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Private investigator launches kickback probe in stone fruits and grapes

by Tim Linden | July 19, 2011

A California private investigator who said that he has been hired by unnamed people in the tree fruit and grape industries in the San Joaquin Valley has placed ads in various trade industry publications, including The Produce News, asking for information with regard to buying practices within the industry.

Scott Nelson of S.K. Nelson & Co. in Fresno, CA, said that the people who hired him have "some evidence" of practices that are "unethical and possibly criminal."

The advertisement asks anyone with information about "corrupt buying practices in the stone fruit and table grape industry" to contact Mr. Nelson and promises that their identity will remain confidential.

He admitted that part of the motivation behind the ads and investigation is to shine a light on this behavior in the hopes of ending it. But he said that any credible evidence would be turned over to the proper authorities as the investigation continues.

"Because this could involve interstate commerce, local police usually don't like to get involved but I suspect there would be several federal agencies that would be interested in what we find," he said.

Mr. Nelson said that the probe would look at both sellers who offer "kickbacks," or direct inducement to buy their products, as well as buyers who extort money from sellers for their business.

In fact, the advertisement promises a financial reward for information that leads to the arrest or conviction of buyers or sellers, though the $50,000 reward for the conviction of a buyer is twice that of a seller.

Barry Bedwell, president of the California Grape & Tree Fruit League, also based in Fresno, said that he has no idea who in the industry is behind this probe and that he has never heard of there being this kind of problem in the industry.

"Since I became aware of this I have talked to a number of growers and shippers and I have no information on this," Mr. Bedwell told The Produce News. "I fear that it can turn into a self-inflicted wound."

Mr. Bedwell said there is no way this can be viewed in a positive light and he is leery of any publicity that damages the image of the industry. He reiterated that in his many years with the League, no one has ever brought this type of complaint to his attention.

A shipper who asked to remain anonymous said that the allegation "turns my stomach." He said that in the California fruit industry, as he suspects is the case with most commodities, shippers will take buyers out to dinner at conventions or pay for a couple of tickets to a ball game. He said that it is also common practice for a company to pay expenses for any buyer to come tour its facility.

Mr. Nelson said that it is not these types of payments that his probe is trying to uncover. "The law is fairly specific as to what is lawful. We are talking about corrupt practices that are severe and pervasive," he said.

He added that a couple of tickets to a game would not be an issue, but season tickets might be.

"We are looking for direct payments or the delivery of things of value that are designed to influence the buying decision."

Mr. Nelson would not reveal who has hired him, as he said that the people behind the investigation fear retaliation if they are linked to the probe.

The ads have been successful to date, as they have produced credible tips, according to Mr. Nelson. He indicated that the investigation would continue throughout the length of the current tree fruit and grape marketing seasons.