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Guilty plea in $40 Million fake fertilizer case
Aug. 7, 2012
In his guilty plea, Mr. Nelson admits that from 2003 to January 2009 he defrauded customers such as 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 manufacturing and selling fertilizers that he falsely represented were organic products permitted for use in organic agriculture.
Organic farmers and distributors relied on Mr. Nelson’s representations as to the fertilizers’ organic status in purchasing the products for use in organic agriculture, says U.S. Attorney Benjamin Wagner.
The fertilizers included products labeled variations of “Agrolizer,” “Marizyme,” and “Fishilizer,” among others. Mr. Nelson said that these fertilizers were made purely with materials authorized for organic agriculture, such as fish meal and bird guano, and had the fertilizers’ labels state that the products complied with organic certification standards and could be used by certified organic growers, court documents show.
But he has admitted that he actually caused large amounts of synthetic materials not permitted in organic fertilizers or organic agriculture, such as aqueous ammonia, ammonium sulfate, and urea, to be used in the fertilizers.
Mr. Nelson admitted in his guilty plea that by using synthetic materials, he was able to produce the fertilizers at a lower cost than if he had used permitted organic ingredients such as fish meal and bird guano. Through this scheme, he caused customers to pay more than $40 million for purportedly organic fertilizers that actually contained synthetic materials that were not permitted to be used in organic agriculture.
He admits that the total losses attributable to the scheme were between $20 million and $50 million. From 2003 through 2008 Nelson, through Port Organic and affiliated businesses, received profits of over $9 million from the scheme.
“This conviction holds the defendant responsible for his flagrant fraud in the labeling and marketing of a fertilizer product as ‘organic.’ 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,” says Mr. Wagner.
In his guilty plea, he has agreed to forfeit to the United States a 2006 Chevrolet Silverado, a 2005 Mini Cooper, a 2004 Porsche Cayenne, a 2003 BMW 330, and a personal money judgment of $9 million.
Mr. Nelson is scheduled to be sentenced on Nov. 5, when he faces a maximum statutory penalty of 20 years in prison and a $250,000 fine on each mail fraud count, and up to three years of supervised release.
Source: Central Valley Business Times
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