U.S.
Food and Drug Administration
FDA Consumer magazine
November-December 2002
Table of Contents
By Michelle Meadows
Robert and Arlen Bechtel, former owners of Bechtel Dairies Inc. of Royersford, Pa., thought they had devised a way to boost profits by increasing the poundage of the milk they sold. But their scam soured when they were caught adding skim milk powder and water to fluid milk from the cow. They packaged, labeled and sold it as fresh whole milk to consumers, including school lunch programs, without revealing that the milk was made with powder and water.
According to documents filed in the U.S. District Court for the Eastern District of Pennsylvania, the defendants bought 1,781,500 pounds of skim milk powder from vendors in Michigan, North Carolina, and Minnesota from January 1993 to December 1997. They traveled to these places, paid cash, and arranged to have the powder shipped to Bechtel Dairies. The Bechtels then directed employees to mix the out-of-state powder with water, producing about 19,596,500 pounds of reconstituted skim milk.
Since at least 1996, the Bechtels and Patricia Hughes, the dairy's controller, not only schemed to defraud purchasers of milk by adding powdered milk and water to it, but also under-filled milk containers, sold milk in mislabeled containers, repackaged old milk that was about to expire along with new milk and falsified freshness dates.
Besides schools, customers who received the milk included Veterans Affairs hospitals, the Department of Defense, and retail stores. More than half of the company's milk business was believed to be from schools participating in the National School Lunch Program. This program gives children at the poverty level a free or reduced-price lunch, and milk provided as part of the program must be fluid milk from the cow.
Investigators charged that Bechtel Dairies routinely added water so that it made up two-thirds the amount of milk in milk containers. But the defendants labeled the containers as milk without listing water or skim milk powder as ingredients. Also, the Bechtels routinely illegally packaged skim milk in whole milk containers.
These actions violated the Federal Food, Drug, and Cosmetic Act because they introduced misbranded and adulterated food into interstate commerce. Food cannot be misbranded with false or misleading labels, and food cannot be adulterated by leaving out essential ingredients, substituting ingredients or adding a substance to increase the food's weight. The FDA's Office of Criminal Investigations' metro Washington field office and the United States Department of Agriculture (USDA) Office of Inspector General jointly worked on the investigation.
The Bechtels and Hughes also were charged with submitting false reports to the Milk Market Administrator (MMA) regarding milk sales and milk powder usage. The MMA, a service of the USDA, regulates milk prices and activities of milk handlers and dairy farm cooperatives.
In an earlier case, Bechtel Dairies paid the USDA $550,000 in administrative penalties for submitting false statements about its milk powder usage. The penalties were levied after the company had indicated the use of 1.7 million pounds of milk powder from 1985 to 1989, when the actual amount was 17 million pounds.
In the most recent case, investigators searched Bechtel Dairies in February 1998 and found two sets of books. One contained the monthly total milk sales matching false reports the defendants submitted to the MMA. The second contained actual milk sales, which were substantially greater. Based on these two sets of records, the defendants routinely understated sales by $70,000 per month, according to court papers. Investigators also found a record of actual amounts of milk powder usage, which was much greater than reported.
The Bechtels and Hughes pleaded guilty to conspiring to misbrand milk products with intent to defraud. The Bechtels were fined $5,000 each, and Patricia Hughes was fined $250. Each of the defendants also received three years probation. Bechtel Dairies went out of business and was sold to another dairy in Pennsylvania in 1998.