Multimillion dollar fraud in US organic grains market

A sophisticated scheme by Turkish businessman Hakan Bahçeci and associates, defrauded the US organic food market by selling falsely labeled non-organic grains.

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Reporting from Abdullah Bozkurt for Nordic Monitor details an elaborate scheme orchestrated by Turkish businesspeople, including the late businessman Hakan Bahçeci and his associates, to defraud the US organic food market through a multi-million dollar fraud. The scheme involved selling non-organic grain, falsely labeled as organic, to the US market, leveraging a network of companies across Turkey, the United Arab Emirates (UAE), and the US. This network operated under Bahçeci's leadership and was involved in the supply chain of various agricultural commodities.

Hakan Bahçeci, who passed away in May 2020, was a significant figure in this operation. He had served as the president of the Dubai-based Turkish Business Council, affiliated with Turkey’s Foreign Economic Relations Board (DEİK), from 2011 to 2017. His companies, including Hakan Agro DMCC and Hakan Organics DMCC based in Dubai, were implicated in purchasing non-organic soybeans and corn from Eastern Europe, which were then fraudulently labeled as organic before being shipped to the US. These actions led to their indictment in a federal criminal complaint and a civil lawsuit in US courts.

The indictment filed with the United States District Court for the District of Maryland on August 4, 2022, revealed that the conspirators charged inflated prices for the grain sold to the US under false organic certification, pocketing millions in illicit profits. For instance, non-organic, non-GMO soybeans were purchased from Ukraine for $423 per metric ton in 2015 and sold to a US customer as organic soybeans for $614/MT, resulting in a transaction exceeding $4.9 million. Similar fraudulent activities were conducted with corn and other soybean shipments in subsequent years, leading to significant financial gains for the conspirators.

The case was thoroughly investigated by the US Department of Agriculture (USDA) Office of Inspector General, with senior trial attorney Adam Cullman of the Environment and Natural Resources Division’s Environmental Crimes Section, along with Assistant US Attorney LaRai Everett for the District of Maryland, prosecuting the case.

Additionally, most individuals and companies named in the federal criminal complaint were also subjects of a civil lawsuit filed by the Maryland-based US company Global Natural, LLC in October 2017. The lawsuit sought damages for fraud, breach of contract, conspiracy, and negligent misrepresentation from Bahçeci, his firms, and associates.

This scandal has highlighted the need for stringent oversight and regulation in the organic food market to prevent such fraudulent activities and protect consumers and legitimate businesses operating within the industry.

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