Foods. For example, in a recorded telephone conversation on April 14, 2008, another leader of SK Foods and Rahal discussed how Rahal had just made personal bribe payments to Bribe Recipient #2 totaling $24,000. Later in that same conversation, the other leader of SK Foods expressed concern to Rahal that SK Foods was not getting a maximum value for its bribes to Bribe Recipient #2. One such payment occurred on or about January 19, 2006. On that date, Rahal directed a check in the amount of $10,000.00 from Intramark's Sun National Bank account number XXXXXX5624 to Bribe Recipient #2 in Wheeling, Illinois, via United States mail. On July 25, 2007, Rahal subsequently directed a second check in the amount of $17,252.78 from Intramark's Sun National Bank account number XXXXXX5624 to Bribe Recipient #2, via United States mail. As a result of Rahal's bribe payments to Bribe Recipient #2, between 2004 and 2008 SK Foods was able to secure contracts for the sale of approximately 230 million pounds of tomato product to Kraft at elevated prices, causing a substantial loss to Kraft Foods. Rahal and Bribe Recipient #2's actions were in direct contravention of the conflict of interest policies set forth in Kraft Foods Code of Conduct for Compliance and Integrity, and were intended to, and did deprive Kraft of its right to Bribe Recipient #2's honest services. Such conduct violated 18 U.S.C. §§ 1341 and 1346. Racketeering Act #3: Honest Services Mail Fraud with Respect to Frito-Lay Frito-Lay is a multinational food company with a principal place of business in Piano, Texas. Frito-Lay is a regular customer of SK Foods with respect to tomato-based products, and various other food products. From at least January 2004 until April 2008, Bribe Recipient #3 served as a purchasing manager for Frito-Lay, working out of the company's Piano, Texas headquarters. In that capacity, Bribe Recipient #3 was vested with the authority to negotiate and enter into contracts, with the approval of his employer, for the purchase of certain food products from various processors, such as SK Foods. In performing these functions, Bribe Recipient #3 owed a duty of honest services to Frito-Lay. In the normal course, Frito-Lay and Bribe Recipient #3 received bids for the sale of tomato-based products from processors to Frito-Lay by way of what was intended to be a competitive bidding process. As part of a scheme to defraud Frito-Lay of its right to Bribe Recipient #3's honest services and to secure contracts with Frito-Lay for the sale of tomato products at elevated prices, beginning in 1998, Rahal began making bribe payments to Bribe Recipient #3 on behalf of SK Foods. As part of the scheme to defraud Frito-Lay, between January 2004 and April 2008, Rahal with the knowledge and encouragement of other leaders and employees of SK Foods, paid approximately $81,000 in bribes on behalf of SK Foods in order secure Frito-Lay's business. One such payment occurred on or about September 7, 2006. On that date Rahal directed a check in the amount of $4,000.00 from Intramark's Sun National Bank account number XXXXXX5624 to Bribe Recipient #3 in Dallas, Texas, via United States mail. On March 26, 2008, Rahal subsequently directed a check in the amount of $5,722.94 from Intramark's Sun National Bank account number XXXXXX5624 to Bribe Recipient #3 in Dallas, Texas, via United States mail. As a result of Rahal's bribe payments to Bribe Recipient #3, between 2004 and 2008, SK Foods was able to secure contracts for the sale of tomato and other food products to Frito-Lay at elevated prices, causing a substantial loss to Frito-Lay. Rahal and Bribe Recipient #3's actions were in direct contravention of the conflict of interest policies set forth in Frito-Lay's Code of Conduct, and were intended to, and did deprive Frito-Lay of its right to Bribe Recipient #3's honest services. Such conduct violated 18 U.S.C. §§ 1341 and 1346, and Tex. Penal Code § 32.43. Racketeering Act #4: Mail Fraud (Mislabeled Product) with Respect to Kraft Foods The market price of processed tomato product is based in large part on the percentage of Natural Tomato Soluble Solids (NTSS) that the product contains. In the normal course, processed tomato product with a higher concentration of tomato solids costs more on the open market than tomato product with a lesser concentration. Customers frequently specify an NTSS concentration in their contracts with manufacturers such as SK Foods. Customers will also often specify acceptable levels of other tomato product characteristics such as the product's pH, mold content, acidity and viscosity. During 2007, SK Foods experienced a period during which it was unable to produce an adequate supply of processed tomato paste containing 31% NTSS (Natural Tomato Soluble Solids) in order to meet its contractual obligations to certain customers, including Kraft. In an attempt to alleviate the shortage, a leader of SK Foods contacted a competing manufacturer of processed tomato products in February 2007, and arranged to purchase approximately 3,400,000 pounds of processed tomato product containing lower NTSS concentrations of 26% and 28%. As the product purchased from the competitor did not meet the specifications contained in certain of SK Foods' existing contracts, in order to conceal the inferior quality of the product, and as part of a scheme to defraud Kraft, Rahal and another leader of SK Foods directed certain SK Foods employees to falsify both internal and customer-bound documentation so that it incorrectly reflected the product as containing 31% NTSS tomato paste. The same documentation was also altered so that it reflected a significantly lower mold content than what the product actually contained. The processed tomato product and the accompanying altered documentation were ultimately shipped, during the spring of 2007, via interstate carrier from SK Foods' facilities in the Eastern District of California to Kraft's facilities in other states. One such shipment occurred on or about April 12, 2007. On that date, SK Foods shipped tomato product, accompanied by among other things, a bill of lading, which falsely identified the shipment as containing 31% NTSS tomato paste, from its facilities in the Eastern District of California to Kraft in Darien, Wisconsin. A copy of the falsified bill of lading was also transmitted on or about April 12, 2007, via United States mail, to a separate Kraft address in San Antonio, Texas. Copies of the altered documentation were provided to Rahal and Intramark, via facsimile, in the District of New Jersey. At the time it was shipped, Rahal and executives at SK Foods knew the documentation was false with respect to the processed tomato product's NTSS level, a fact that was material to Kraft's decision to pay SK Foods for the product. As a result of SK Foods' scheme to defraud, Kraft unknowingly paid approximately 11% and 12% above market rate for the 28% and 26% NTSS processed tomato product, respectively, causing a loss to Kraft in the approximate amount of $136,020. Money Laundering On or about April 16, 2007, Rahal transmitted check number 7760 in the amount of $12,896.00 from Intramark's Sun National Bank account number XXXXXX5624 to Bribe Recipient #2 in Wheeling, Illinois, which was received, via United States mail. As Rahal well knew at the time of its transmission, the check represented the proceeds of acts otherwise indictable under Title 18, United States Code, Sections 1341 and 1346, specifically Rahal's and SK Foods' scheme to defraud Kraft of its right to Bribe Recipient #2's honest services with respect to the awarding of contracts for the purchase of tomato-based products. The issuance of the check on Intramark's Sun National Bank account constituted a violation of 18 U.S.C. § 1957. Violations of the Sherman Act Beginning at least as early as February 2006 and continuing until approximately April 2008, Rahal participated in and aided and abetted a conspiracy to fix prices, allocate contracts, and rig bids for processed tomato products, including tomato paste and diced tomatoes. The primary purpose of this conspiracy was to eliminate competition and fix the price of processed tomato products sold in the United States. During the relevant time, Rahal was the owner and president of Intramark USA Inc., a broker selling processed tomato products for itself and on behalf of others. Rahal and his co-conspirators reached agreement to fix the prices to be charged to customers in the United States for processed tomato products in the Eastern District of California and elsewhere. To carry out their agreements, Rahal and his co-conspirators submitted artificially inflated bids and price quotations. Rahal also acted to assist in enforcing the agreements, by obtaining and distributing information about prices offered by co-conspirators and competitors to the subject customers. In at least one instance, a co-conspirator withdrew a quote that did not comply with agreed-to prices after being confronted with information obtained by Rahal from the customer. During the relevant period, processed tomato products sold by one or more of the conspirators, as well as payment for such products, traveled in interstate commerce. The business activities of the defendant and co-conspirators were within the flow of, and substantially affected, interstate trade and commerce. |