Office of the United States Attorney, John S. Leonardo
District of Arizona
August 30, 2013
PHOENIX – John S. Leonardo, United States Attorney for the District of Arizona, announced today that Bashas’ Inc. (“Bashas’”), a family-owned Arizona corporation that operates more than 100 grocery stores in Arizona, California, and New Mexico, including the line of stores known as AJ’s Fine Foods (“AJ’s”), has agreed to execute a Non-Prosecution Agreement concerning meat mislabeling practices that occurred at certain AJ’s locations between January 2010 and February 2012.
Under the Non-Prosecution Agreement, Bashas’ has admitted, accepted, and acknowledged corporate responsibility for the misconduct of the employees who were responsible for the mislabeling practices and has voluntarily undertaken a variety of remedial measures – including disciplining and/or terminating culpable employees and adopting a comprehensive compliance program to be overseen by a Chief Compliance Officer – in an effort to prevent the misconduct from ever recurring. Bashas’ also has agreed to provide $1,472,487.20 (which represents the total sales generated from the sale of the misbranded meat) to the Tucson Community Food Bank, St. Mary’s Food Bank, United Food Bank, the Salvation Army, St. Vincent de Paul Food Bank, and the Association of Arizona Food Banks in order to provide complete restitution for the misconduct.
Between January 2010 and February 2012, Bashas’ operated 12 AJ’s locations in the Phoenix metropolitan area and an additional location in Tucson. During this time period, employees within the meat departments of some of these locations followed a practice of taking beef tenderloin steaks that had been graded as “Choice” under the USDA’s meat grading system, mislabeling those steaks as “Prime” (a higher grade), and then selling the mislabeled steaks to customers. Because “Prime” steak is usually more expensive than “Choice” steak – AJ’s typically sold “Prime” steak for $35.99/pound and sold “Choice” steak for $25.99/pound during the relevant time period – the result of these mislabeling practices was that customers were being overcharged. In addition, during the same time period, employees within the meat departments of some of these AJ’s locations also engaged in mislabeling practices concerning American-style “Kobe” ground beef, a special breed of beef that was typically sold for $5.99/pound. Specifically, these AJ’s locations followed a practice of adding trimmings from non-“Kobe” meat products (including “Choice” and “Prime” steaks, cuts of meat that typically sell for much more than $5.99/pound) to the “Kobe” ground beef mixture in an effort to improve the consistency of the grind. As result, the product being sold by these AJ’s locations as “Kobe” ground beef was not, in fact, composed solely of “Kobe” ground beef. In total, the offending AJ’s locations sold approximately 17,636 pounds of mislabeled “Prime” tenderloin steaks and 139,861 pounds of mislabeled “Kobe” ground beef to customers and generated $1,472,487.20 in total sales therefrom.
The United States Attorney’s Office’s decision to enter into the Non-Prosecution Agreement with Bashas’ was based on a careful consideration of the factors set out in the Department of Justice’s “Principles of Federal Prosecution of Business Organizations.” Of particular weight were Bashas’ full and ongoing cooperation with the investigation (which was conducted by the United States Department of Agriculture); Bashas’ willingness to accept full corporate responsibility for its employees who engaged in misconduct; Bashas’ willingness and agreement to undertake significant remedial measures to ensure that such misconduct will not recur; Bashas’ agreement to disgorge all of the sales it derived from its misconduct, in the form of restitution payments to area food banks; the absence of prior instances of misconduct associated with Bashas’; the absence of proof that Bashas’ upper management was aware of, or ratified, the misconduct; and the USDA’s conclusion that the misconduct did not create any public health risk.
The investigation in this case was conducted by the United States Department of Agriculture. The prosecution is being handled by Dominic Lanza and Peter Sexton, Assistant U.S. Attorneys, District of Arizona, Phoenix.
RELEASE NUMBER: 2013-071_Bashas
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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
ATTACHED: Bashas’ Non-Prosecution Agreement (PDF)