November 21st, 2010
12:54 PM ET

$15M penalty for alleged sale of mislabeled food for troops

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The Justice Department has not said whether any troops were sickened by the out-of-date food, according to the L.A. Times.

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Filed under: Iraq • Lawsuit • Military • War
soundoff (24 Responses)
  1. H-1 surplus dump

    We send troops over in pos vehicles with no armor, but if they get some out-dated food (as we all do from time to time) we cry like little babies.

    November 22, 2010 at 4:57 am | Report abuse |
  2. Jim Morrison

    @H-1. Why is there is always someone like you to deflect criritism off bad guys by pointing out something worse. STFU.

    November 22, 2010 at 9:01 am | Report abuse |
  3. George Tichy

    So the business is not being closed, neither are the owners going to jail, right? My taxes are paying for some arab to supply expired food to our troops, right? Just unbelievable!!! Should at least change the company's name to ARAB GROCERS LTD.

    November 22, 2010 at 9:04 am | Report abuse |
  4. Jim Morrison

    And another thing H-1. When was the last time YOU ATE. food 18 MONTHS past it's exp. date?? It's not like they can toss it aside and go to the "Drive Thru" like you do. Jezzzus.

    November 22, 2010 at 9:14 am | Report abuse |
  5. Victor goldberg

    I don't get it. May be the reason they don't used a american company is because the american goberment don't want to deal with their own people why you thinks big corporations leave united states to open their companys else where in the world. The reason is that america don't care about us. The goberment here consider all americans a threat to them. And embrace foreings and help them more than americans. And those scanners i remember i saw that when i was a kid in the movie TOTAL RECALL of arnold swashnneger the gobernator of california. All of this from 911 to scanners is all been plan against us. Is a reality made of lies. Wake up america! Don't be fools.

    November 22, 2010 at 9:21 am | Report abuse |
    • Mmmmm

      The leave the American economy for GREEDY PROFITS! Unfair wages are tolerated in foreign countries, the the greedy dogs import thes product back into the American market without passing on the savings thus causing inflation. Why are paying an exorbitant price as if this was built with American
      wages? Where are the high tariffs to prevent this kind of stealing? And why hasn't our elected leaders proctected our market and workers? The only people making big money with globalization is the GREEDY DOGS!

      November 22, 2010 at 9:58 am | Report abuse |
  6. jim crazy

    Sell 36 million in spoiled food get fined 15 million. Who says crime does not pay! It paid big time for these folks! Our own government needs to go on the Witless Protection Program. Yeah I said it! Our governmentis either a) too lazy to inspect what it is buying. b) Too stupid. Either way they do not deserve their jobs!

    November 23, 2010 at 9:00 am | Report abuse |
  7. stephie marko


    December 2, 2010 at 2:19 am | Report abuse |
  8. Livij Sunnyu

    Normally I do not learn article on blogs, but I wish to say that this write-up very pressured me to check out and do so! Your writing style has been amazed me. Thanks, very nice article.

    July 17, 2012 at 1:43 am | Report abuse |
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