A Texas businessman has reached a settlement with the U.S. government over allegations that his company, a food services contractor, falsified expiration dates on food products and sold them to the U.S. military during the Iraq war.
Samir Mahmoud Itani and his company, American Grocers Ltd., were ordered to pay $15 million, according to a statement released Friday by the Department of Justice.
Federal prosecutors alleged Itani, his wife and American Grocers bought heavily discounted food from leading food product manufacturers, then altered the dates on the packages and shipped them to the Middle East at a marked-up price.
Suzanne Itani, chief executive of American Grocers, released a statement Friday denying that the company did anything wrong and saying the company was "proud of the service and products it delivers to its customers," according to the Los Angeles Times newspaper.
The government alleged that American Grocers sold it about $36 million worth of mislabeled food, the paper said.
“We will be vigilant in protecting taxpayer funds from fraud, especially where the fraud relates to contracts meant to support our troops,” Tony West, assistant attorney general for the Civil Division of the Department of Justice, said in the release.
The government’s case was aided by a whistleblower, Delma Pallares, a former sales manager at the company’s Houston warehouse, who filed suit under the Civil False Claims Act in the Southern District of Texas, according to the Houston Business Chronicle.
Court documents filed in the case detail that from 2003 to 2006, up to 30 employees would gather to use different methods – including black spray paint and acetone – to remove the “use by” labels on food, the L.A. Times reported.
In one of the more egregious examples, according to the government, American Grocers employees allegedly printed or stamped new dates on food that added as much as 18 months to the apparent shelf life, the paper said.
Pallares, who worked in management at American Grocers from 1996 to 2003, said the warehouse “smelled strong” like a nail salon, according to the newspaper.
Pallares has turned down the government’s offer to be placed in the Witness Protection Program, according to the Houston Business Chronicle.
The Justice Department has not said whether any troops were sickened by the out-of-date food, according to the L.A. Times.