A company hired to provide food and water supplies to the U.S. military in Afghanistan has been charged with fraud and owes $389 million dollars in fines after engaging in war profiteering, Stars and Stripes reports.
Supreme Foodservice GmbH, based in Europe, created a scheme to fool the military by setting up a shell company in the United Arab Emirates, which was used to justify abnormally high profits. In one example cited in the case, products like milk and juice were marked up by 55 percent.
Non-alcohol beer soared up to 125 percent of its original price. One internal company email released revealed that Supreme even considered overcharging for ice cubes, but figured that officials were too well-acquainted with the actual price to get away with it.
Suspicions started in 2006 after military officials pointed out that Supreme was charging an incredible 525 percent above the market rate for corn. Unbelievably, after the complaint was lodged, one executive made the case internally that Supreme should charge the military even higher prices as punishment.
Lasting from 2005 to 2009, the scheme allowed Supreme to bring in $48 million dollars through its affiliate company Jamal Ahli Foods Co. L.L.C. According to U.S. prosecutors, the only reason why Stephen Orenstein–the majority owner of Supreme—did not face trial in the United States is because there is no extradition treaty between the two countries. Supreme executives did not make the trip to Philadelphia, where the case was being held, instead preferring to send a company ethics officer to enter in a guilty plea.
“This is about soldiers in the desert being charged outrageous amounts of money for something like water, all for money,” U.S. District Court Judge Gene Pratter said, according to Bloomberg. “That’s pretty low.”
Supreme will be barred from business with the federal government for at least five years following the ruling.
Aside from having to pay hefty fines and damages, Supreme must now hold an annual event for at least five years honoring the service of veterans. Additionally, part of the money from the judgment will be sent to Supreme employee Michael Epp, who blew the whistle on Supreme’s unscrupulous activities and contacted federal investigators.
After Epp informed Orenstein he had overcharged on transportation fees, Epp was summarily fired and his compensation package was taken away. According to Epp, Orenstein even tried to remove his work permit.
“We regard their crimes as the worst sort of war profiteering,” asssistant U.S. Bea Witzleben told U.S. District Judge Gene E.K. Pratter during Monday’s hearing.
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