Mushroom Company Consents to Order Finding It Committed “Willful, Flagrant and Repeated Violations” of Federal Law

(Washington, D.C.) – In a lawsuit brought by the US Department of Agriculture (USDA), Golden Gourmet Mushrooms (GGM) has consented to an order finding that it “committed willful, flagrant and repeated violations” of the Perishable Agricultural Commodities Act (PACA). The USDA charged that GGM operated without a required PACA license for over two years, through the end of 2007.

The USDA also charged that GGM misrepresented to its customers in the US and Mexico that its mushrooms were from California. In fact, USDA found, the mushrooms were from Japan and Korea. GGM agreed to cease and desist from further operations subject to PACA without a valid PACA license, and the company withdrew its pending PACA application. PACA was enacted to protect against fraudulent practices in the fresh fruit and vegetables industry. The law requires companies to be licensed in order to conduct PACA-related business.

The USDA action was triggered by a Government Accountability Project (GAP) investigation, which found that the San Diego-based mushroom company defrauded its customers into believing its mushrooms were of California origin. In its complaint, USDA alleged that GGM made false statements on NAFTA certificate-of-origin papers, misused USDA phytosanitary papers, and made both written and oral false claims to customers.

Last October, GAP submitted a formal complaint to USDA’s National Organic Program (NOP) alleging that GGM sold conventional mushroom products as organic, manipulated organic certification documents, and made false claims regarding the nature and origin of its mushroom products. Additionally, GAP’s complaint asked the USDA to investigate whether GGM’s supplier, Hokuto Corporation, and its organic certifier, Quality Assurance International, were complicit in the fraud.

GAP’s investigation revealed the existence of the manipulated organic certification documents, which GAP alleged were sent to customers to convince them that GGM’s “certified organic” fresh mushrooms were also locally grown, an absolute must for some consumers.

While the NOP’s investigation is still ongoing, USDA’s PACA branch stated the following:

[GGM] maintained a company policy of withholding the true origin of its mushrooms from customers even though some customers were paying [GGM] higher prices for locally grown product. [GGM] failed to perform its duty of disclosing the country of origin of its mushrooms despite knowing that some of its customers did not want to buy product grown outside the United States.

GAP Executive Director Mark Cohen praised USDA for pursuing the investigation but blasted the consent order as “a slap in the face to honest actors in the market place. The penalty for ‘willful, flagrant and repeated violations’ is simply an agreement by the company not to repeat the offense. This invites other bad actors to break the law.”