By Chris Lane
By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
On September 27, 2006, federal agents surrounded the offices and warehouse of Houston's American Grocers, Inc., an exporting business that shipped food to the Middle East and worked, in part, off lucrative military contracts. Located in a business park along the Beltway on the city's northwest side, next to companies that built transmissions for diesel trucks and distributed linoleum flooring, American Grocers existed the same as the rest. Unnoticed and quiet, except for the delivery trucks growling to and from its loading bays.
The agents approaching the building that morning weren't the typical raiders. They weren't FBI, not bullish G Men or battle-tested SWAT officers by any means. Many of the men, from the Department of Defense's Criminal Investigative Service and the Food and Drug Administration, didn't carry weapons, and those who did certainly hadn't fired shots in the field. In terms of raids, this one was low key.
But when agents rushed through the doors, they found an operation that was nothing short of evil: workers, surrounded by vats of chemicals, hunched over pallets of expired food and using acetone and Dremel tools to erase expiration dates from packaging. The expired food was destined for American military troops serving in the Middle East, according to court documents.
News of Samir Itani's arrest went national, grabbing headlines because a "Muslim businessman in Texas..." was ripping off the government and putting American soldiers in danger in the process. Itani initially pled not guilty to the criminal charges filed against him.
"Samir Itani did not engage in any intentional wrongdoing and looks forward to his day in court," Itani's lawyer, Paul Nugent, told The Wall Street Journal in 2007.
Court documents, alleging that Itani sent, among others, expired peanut butter, turkeys and chocolates to the troops, summed it up differently: "This is an appalling case of corruption that directly harms American military men and women serving overseas...Expired food, like [ammunition] shells filled with saw dust [sic] or useless small arms, endangers our military operations."
As the investigation continued, agents discovered that the case stretched far past Itani, unraveling to include food wholesalers in rural Texas, a Saudi sheik living in California, the largest commercial "merchant family" in Kuwait and some of the most prominent food companies in the United States. In fact, the U.S. government is involved in ongoing litigation with other military food contractors, and the cases are calling into question the entire process of how food contracts are procured, paid out and delivered to troops in the Middle East.
The civil settlement and criminal sentence of Itani were made public in November and December of this year, marking the end to one of the biggest white-collar crime cases to come out of Houston in recent years.
The government's case, however, started and was made by an unlikely whistleblower: 42-year-old Delma Pallares, a single mom and former employee of American Grocers who, according to her attorneys, simply "wanted to do the right thing." And in the middle of the investigation, when the feds wanted to put Pallares and her family in the Witness Protection Program, she wanted to get as far away from the case as possible.
Tracing back the life of Samir Itani is next to impossible. He didn't have a criminal record before this case. He didn't donate to political campaigns. (His wife gave $1,100 to California Congressman Darrell Issa in 2007, in the middle of the government's investigation.) He stayed off social circuits. And his company — perhaps because of the criminal operations — kept an extremely low profile.
Itani and members of his family refused to speak to the Houston Press for this story, and so did federal agents and prosecutors. Pallares's lawyers at Houston's Berg & Androphy firm didn't talk much about details outside the court filings, and Pallares herself had little to say about her former boss.
Nugent, however, says this of his client: "Samir Itani is a dedicated small businessman. He runs the kind of business that's good for America. He took American-made products and shipped them to foreign countries. With most companies, it's the other way around."
Doing so made Itani money. Lots of it. While "$20 million in sales" on a court document is simply a number on paper, tangible proof of Itani's financial worth sits on the outskirts of Houston's Tanglewood neighborhood that's famous for residents George and Barbara Bush. Itani's estate is valued at $2.85 million on Harris County tax rolls, and with almost 10,000 square feet, the place has five bedrooms, six baths, two rec rooms, five fireplaces and two elevators.
If nothing else, the house is a symbol of the wealth Itani built with his company, and based on information the Press has gathered, here's how he did it.
Itani, now 51, immigrated to the United States and Texas sometime in the 1980s, finding a job as a salesman at Grocers Supply Company, a Houston-born company that ships food to grocery stores and schools primarily in the state. The contacts he developed in Texas would later become invaluable to Itani's business plan. Itani and his wife, Suzanne, had their first child in 1988, and five years later, Itani quit his job at Grocers Supply and started his company.