By Camilo Smith
By Craig Malisow
By Jeff Balke
By Angelica Leicht
By Jeff Balke
By Sean Pendergast
By Sean Pendergast
By Jeff Balke
It continues, "...it was not unusual to find twenty workers or more at a time sitting together at a large table at American Grocers's warehouses erasing product dates using acetone and attaching new labels with new dates."
The investigation turned up additional allegations against Itani, including fake invoices (using two sets of invoices to "increase his profit and please customers"), forged halal certificates (using a fake certificate from a sheik in California to avoid paying a $500 fee) and fake health certificates from the USDA. (Itani, "often using the name John Bartlette," forged forms to clear food packages for export.)
Meanwhile, Pallares was getting nervous. She was constantly dealing with federal agents, conducting interviews, helping them locate invoices or e-mails to connect the dots in the case against Itani. It had been several years since she quit her job, and even after the raid on American Grocers' warehouses, the case seemed only to be getting bigger and more complex.
"It was scary dealing with the government," Pallares says. "I never knew what to expect, never knew what would happen."
To make matters worse, Pallares felt that her family could be in danger. Not long after she quit her job with Itani, Pallares says, Itani's brother began "stalking" her, following her around the city and showing up at the same places as her. The worst instance, she says, involved the brother following her to the high school her son attended. Pallares reported the incident to the police, and the harassment stopped. But when she told federal agents about the situation, they wanted to put her in the Witness Protection Program.
"I considered it, because I was scared of him. But honestly, I was having regrets," Pallares says. "I didn't want to cut ties with all my family and take my son out of school."
She refused the offer of witness protection.
"It was difficult, but I knew I was doing the right thing," Pallares says. "I had to keep telling myself, 'You're doing the right thing.'"
On July 23, 2007, a federal grand jury indicted Itani on 46 counts of stealing from the government using "contracts related to the 2003 invasion and subsequent occupation of Iraq." He was arrested that same day and held in federal custody until his wife used cashier's checks to post his $1 million bail.
In July of this year, Itani, American Grocers, Pallares and the government settled on terms to end the ongoing civil suit. Itani agreed to pay $13.2 million, a number determined by federal agents based on Itani's "ability to pay." (He was accused of selling $36 million worth of bad products to troops.) Because of the settlement, the government couldn't go after Itani's assets, including the estate near Tanglewood, or his business. And, more important, his attorney notes, it is not an admission of guilt.
"Samir Itani never once altered dates on food shipped to the United States military," Nugent says. "The allegations hold a lot of sex appeal, they're sensational and they're incendiary."
Nugent says acetone was used, but claims it was used only to remove dates and labeling that needed to be erased to make way for correct Arabic labeling. As for the e-mail in which Itani ordered his employee to "erase the bad dates," Nugent says he hasn't seen the e-mail but would be skeptical of its source. (The e-mail was obtained during the raid on American Grocers' warehouse.) The settlement, Nugent says, was simply about Itani "putting the matter behind him."
"It was a business decision. He could continue to spend years and millions of dollars fighting the U.S. government or he could focus on saving his business," Nugent says. "But he admits to no wrongdoing [in the civil allegations]. He refused to make any admission. Zero."
And, in fact, the government didn't go after the expired-food allegations in its criminal case. Stephen Corso, a federal prosecutor, told a judge during a hearing that the government wasn't certain it could make the charges stick, at least criminally. Of course, Corso also called Itani a "war profiteer" and "leader of a criminal conspiracy."
"This undermines citizens' faith in government, and his conduct should be offensive, especially to families of the troops on the ground in the Middle East," Corso told the judge. "He took advantage of the American taxpayer, and we want others who contract with the government to think twice before doing the same."
To do that, the government focused its criminal investigation on bogus shipping costs. Prosecutors charged Itani with using fake invoices to overcharge the government by about $2 million. Itani eventually pled guilty, and even before his sentencing, had repaid the money along with the civil settlement.
For Pallares, it seemed like good news, but according to Androphy, the government didn't want to pay her.
"It's a shame because she basically made the case for the government, and for five years we've put ourselves on the line and invested about $1 million of our own money," Androphy says. "She took all the risk, and now the government doesn't want to compensate her for that."
And in a 34-page opinion on the matter, Judge Melinda Harmon wrote: "[Pallares] is not a parasite seeking a free ride on information previously obtained by the Government, but at minimum an equal partner, and probably more, in developing the claims against [American Grocers] for the Government's indictment..."