Idaho farmer admits defrauding organic seed merchants
Bernard Saul, co-owner of Saul Farms in Bliss, admitted in federal court on Tuesday that he obtained $1.9 million in padded profits by illegally marketing conventional alfalfa seed as organic.
Between 2010 and fall 2015, Saul, under the name Bliss Seed, sold 7 million pounds of alfalfa seed labeled as organic. But organic certification records Saul submitted to state agricultural officials showed his farm was capable of only growing 35,000 to 50,000 pounds of organic seed annually, Assistant U.S. Attorney Ray Patricco said. He bought conventional seed from four companies that was sold as higher-cost organic.
Marketing the seed as organic allowed Saul to charge an average of $3.75 per pound. Saul Farms bought nonorganic seed — which was treated with fungicides and pesticides — for an average of $2.50 a pound, according to an affadavit filed by FBI agent Drew McCandless, who investigated the case.
Saul, 58, pleaded guilty before U.S. Magistrate Candy Dale in Boise to wire fraud and money laundering. He faces up to 20 years in prison on the fraud charge and 10 years for money laundering. He was not taken into custody Tuesday and is scheduled to be sentenced June 7 before Senior District Judge Edward J. Lodge.
“He accepts responsibility for his actions and will do what he can to make things right with his customers,” said Saul’s defense attorney, Dennis Benjamin.
Saul’s wife, Roza Saul, was also charged in the case. She pleaded guilty Monday to a misdemeanor count of selling a product that was misbranded. She is jointly liable for $1.9 million in restitution for the companies victimized by the fraud, and faces up to a year in prison when she’s sentenced June 2 before U.S. Magistrate Ronald Bush.
Farmers and seed-handlers that bought from Saul Farms or Bliss Seed supply dairy and beef operations across the Midwest, the East Coast and the Southeast. The owners of businesses in other states that bought what they thought was organic alfalfa seed told the Statesman in February they were scrambling to find new suppliers.
Saul agreed as part of the restitution agreement to forfeit a $1 million property in Buhl that includes a residence and 438 acres of land. He also agreed to forfeit ownership in a 2012 Coachman Freelander recreational vehicle, a 2014 Polar Kraft boat, engine and trailer and a 2015 Dodge Ram pickup, all bought with proceeds of the fraudulent sales. And, he agreed to turn over an uncashed $90,000 cashier’s check purchased last fall after he and his wife, Roza Saul, learned they were under investigation.
Last month, the U.S. Attorney’s Office in Boise filed a forfeiture action against the Sauls seeking those items. At the time, neither of them had been charged criminally but U.S. Attorney for Idaho Wendy Olson said they were under investigation.
John Sowell: 208-377-6423, @IDS_Sowell
ORGANIC ALFALFA AND IDAHO
Organic producers can be certified by the state or other organizations. As of 2016, Bernard and Roza Saul had organic certification from Nature’s International Certification Services for alfalfa, corn and Great Northern dry bean crops but not for alfalfa seed, according to U.S. Department of Agriculture records. From 2006 through 2015, Saul Farms had been state-certified for organic alfalfa seed.
An organic seed-handler inspection can take anywhere from three to 12 hours, according to said Johanna Phillips, program manager for the state’s organic program. Inspectors scrutinize records, trace the seed back to its origin and check for discrepancies between production and sales, she said.
The state had certified 232 organic operations as of Monday, Feb. 22.
IS IT REALLY ORGANIC?
U.S. consumers spend more than $35 billion on organic food each year, according to the Organic Trade Association. The vast majority of food products labeled as organic are as advertised, according to the U.S. Department of Agriculture.
In 2012, the USDA released the findings on 571 organic fruits and vegetables purchased from retail stores and tested for residue from more than 200 pesticides. The tests showed 96 percent of the fruits and vegetables complied with USDA organic regulations. Four percent were above the tolerances, which suggested some of the samples labeled as organic products were not. Other products may have been grown organically but were not adequately protected from prohibited pesticides.
ALFALFA: BIG CROP
Alfalfa ranks fourth among the most widely grown crops in the United States, behind corn, wheat and soybeans. The crop is worth $10 billion annually and is produced in all 50 states.
Idaho ranks third in alfalfa production, behind California and South Dakota, according to the USDA.
In 2012, Idaho farmers harvested 4.16 million tons of alfalfa, worth $799 million. There were 1.04 million acres planted in alfalfa, with a yield of about four tons per acre.
The crop is used as feed primarily for dairy cows but also for sheep, beef cattle, chickens and other farm animals.
It is also used as a cover crop that reduces pests and plant pathogens when rotated between corn and soybean crops. Alfalfa is valuable for fixing nitrogen in the soil, saving an estimated $457 million a year in fertilizer costs.
Demand for organic alfalfa has increased for use in organic dairy operations.
This story was originally published March 29, 2016 at 1:50 PM with the headline "Idaho farmer admits defrauding organic seed merchants."