Fraudsters convicted for selling spoiled, tainted food to discount grocers
Facing a federal judge in Seattle, Randy Sparks and Dexter Jorgensen put themselves forward as heroes in the fight against food waste.
America is a country with wasted food and hungry people. Randy Sparks saw himself as a man who could use the former to help the latter, while turning a tidy profit. All the discount grocery supplier had to do was join in on a well-worn lie.
Sparks, a Mississippi man who made millions in the industry, knew Dexter Jorgensen wasn’t on the level. One of many resellers Sparks dealt with, Jorgensen made an offer that was too good to be true: Washington apple juice at 23 cents a gallon. Sparks bought it anyway, then resold what turned out to be moldy juice to discount grocers across the United States.
Jorgensen was a salesman of an unusual stripe. A South Dakota farmer, he took in spoiled or contaminated food by the truckload, promising to turn manufacturers’ waste into animal feed. He then took the food he had agreed to destroy and resold it to Sparks and others who stock the shelves of America’s grocery liquidators.
Their fraud was undone after thousands of gallons of juice slated for destruction by a processing plant in Selah, Yakima County, had been resold instead. Jorgensen and Sparks are now paying a big price for their discount deception; federal prosecutors in Seattle recently won probationary sentences and six-figure financial judgments against each.
Jorgensen’s resale scheme had been running for years, and though investigators could determine the fate of only 200 truckloads Jorgensen sold to Sparks, prosecutors suspect he trafficked thousands of tons of waste food, ranging in quality from unappetizing to unsafe. Pizza sauce flecked with glass and insect-infested grain flowed through Jorgensen’s companies, as did soup laden with metal bits.
Customers who filled their pantries with manufacturers’ trash remain in the dark. Brand-name products were dumped into a system with few paper trails for investigators to follow. Still, the investigation shed light on a shadowy corner of America’s food web.
Appearing in U.S. District Court at Seattle for sentencing earlier in July, Sparks, who continues in the discount grocery business, said he is regularly approached by vendors hoping to sell him waste food.
“Being in the business for 36 years, certainly opportunities present themselves from time to time,” Sparks, 62, told U.S. District Judge Robert Lasnik. “There is plenty of product that is available out there.”
The “secondary” grocery industry feeds off of a stunning amount of food waste. Estimates vary, but 30% to 40% of America’s food supply ends up being destroyed. The food policy think tank ReFED estimates 62 million tons of food is wasted or left in the fields each year in the United States, all while one in seven people don’t have enough to eat. The organization, which draws support from the grocery industry and environmental activists, contends that waste could be cut by 20 percent immediately with limited effort.
Facing judgment, Jorgensen and Sparks put themselves forward as heroes in the fight against food waste. Assistant U.S. Attorney Matthew Diggs, who led both prosecutions, wasn’t having it.
“The answer to the fact that there is significant food waste in America cannot be that Randy Sparks and Dexter Jorgensen get to decide what they want to sell after manufacturers want it destroyed,” Diggs said in court. “That can’t be the answer. If it is, we’re just waiting for a significant problem.”
States and cities, including Seattle, require that unsalable food be recycled. When working well, the food recycling industry promoted by those regulations turns overripe fruit into pies and smoothies, stale cereal into animal feed. When it fails, it produces food fraud.
Food fraud is a catchall encompassing all profitable deceptions related to food. An olive oil maker diluting its product with peanut oil and a faux farmer passing store-bought fruit at a farmer’s market are both engaging in food fraud. So, too, were Jorgensen and Sparks.
Industry watchers believe food fraud is on the rise, though estimates are unreliable. Researchers know food is being misrepresented to consumers but have no way to gauge the prevalence of fraud, said Karen Everstine of Decernis, a New York tech firm tracking fraud incidents for industry.
“Given the nature of food fraud — it’s designed specifically not to be detected — we don't know the true scale of food fraud in the U.S.,” said Everstine, senior manager for scientific affairs at Decernis.
John Spink of Michigan State University’s Food Fraud Initiative offered a similar view.
“The bottom line is we don’t have a lot of good data,” Spink said by phone. “The fraud act is constantly changing. … What we know is that there are a lot of vulnerabilities.”
The case of Sparks and Jorgensen shows that the secondary grocery market presents one such vulnerability.
Secondary grocers act as a store of last resort for expiring, discontinued or damaged products. Millions of cash-strapped Americans rely on the savings these stores provide; food at a secondary grocery is usually discounted 35% to 75%.
While some larger discount chains source directly from manufacturers, smaller or less-scrupulous grocers buy from suppliers like Sparks, who buy truckloads of waste food for resale. Sparks described a system of harried phone conversations and text exchanges resulting in handshake agreements. Bookkeeping is poor, auditing difficult.
For more than 30 years, Jorgensen had been in the business of taking in waste food that producers wanted destroyed. Jorgensen convinced recycling brokers and manufacturers that the food would be converted into animal feed or fertilizer at his farm in Burbank, South Dakota. What could not be repurposed, he told them, would be recycled or destroyed.
In truth, Jorgensen was putting food marked for destruction onto grocery shelves.
“There is no reason to believe Jorgensen did anything but divert loads,” Diggs told the court.
The scheme spread across the country, from New York to California and Washington. Ruined rice bought in North Carolina would be trucked out of the state and disappear into Jorgensen’s business. Candy that a manufacturer deemed unsellable left a Kentucky factory to join the stream.
“Simply put, this was not a scheme likely to ever be discovered and prosecuted by a local jurisdiction,” Diggs told the court.
The scheme was also unlikely to receive federal scrutiny. Prosecutors and Sparks’ attorney described the criminal case as the first of its kind. The nation’s food safety watchdog, the Food and Drug Administration, intervenes only when there is a public health threat or clearly fraudulent advertising. Reselling garbage does not necessarily fall under the FDA’s purview.
FDA spokesperson Peter Cassell said the agency uses “a variety of enforcement tools … to ensure that companies are keeping consumers safe and that product labeling is not false or misleading.” Except in the case of infant formula, the FDA does not police expiration dates.
While there is no evidence anyone was sickened by the diverted food, Diggs noted that many of the items handed off to Jorgensen raised the potential for harm.
Records show Jorgensen took in 23 tons of Campbell Soup-produced Prego pizza sauce contaminated with glass flecks. A recycling broker assured the manufacturer by email that Jorgensen would be “running them over with a backhoe to make sure even a bird flying by would not be able to get them.” Grain that posed an insect “infestation risk” was passed along to Jorgensen, as were 14 pallets of soup with metal bits inside.
The known victims of Jorgensen’s scheme are the food manufacturers that saw their fortunes jeopardized. Court filings carrying their names, and the names of the grocers Sparks’ sold to, were ordered sealed or redacted during the prosecution. Consumers who bought the trashed food have not been identified. Asked whether customers who were sold waste food would be notified if it were possible to do so, the FDA's Cassell equivocated.
“Companies are required by law to sell food that is safe and truthfully labeled,” the FDA spokesperson said. “In deciding whether and what information to provide to consumers, FDA considers information such as whether the product is subject to recall or is otherwise adulterated or misbranded.”
While the FDA removes contaminated food from grocery shelves, food quality isn’t the FDA’s core concern, said Spinks, the Michigan State University food fraud expert who helps food manufacturers improve their defenses against food fraud.
“They’re looking at the worst public health threats, broad-scale salmonella, E. coli, things like that. They are resource-constrained,” he said.
Food fraud researchers working with industry have no clear picture of how much discarded food flows through the secondary market.
“I wish we knew more,” said Everstine, the Decernis food protection specialist. “This is one area that — in my view — has been not well documented or reported. We are at the mercy of what is publicly reported.
“It seems like there is general knowledge about stolen or redirected foods but not documentation about where it actually winds up.”
Sparks followed his father into the discount grocery industry. Wholesaling substandard food to other grocers, Sparks built his company, Silver Dollar Sales, into a business moving $12 million to $14 million in inventory annually.
Sparks owns several large warehouses in Belmont, a rural community in northeast Mississippi on the Alabama state line. Addressing the court, Sparks described himself as having contracts — “some verbal, some written” — to receive food waste from Kroger, Colgate-Palmolive, Food Lion Grocery, Walmart and others. His company also buys through auctions, flea markets and food banks. The transactions happen fast — Sparks estimates he gets 15 to 20 offers each day — and any transaction may or may not yield a profit.
Sparks connected with Jorgensen in 2013, and soon began buying from him. Even after Sparks learned Jorgensen sold products slated for animal feed, he kept buying.
In May 2015, Jorgensen took on 99,792 gallons of moldy apple juice packed in gallon jugs.
Jorgensen told the manufacturer he would take the juice to South Dakota and dispose of it. Instead, Jorgensen sold 20 truckloads of the juice to Sparks for $20,000. Documents filed with the court indicate the juice was trucked from a Tree Top plant in Selah to Seattle and then shipped out of state by rail. It was ultimately sold to discount grocers in Mississippi and California, and then resold to consumers.
The unappetizing but harmless juice was discovered that fall in a discount grocery store in Maryland. Investigators ultimately showed Sparks and Jorgensen diverted truckloads of waste food from at least 12 other manufacturers between January 2014 to September 2017. Jorgensen provided falsified documents showing the products had been destroyed. Sparks helped forge the documents and photograph small amounts of destroyed goods to sell the lie.
Once caught, Sparks worked with FDA criminal investigators. He made recorded calls to Jorgensen. In one, Jorgensen plainly told Sparks he makes his money reselling products slated for destruction. Asked whether he ever converts spoiled food into animal feed, Jorgensen demurred.
“We’d never be able to do it and make any money,” Jorgensen told Sparks, explaining that he sometimes fed waste food to his hogs as a way to allay manufacturer concerns.
Jorgensen was indicted in July 2018 by a federal grand jury in Seattle. Sparks was charged after agreeing to plead guilty and assist in the investigation. Jorgensen did not cooperate with prosecutors.
Sparks’ defense attorney, Robert Westinghouse, described the prosecution as “one-of-a-kind.” Similar incidents, he said, had previously been resolved through lawsuits or “gentlemen’s agreements.” Westinghouse argued, too, that some good may have come from Sparks’ crimes.
“He purchased products that manufacturers such as Tree Top sought to take out of the stream of commerce,” said Westinghouse, a former assistant U.S. attorney who distinguished himself prosecuting Western Washington’s most notorious white-collar criminals.
“It is possible to argue that the public benefited from having some of the product which was to be destroyed resold at discounted prices,” he continued.
In his small community, Sparks has been shamed.
A volunteer Santa Claus, Sparks had long booked his holiday season with appearances at schools and events. Last December, Sparks’ wife said, he received only two calls. Enrollment in his Sunday school class dropped from 10 to two.
Facing Judge Lasnik, Sparks’ broad shoulders slumped as his wife described plans, now shattered, to open their home to foster children. The escape ladders and safety locks they bought to satisfy state inspectors sit unused. His crimes, he said, made his home unsuitable for Mississippi’s neediest children.
“I’ve hurt my family,” Sparks told the judge. “I’ve hurt my business, for obvious reasons. Manufacturers and suppliers don’t want to be affiliated with someone who makes judgments like I made. My faith has been questioned, which hurts me dramatically. …
“It has absolutely been a weight, a serious weight.”
Before sentencing Sparks, Lasnik all but pleaded with him to explain why he joined Jorgensen in the fraud. Sparks had no answer for the judge, saying only that he “ran the red light.”
While prosecutors sought a one-year prison term for Jorgensen, he and Sparks avoided jail time. Both men, having each pleaded guilty to an interstate fraud charge, were sentenced to probation and ordered to pay restitution; Jorgensen will be required to repay $216,461, while Sparks was ordered to pay $103,709 in restitution as well as a $10,000 fine.