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For Garlic Powder They Got Maltodextrin

Posted  August 28, 2020
By Jessica T. Moore

The centuries-old yet enduring fraud of cheap-substitutions for quality foodstuffs reared its head during the U.S. Civil War when the government bought supplies from contractors: “For sugar, it often got sand; for coffee, rye; for leather, something no better than brown paper; for sound horses and mules, spavined beasts and dying donkeys; and for serviceable muskets and pistols, the experimental failures of sanguine inventors or the refuse of shops and foreign armories.”  Tomes, Fortunes of War, 29 Harper’s Monthly Mag. 228 (1864).  This time, it’s 70% maltodextrin instead of pure garlic powder, and the federal government isn’t happy about it.

When we buy spices and other foods at the grocery store, often paying more for certain quality products, we expect the ingredients labels to be truthful.  The government expects the same when it uses taxpayer dollars to purchase food for persons in its institutional care, and it is willing to sue for enforcement.  Food fraud during the Civil War helped prompt enactment of the False Claims Act, and the federal government used the law just recently to bring a lawsuit against Arkansas food company Shaver Foods and Pennsylvania subcontractor Zilka & Co. for cheating on the Bureau of Prisons’ contract requirements to provide “pure” spices with “no additives, extenders, or foreign matter.”

The Bureau, with taxpayer dollars, paid full freight for supposedly a pure product.  Instead, the FDA Forensic Chemistry Center discovered that the “garlic powder,” which listed only one ingredient on its label (“Garlic”) was 70% maltodextrin (a starchy white filler).  The “cinnamon” and “cocoa powder” comprised about 50% maltodextrin, and the cumin and chili pepper also suffered from high levels of the same adulteration.  None listed the cheap additive in their ingredients labels.

When compared to other commercial spice brands, the government-purchased spices were ineffective and tasteless, and much different in appearance.  An image from the government’s complaint shows the difference (U.S. v. Shaver Foods, Zilka & Co., Case No. 5:20-cv-04169, E.D. Penn., paragraph 88):

Gross.

CC Insider wrote about pervasive food fraud when a 2014 Congressional Research Service report warned that up to 10% of food and drink products are affected by “economically motivated adulteration,” intentional tampering with ingredients make more money.  Vulnerable products include olive oil, wine, milk, honey, maple syrup, coffee and tea, spices, grains, and fruit juice.  These products may be diluted with cheaper materials, some of which are unsafe for consumption.

The government relies on food suppliers to turn square corners when representing the quality and purity of its products.  Pure spices cost more than adulterated ones, and cheating on contract specifications means not only that the government does not receive what it paid for, but also that taxpayers are overcharged.  The practice is unfair to competitors who lost the contract to the fraudster and would have provided pure product at the lowest price.  Some of the contracts for food products are massive and highly lucrative; the Bureau of Prisons, for example, serves almost a half a million meals per day.

As the Shaver Foods case demonstrates, food fraud can lead to False Claims Act liability when the federal, state, and local governments pay for products.  The government procures foods not only for persons during incarceration or detention but also for numerous other settings such as military personnel and public schools.  In 2015, food services provider Chartwells (a subsidiary of Compass Group) paid almost $20M to settle allegations of fraud in DC public schools’ meals programs.  The company had failed to provide meals consistently as promised, and food quality and price were compromised unacceptably due to conflicts of interest in vendor relationships.

If food fraudsters believe they can hide their culpability in the layers of the supply chain, they have another think coming.  In the Shaver Foods lawsuit, the government is going after both the prime contractor (Shaver Foods) and the sub-contractor, Zilka.  The government posits that both companies are independently liable.  First, while Shaver Foods did not manufacture the spices itself, it promised to deliver pure spices and then recklessly failed to tell its supplier about the contract specifications.  Second, although the subcontractor, Zilka, did not know about the contract specifications, it caused Shaver Foods to submit false claims by “diluting its spices with vast amounts of cheap food additives that deviated from the industry custom and practice and served no commercial purpose, regardless of the contract specification.”

Shaver Foods and Zilka settled their food fight with the government by agreeing to pay tens of thousands of dollars and “train their employees to avoid unlawful economic adulteration of food items, and comply with all federal contract specifications.”  The U.S. Attorney for the Eastern District of Pennsylvania, William M. McSwain, said: “Taxpayers deserve to get what they pay for,” and vowed to “ensure that contractors hold up their end of the bargain on government purchases—from garlic powder to fighter jets, and everything in between. We will not hesitate to bring False Claims Act cases when appropriate.”

The adulterated-spices lawsuit is not “only” about ensuring tasty food.  Government food services, including in the Bureau of Prisons, have a mission is to provide healthy and nutritious meals, including meals that are safe for those at nutritional risk.  Taste is related to nutritional uptake, and hidden fillers may be unhealthful or trigger severe allergies.  And to be sure, persons who are incarcerated as well as others when institutionally dependent on the government for nutritional needs should receive the flavor benefits of spices and other products taxpayers purchase on their behalf.

Persons with knowledge of pervasive or systematic food-fraud in government purchasing or contracting might qualify as whistleblowers under the federal or state False Claims Acts, which allow successful whistleblowers to share in any recovery from the fraudsters.  Please contact us if you think you might have a case.

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Tagged in: Contract Non-Compliance, Correctional Services Fraud, Falsifying Invoices, FCA Federal, FCA State, Government Procurement Fraud, Pricing Fraud,


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