A California man has pleaded guilty to four counts of mail fraud related to a scheme where he would defraud customers of his organic fertilizer business, U.S. Attorney Benjamin Wagner announced this week in a release.
According to his guilty plea, Kenneth Nelson defrauded organic farmers and distributors through his company Port Organic Products Ltd. and affiliated businesses such as AgroMar Inc., Sail On Ag Products Inc., Desert Organic Express Inc., Action Fertilizer, and Microbial Assisted Soil Health Inc. by producing and selling fertilizers that were falsely represented as organic. Nelson represented to his customers that the fertilizers were made with ingredients such as fish meal and bird guano that are authorized for organic agriculture. Nelson admitted to using products such as aqueous ammonia, ammonium sulfate and urea, which are synthetic materials not permitted in organic fertilizers or organic agriculture. Using the synthetic materials enabled Nelson to produce the fertilizers at a lower cost than if he had used organic ingredients.
Nelson also admitted to submitting false documents in order to have his fertilizers listed as organic by the Washington State Department of Agriculture and the Organic Materials Review Institute.
The scheme caused Nelson’s customers to pay more than $40 million for fertilizers falsely labeled as organic but which actually contained synthetic materials. Nelson also admitted that the scheme resulted in total losses between $20 million and $50 million.
“This conviction holds the defendant responsible for his flagrant fraud in the labeling and marketing of a fertilizer product as ‘organic,’” U.S. Attorney Wagner said. “Consumers pay a premium for organic products, and they should not be misled by companies that seek to profit by falsely categorizing their products as organic. We will continue to work with USDA investigators and with the FBI in examining production and labeling practices in the organic fertilizer industry.”
Pursuant to his guilty plea, Nelson agreed to forfeit to the United States a 2006 Chevrolet Silverado, a 2005 Mini Cooper, a 2004 Porsche Cayenne and a personal money judgment of $9 million.
The investigation was led by the USDA Office of Inspector General and the Federal Bureau of Investigation, with help from the California Department of Food and Agriculture, USDA Agricultural Marketing Service and the Kern County Environmental Health Services Department.