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Something Rotten in Tomato Industry

LOS ANGELES - (CN) A former Safeway manager admits taking bribes from SK Foods and will cooperate in a wide-ranging investigation into the tomato processing industry where employees of the bankrupt grower have already conceded that they were paying canneries to accept moldy and substandard tomatoes.

The manager is the latest corporate purchasing manager to admit taking bribes from SK Foods in a wide-ranging, multi-agency investigation into criminal activities in the tomato processing industry. Federal prosecutors in Sacramento say Michael Chavez, 52, of Fremont, Calif., agreed on Wednesday to plead guilty to two counts of wire fraud for taking bribes to help SK Foods win contracts.

U.S. Attorney Benjamin Wagner said in a statement that Chavez took bribes from Randall Lee Rahal, a sales broker and director of SK Foods, which declared Chapter 11 bankruptcy in 2009.

Chavez is the fourth corporate purchasing manager to plead guilty to accepting bribes from SK Foods in this investigation.

Managers with Kraft Foods, Frito-Lay and B&G Foods also admitted taking kickbacks from Rahal, who pleaded guilty in December 2008 to racketeering, bid rigging and contract allocation conspiracies, prosecutors say.

The long-running investigation by FBI, the IRS and the U.S. Department of Justice's Antitrust Division has turned up a "pattern of commercial bribery" and "wide-ranging fraud" in the tomato processing industry, prosecutors say.

Managers and workers have admitted misbranding food, falsifying records, and "regularly ship[ping] products which, while not a health threat, contained mold count levels that were above the federal regulatory threshold, or which bore altered dates of production or other falsified product information," prosecutors say.

The maximum statutory penalty on the wire fraud charges is 20 years in prison, and a fine of $250,000.

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