Multinational Corporation, Individuals Charged with Multimillion-Dollar Organic Grain Fraud Scheme

The Department of Justice (DOJ) indicted Hakan Agro DMCC and Hakan Organics DMCC as well as three individuals on counts of conspiracy, smuggling, and wire fraud. The agency alleges that these companies and individuals exported over $24.9 million in organic-labeled grains, when the goods were not organic. 

Per a Department of Agriculture (USDA) investigation cited in the DOJ’s statement, the two Dubai-based companies as well as Goksal Beyaz, Nuray Beyaz and Mustafa Cakiroglu, each of Turkey, engaged in a years-long conspiracy to mislabel conventional crops as organic in order to cash in on the price premium organic goods earn. In some cases, organic grains sell for as much as 50% more than their conventional counterparts.

Unlike the term “all-natural,” organic is a regulated term in the United States. In 1990 Congress passed the Organic Foods Production Act which tasked the USDA with creating a body to regulate and protect the USDA organic seal, such that only goods with at least 95% organic ingredients can bear said seal and be called organic. While the final framework was codified in 2000, since then the United States has signed equivalency agreements with peer nations like Canada and the European Union.

Allegedly, the charged individuals and companies attempted to flout these regulations. In one instance in early 2016, the defendants supposedly shipped 16,250 metric tons of falsely-labeled “organic” soybeans from Turkey to the United States, where they were sold for over $10 million. In other instances cited in the press release, they imported corn under the same false label. 

An initial hearing for Hakan Agro and Hakan Organics took place on January 5 in the District of Maryland, where all these cases will be heard. Some of the aforementioned shipments arrived in the port of Baltimore.