Fruit Salesman Charged With Defrauding Grocery Chains

A federal grand jury on Thursday indicted a salesman for a large Los Angeles fruit wholesaler in a widening investigation into the highly competitive system that gets produce from the fields to the supermarket.

The indictment accuses Paul Raggio, 32, of defrauding grocery chains and fruit wholesalers by selling lower-quality or smaller fruit as top grade in 1988, when he was a salesman for the Los Angeles firm of Cal Fruit, working at its operation in Sanger, 12 miles from here.

The government accused Raggio of carrying out a wire fraud by submitting false bills of lading to customers in 10 different instances in 1988. The fruit was shipped as far as Mexico City, and to retailers in Washington state, Arizona, Texas and New Mexico.

The indictment gave no indication of how much money was at stake. The price variance between the highest-quality fruit and smaller fruit can be as much as $2 a carton wholesale, and cartons holding several dozen pieces of fruit can range in price from $4 to $20.

Raggio’s indictment alleges that the fruit came from a large packinghouse in Sanger, owned in 1988 by Christian Salvesen, a Scotland-based firm. Cal Fruit had the exclusive contract to sell the millions of cartons of fruit packed by Christian Salvesen.

In June, the general manager of the packinghouse, Mark E. Thomas, was indicted on charges of bilking growers by giving them phony invoices showing that their fruit fetched lower prices than in fact it had.

Like Raggio, Thomas, who is set to go on trial in federal court next month, is not accused of pocketing any money. Rather, Thomas evidently was driven to improve the bottom line for Christian Salvesen, a firm known for its aggressive pursuit of profit in its primary business of cold storage, records showed.

Christian Salvesen began its failed foray into the San Joaquin Valley packing industry in 1986. It got growers to use its packinghouse by promising financing and big profits for their harvests. But it was forced to fold the Sanger operation in 1989 after growers became suspicious and sued, and authorities opened criminal investigations.

Both indictments are part of an investigation led by Assistant U.S. Atty. Mark Cullers in Fresno. More indictments are likely.

In a related development, federal agents two weeks ago searched the Fresno offices of Nobility Fruit, owned in part by the owners of Cal Fruit, and seized records relating to the company’s sales. Raggio is now an employee of Nobility.

Nobility contracts with growers to sell their crops. Several large growers of grapes and tree fruit moved their business to Nobility in 1989 after Christian Salvesen pulled out of its Central Valley fruit packinghouse and distribution operation.

Joseph Agapay, Cal Fruit’s attorney, called the charges against Raggio “outrageous and completely unjustified.” He said that customers could have rejected the shipment or demanded lower prices. “It has always been the practice of Cal Fruit and its employees to deliver to its customers what the customers expect,” Agapay said.