Criminal charges for mislabeling food are rare with the United States Department of Agriculture filing criminal actions against only 10 people or companies in the past two years.
Midamar Corporation, a Cedar Rapids-based international food supplier, says it doesn’t know why federal agents searched the company Oct. 17, but believes it may be based on allegations Midamar labeled meat as being processed according to Islamic law when it had not.
Agents from the USDA and the Internal Revenue Service also seized $454,000 from Midamar’s bank account, which is very unusual in an investigation into food mislabeling, said attorneys familiar with federal investigations and food law.
“There is relatively little seizure action related to mislabeling,” said Peter Barton Hutt, a Washington, D.C., food law expert and Harvard Law School professor.
Seizure of financial assets is often connected to investigations of tax evasion, money laundering or fraud, said Bob Teig, a former assistant U.S. attorney who served 31 years in Iowa’s Northern District before retiring last year.
“It appears to involve more than meat inspection requirements and regulations,” Teig said after reading public documents about the Midamar case.
No one has been indicted in the case and assistant U.S. attorney Peter Deegan said he couldn’t comment on the investigation. U.S. District Court Judge Linda Reade has ordered the search warrant applications remain secret so as not to “compromise an ongoing criminal investigation.”
Midamar Spokeswoman Sara Sayed released a statement Tuesday saying the company is cooperating with the inquiry.
“Unfortunately, the authorities have not responded to our requests about the reason for the investigation,” Sayed said. “We believe it would be counterproductive to guess or make assumptions about the cause of the investigation.”
Criminal investigations into mislabeling of meat are uncommon. The USDA filed criminal actions against 10 people or companies since Jan. 1, 2011. None have been in Iowa.
“Both FDA (Food and Drug Administration) and USDA have the ability to pursue criminal penalties against companies,” said Jennifer Williams Zwagerman, a Drake University law professor who has studied food and agricultural law.
“Officially they make the recommendation to the U.S. Attorney’s Office who would determine and pursue charges,” she said.
Among the more well-known cases is a 1997 case in which Washington Lamb of Springfield, Virginia, was fined about $15,000 for falsely claiming its products were prepared under Islamic religious standards called halal. An Anaheim, California, food market was fined $527,000 last year for false claims about halal meat.
In comparison, the IRS indicted 3,390 people in fiscal 2012 as part of 5,125 criminal investigations. The IRS fiscal year ends Sept. 30. Of those indictments, there were 2,634 convictions.
Midamar, incorporated in Cedar Rapids in 1974, does business in all 50 states and more than 30 foreign countries, according to the company’s website. Midamar markets halal beef, turkey, chicken, lamb and organic products.
Halal meats are a growing market with more than 1.5 billion Muslims around the world eating halal every day, according to an Oct. 26 article in Food Safety News.
The USDA halted voluntary inspections at Midamar in 2010 after inspectors found misbranded meat products and falsified export documents for meat being sent to Indonesia and Malaysia, according to court documents.
Midamar took corrective action and was again approved for inspection in 2011.
Agents wearing vests marked with “IRS-CI,” which stands for the IRS’s Criminal Investigation, and “USDA-OIG,” which stands for the agriculture department’s Office of the Inspector General, were seen Oct. 17 at Midamar’s offices at 1105 60th Ave. SW.
U.S. Magistrate Jon Scoles signed search warrants authorizing agents to seize books and records from the business and up to $1.7 million from Midamar’s account at Cedar Rapids Bank & Trust. Agents ended up seizing $454,000.
Midamar filed a request to have those funds released, saying the seizure was crippling business. Reade denied the request last week.