Multinational Corporation and Several Individuals Charged with Multimillion-Dollar Organic Grain Fraud Scheme
Two Dubai entities and several individuals were charged in an indictment unsealed in the District of Maryland recently for their roles in a multimillion-dollar scheme to export non-organic grain into the United States to be sold as certified organic.
Hakan Agro DMCC and Hakan Organics DMCC, both based in Dubai, and Goksal Beyaz, Nuray Beyaz and Mustafa Cakiroglu, all of Turkey, were each charged with conspiracy, smuggling, and wire fraud. An initial appearance for Hakan Agro and Hakan Organics was held on Jan. 5 in the District of Maryland.
The indictment alleges that between November 2015 and May 2017, the defendants operated a scheme where Hakan Agro, Hakan Organics and associated entities would purchase non-organic soybeans and corn from Eastern Europe before having it shipped to the United States as “organic.” This scheme allowed the defendants to charge the higher prices associated with organic grains. Organic grains often cost as much as 50% more than conventional (i.e. non-organic) grains.
Among other misconduct, the indictment alleges:
- In late 2015, the defendants obtained non-organic, non-GMO soybeans from Ukraine for $423 per metric ton (MT). Thereafter, the defendants arranged to have the same soybeans shipped to Baltimore, Maryland, where they were sold as “organic soybeans” for $614/MT, totaling over $4.9 million.
- In early 2016, the defendants arranged to purchase non-organic corn for $168/MT and have it delivered to Constanta, Romania. Simultaneously, they arranged to sell the same corn from Constanta through Baltimore as “organic corn” for $247/MT. The invoices for this falsely labeled corn totaled over $3.3 million.
- In late 2016, the defendants shipped 16,250 MT of non-organic soybeans falsely labeled as “organic” from Turkey to the United States where they were sold for over $10 million
- In early 2017, the defendants arranged for 21,000 MT of non-organic corn to be shipped to the United States falsely labeled as organic. The invoices for the falsely-labeled corn totaled over $6.7 million.
- In early 2017, the defendants arranged for a load of non-organic soybeans to be shipped from Turkey to Baltimore falsely labeled as “organic” soybeans.
Wire fraud and smuggling are each punishable by a maximum penalty of 20 years in prison. Conspiracy is punishable by a maximum penalty of five years in prison. Upon conviction, a federal district court judge would determine any defendant’s sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The U.S. Department of Agriculture, Office of Inspector General investigated this case
Senior Trial Attorney Adam Cullman of the Environment and Natural Resources Division’s Environmental Crimes Section and Assistant U.S. Attorney LaRai Everett for the District of Maryland are prosecuting the case.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.