U.S. charges five in 'Honeygate' anti-dumping probe

Wed Feb 20, 2013 6:08pm EST

Feb 20 (Reuters) - Five people and two honey-processing companies have been charged with dumping honey imports from China, including some that were adulterated with unauthorized antibiotics, in an operation dubbed Project Honeygate, U.S. authorities said on Wednesday.

U.S. Immigration and Customs Enforcement and Homeland Security Investigations announced the charges in what they called the second phase of an investigation that resulted in charges against 14 people and several companies in 2008.

The investigation stems from an industry attempt to avoid paying U.S. duties of more than 200 percent on Chinese honey starting in 2006, about five years after the U.S. Commerce Department determined Chinese honey was being sold in the United States at less than fair market value.

The charges accuse the defendants of falsely declaring honey imported from China as other commodities in order to evade more than $180 million in anti-dumping duties, officials said in a statement.

As part of the probe, an undercover special agent in 2011 posed as the director of procurement at Honey Holding I Ltd, a company that is cooperating with the investigation, the statement said.

Two of the largest honey suppliers in the United States - Honey Holding, doing business as Honey Solutions, of Baytown, Texas; and Groeb Farms Inc., of Onsted, Michigan - have agreed to cooperate with the government and entered agreements that will defer prosecution for two years.

Honey Holding agreed to pay $1 million and Groeb Farms agreed to pay $2 million in fines, officials said.

"We take full responsibility for and deeply regret any errors that were made in the past regarding the import of honey," Rolf Richter, chief executive of Groeb Farms, who joined the company in 2012, said in a statement.

One person charged in the case pleaded guilty on Wednesday and two others intend to plead guilty, a spokesman for federal prosecutors in Chicago said.

A grand jury has indicted two other suspects, one who was arrested in California in February and another who was living in Canada, the spokesman said.

"These businesses intentionally deprived the U.S. government of millions of dollars in unpaid duties," Daniel Ragsdale, deputy director of U.S. Immigration and Customs Enforcement, said in a statement. "Schemes like this result in legitimate importers and the domestic honey-producing industry enduring years of unprofitable operations, with some even being put out of business."

Some of the imported honey contained Chloramphenicol, an antibiotic not authorized in honey, authorities said. (Reporting by Daniel Trotta; Editing by Leslie Adler)