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Updated Thursday, February 21, 2013 at 06:52 AM

2 major U.S. companies charged in ‘Honeygate’

By Phil Mattingly
Bloomberg News

WASHINGTON — Five people and two honey-processing plants were charged by U.S. authorities for their involvement in smuggling and mislabeling honey from China.

In one of the largest honey anti-dumping cases in U.S. history, the individuals and companies allegedly mislabeled Chinese-origin honey in an attempt to skirt more than $180 million in anti-dumping duties.

“The honey industry has been under assault due to anti-dumping circumvention.” Daniel Ragsdale, deputy director of U.S. Immigration and Customs Enforcement, said the case marks the “tip of the iceberg” in the agency’s pursuit of commercial fraud.

The charges from the probe, “Project Honeygate,” mark the culmination of a two-part investigation that began in 2008 and included U.S. Customs and Border Protection and the U.S. Attorneys Office in the northern district of Illinois.

The latest phase of the investigation included an undercover agent, who took a role as director of procurement with a cooperating honey supplier.

The resulting investigation led to two of the nation’s largest honey suppliers — Honey Holding and Groeb Farms — entering into deferred-prosecution agreements with the government; they also paid $1 million and $2 million in fines, respectively.

As part of the agreement to resolve the charges, Groeb Farms implemented a new compliance program and dismissed senior executives responsible for the actions.

Honey Holding, now doing business as Honey Solutions, cooperated with the investigation, officials said.

“Not only do these products disadvantage domestic producers and take jobs away from U.S. workers, these goods are frequently produced to standards (that) can adversely impact health and safety,” said Thomas Winkowski, chief operating officer for Customs and Border Protection.

The U.S. International Trade Commission in November voted to keep in place an order to prevent honey from China from being sold in the U.S. below production costs.

The U.S. imported $416 million dollars worth of natural honey last year, a 7 percent increase from 2011, according to the Census Bureau.


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