“An army marches on its stomach”, goes the old saying and despite the most modern technology being deployed on the battlefields of Iraq and Afghanistan, it still takes our service men and women to operate in extremely harsh and hostile conditions.
Federal investigators have announced that the case they brought against Houston based, American Grocers Limited, has been settled for $15 million.
The federal officials involved claimed that Houston businessman, Samir Mahmoud Itani and his company, American Grocers Limited, have defrauded the US military, including serving personnel in Iraq. The fraud involved adding trucking costs onto invoices which were passed on by the primary contractor acting as the main supplier of food to the US military. The prime contractor, Public Warehouse Corp. supplied food through the Defense Supply Center in Philadelphia which was then transported to the US military serving in the Middle East and parts of Asia.
American Grocers Limited received discounts from its own suppliers, which it then failed to pass on to Public Warehouse Corp. resulting in inflated invoices.
Defrauding Uncle Sam is never a good idea, and many commentators might think this is no big deal but there is a particular aspect of this case which causes revulsion.
Part of the fraud included re-labeling food which was out-of-date or close to expiration so that it looked fresh and safe to eat. Both combat and support personnel were supplied with potentially dangerous food supplies. Itani pleaded guilty to the criminal charges and arranged a settlement of $15 million. He has yet to be sentenced for the criminal submission of false invoice claims, but the settlement is likely to mitigate any sentence.
The scheme included sourcing groceries from some of the leading manufacturers in the US, including Kraft Foods, Hershey, Frito-Lay and Smuckers. Pallet loads of food were unloaded at the company warehouse where expiration labels were altered using acetone and nail-polish remover, or in some cases even a drill. New dates and stamps were created for food items ranging from Jennie-O turkeys through to peanut butter and cheese.
The fraud took place during Operation Iraqi Freedom between 2003 and 2006. Itani and two other members of his family together with several, close business contacts formed a tight-knit cabal which sold $36 million of food whose labeling was changed to show it was fresher than in fact it was.
American Grocers Limited is still in business, and Itani’s wife, Suzanne Itani continues to deny the allegations against the company of which she is the Chief Executive.
Information for this report was sourced from Civilian Contractors and Corrupt Authority where you can read more on this case and others involving contractor fraud.
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