The organic industry is pleased with the federal indictment handed down against the president of Port Organic Products Ltd. for fraudulently marketing organic fertilizers containing synthetic ingredients not allowed under USDA National Organic Program standards.
The U.S. Attorney’s office for the Eastern District of California announced that a federal grand jury returned the indictment charging Kenneth Noel Nelson Jr. of Bakersfield, Calif., with 28 counts of mail fraud relating to a scheme to defraud customers, including distributors and organic farmers, by falsely representing the fertilizers to be organic when he knew they contained synthetic materials.
The indictment charges that when federal search warrants were executed at Port Organic and affiliated businesses Nelson owned and operated, it was found that between at least 2003 and January 2009 he had defrauded his distributors and organic-farmer customers by falsely representing that his companies’ fertilizers were organic products suitable for use in organic agriculture. Nelson claimed that these fertilizers were made with purely organic ingredients, including fish meal, bird guano, or blood meal, which bring a higher price than conventional fertilizers.
The Organic Materials Review Institute (OMRI) declared that the Nelson scheme defrauded not only the users, but the California Department of Food and Agriculture (CDFA), certifiers, retailers, farmers, and consumers. “This situation created a shockwave through the organic community and diminished consumer confidence in organic products,” said OMRI Executive Director/CEO Peggy Miars. “I believe this indictment proves that cheaters will be caught and that consumers can trust the organic label.”
Aqueous ammonia, ammonium sulfate, synthetic urea, and other nonorganic, synthetic substances commonly used as conventional fertilizers but not permitted for organic crop production were identified in the indictment. By mixing in these cheaper ingredients, Nelson allegedly produced fertilizers that aided him in increasing his profits from 2003 through 2008 in excess of $9 million.
According to U.S. Attorney Benjamin B. Wagner, the indictment states that Nelson obtained and maintained organic listings for his fertilizers from OMRI and the Washington State Department of Agriculture based on the submission of false applications and renewal applications in which he failed to disclose the true ingredients in the fertilizers.
This case is the second recent investigation in California involving the organic fertilizer industry that has resulted in federal criminal charges. In October 2010, Peter Townsley, the founder and former president of California Liquid Fertilizer, was arrested in Los Angeles after being charged in a similar case and indicted in the U.S. District Court for the Northern District of California.
The organic industry is still feeling the impact of these frauds, which have resulted in California implementing a new law requiring registration, inspection, and review of all fertilizing products marketed in the state for use in organic agriculture. OMRI participated in the development of the regulations to implement the measure and is continuing to collaborate with CDFA on inspections and reviews of fertilizing materials.