The Scam At Hunts Point
Drought conditions are making things miserable for farmers across much of the Unites States. No one can protect farmers from the weather, but once their products reach market, they should be able to expect a fair price.
But fairness goes out the window when the system is corrupt, as CBS News Correspondent Wyatt Andrews reports.
It was a scheme so slick, even the victims admit it was brilliant. At the Hunts Point wholesale produce market in New York City, the country's largest, most of the USDA produce inspectors were on the take. According to the government, 13 of the wholesale buyers there regularly paid cash bribes to federal inspectors to label perfectly good produce as scarred or rotten. The wholesaler could then demand a discount from the farmer.
"He says instead of Grade A fancy it's now Grade C. It’s called knocking the load," says Roger Viadero. Viadero, the Inpector General of the Agriculture Department, whose agents cracked the scandal, says the scheme cheated farmers from across the country out of more than $100 million. "The average during our operation was about $7,500 per truck," he recalls.
"There was no way to win at that market. It was a stacked deck," says Florida vegetable grower Jay Taylor, who adds that farmers knew for years something was wrong at Hunts Point. Too many loads of good produce were being declared damaged and too many phone calls came from Hunts Point demanding a lower price.
Taylor still has a receipt from one load of produce he sold in the Bronx. "You can see $8 has been scratched out and $6 written in. That cost us $3,200, that inspection."
And Taylor, 1,000 miles away, had no way to prove the inspector wrong. What made this entire scheme work is that they were dealing with a perishable agricultural commodity.
In some areas of Hunts Point market, cash bribes were the norm. Eight of the 14 agriculture inspectors assigned there, including two supervisors, were on the take. And in court documents they admitted the bribes had been going on for more than 20 years.
When the inspectors recently pleaded guilty to the bribery, Inspector Micheal Tsamis admitted he took more than $100,000; Edmund Esposito, more than $90,000. Paul Cutler surrendered a $70,000 brokerage account.
That much cash meant thousands of corrupt inspections. "This was everyday business, they didn’t know different," Viadero says.
Of the 13 wholesalers indicted in this investigation, six have pleaded guilty; they'll be sentenced in May.
Now, Viadero tells CBS News, the scandal has spread beyond Hunts Point, and that he expects more indictments. This case goes border to border, coast to coast.
The USDA is attempting to help farmers cheated by corrupt inspectors, but one thing it's not doing is paying them back.
"It makes me sick to my stomach to think that kind of financial devastation can come that easily in this county from a federal employee," says Jay Taylor.
Taylor and farmers like him have not only lost money, they’ve lost some trust in the government. It's not surprising. The very inspectors put in place to protect farmers were part of what was rotten in the system.