Former SK Foods owner, c.e.o indicted
February 19, 2010
SACRAMENTO, CALIF. — A federal grand jury has returned a seven-count indictment charging Frederick S. Salyer, the former owner and chief executive officer of SK Foods, with violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), in connection with his direction of various schemes to defraud SK Foods’ corporate customers through bribery, food misbranding and adulteration, and with wire fraud and obstruction of justice, according to United States Attorney Benjamin B. Wagner.
Steven J. King, the former vice-president of operations for SK Foods, was also charged with one count of food adulteration and misbranding. He has agreed to plead guilty and cooperate in the ongoing investigation.
According to the indictment, SK Foods constituted a racketeering enterprise, an organization that Mr. Salyer directed, and other SK Foods executives and employees helped to further through a variety of illicit activities. It is alleged that over a period of 10 years, Mr. Salyer orchestrated a number of schemes that involved SK Foods regularly paying bribes to the purchasing managers of many of its customers such as Kraft Foods Inc., Frito-Lay Inc., B&G Foods Inc., and Safeway Inc. to ensure those customers purchased processed tomato products from SK Foods rather than from its competitors. It is also alleged that the purchasing managers involved purchased the product from SK Foods at elevated, above-market prices.
As the enterprise’s leader and primary decision maker, Mr. Salyer also is alleged to have directed a widespread practice of selling and shipping processed tomato product that did not meet contractual specifications, contained mold levels in excess of the thresholds established by the Food and Drug Administration. The indictment alleges that at Mr. Salyer’s direction, executives at SK Foods falsified both internal and customer-bound documentation to make the product appear as if it were legal and contractually compliant when it was not.
Mr. Salyer also is charged with obstructing justice by ordering the alteration of certain SK Foods’ corporate records after the government’s investigation of the company had become public knowledge. Specifically, the indictment alleges that two weeks after former SK Foods sales broker and director Randall Lee Rahal pleaded guilty to racketeering, money laundering, and antitrust charges in December 2008, Mr. Salyer ordered certain individuals to alter the minutes of a Dec. 14, 2007, SK Foods board of directors meeting to eliminate any reference to Mr. Rahal as a director of the company.
On Feb. 4 Special Agents from the Federal Bureau of Investigation arrested Mr. Salyer in New York City, based on a criminal complaint charging him with 20 counts of mail and wire fraud. According to that complaint he left the United States in October 2009, following the guilty pleas of several employees of SK Foods and some of its customers, intending to relocate abroad permanently.
Mr. Salyer had instructed a subordinate to sell many of his belongings and had transferred millions of dollars from bank accounts formerly associated with SK Foods entities to bank accounts in the Caribbean and Liechtenstein.
Mr. Salyer allegedly spoke with a former SK Foods employee about obtaining permanent residence status in Uruguay, Paraguay, Andorra, and France because he believed he would not be extradited from these countries. He had also booked a flight back to Europe the next day, Feb. 5. Instead, he made his initial appearance before U.S. Magistrate Judge Steven Gold in Brooklyn, N.Y., that afternoon. Judge Gold denied Mr. Salyer bail, stating that his efforts constituted one of the “most elaborate schemes to flee he had ever seen.” SK Foods is not affiliated with SK Food International, Fargo, N.D. SK Food supplies grain-based ingredients.