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VIDEOQuick Hits: Kraft Food Scam No Small Potatoes
By
Scott Reeves Jan 29, 2009 2:50 pm
Brief scrutiny of today's headlines.
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Two geniuses pleaded guilty in US District Court in Sacramento to accepting bribes that may have helped drive up food prices nationwide.
The crooks' employers, Kraft Foods (KFT) and Frito-Lay, a division of Pepsico (PEP), weren't part of the scheme and are cooperating with investigators.
Kraft senior purchasing manager Robert Watson, 59, of White Plains, NY pleaded guilty to accepting $158,000 in bribes from a California tomato processor. James Wahl Jr., 58, of Dallas, a former purchaser for Frito-Lay, has agreed to plead guilty to accepting about $160,000 in bribes.
Federal prosecutors say the buyers helped Randall Lee Rahl, a broker for SK Foods in Lemoore, California, charge their companies inflated prices for tomato paste and diced tomatoes. Watson and Wahl purchased about 230 million pounds of processed tomatoes from SK Foods between 2004 and 2008.
Watson and Wahl could be sent to prison for 20 years when they're sentenced May 5.
Rahal, 61, of Ramsey, New Jersey, pleaded guilty to racketeering, price-fixing, bid-rigging and conspiracy.
All this is small tomatoes in the scheme of things, but do the math to underscore the enormity of their stupidity. Watson and Wahl pocketed about $31,800 a year for 5 years from their scam. If sentenced to the maximum prison term, that works out to about $1,590 for each year in the slammer.
But the slow-witted, soon-to-be geezers can cheer up: they probably won't live 20 years in prison, and that will boost the theoretical take for each year spent behind bars.
The Unabomber may be nuts, but at least he's smart.
No positions in stocks mentioned.
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