Bashas' to pay restitution for meat mislabeling

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By Sarah Blais By Sarah Blais

PHOENIX (AP) -- The parent company of AJ's Fine Foods has agreed to pay more than $1.4 million in restitution to food banks around Arizona in a meat mislabeling case.

Federal prosecutors say Bashas' Inc. operated 12 AJ's locations in the Phoenix metropolitan area and one in Tucson at the time of the mislabeling from January 2010 to February 2012.

Investigators say meat department employees at some of the AJ's markets took beef tenderloin steaks that had been graded as "choice" under the USDA's system and mislabeling them as "prime" and also mislabeled "Kobe" ground beef.

AJ's reported selling more than 17,500 pounds of the mislabeled steaks and nearly 140,000 pounds of the mislabeled ground beef.

In addition to restitution, Bashas' will discipline and-or fire culpable employees and adopt a comprehensive compliance program.

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Statement from Bashas'

As part of an investigation by the United States Department of Agriculture (USDA), it was discovered that meat department members at some of our AJ’s stores engaged in the mislabeling of meat products from January 2010 to February 2012.

There were two specific wrongs:

1) Meat department members at some AJ’s stores mislabeled USDA Choice steaks as USDA Prime (a higher grade that costs more, resulting in customers being overcharged); and

2) Meat department members at some AJ’s stores added cuts of expensive prime and choice steak to American-style Kobe ground beef in order to improve the consistency of the grind.

Due to our full cooperation with the USDA and the United States Attorney’s Office for the District of Arizona, we’ve entered into an agreement to resolve the matter. We’ve agreed to pay $1.47 million in restitution – based on total gross sales of these products – to a group of Arizona food banks.

Both parties agreed this was a great way to remediate the damage done and help others in need, because there was no means of identifying which customers bought the affected items, and each customer’s loss was so minimal, issuing individual restitution would have been logistically difficult.

The fine will be split up and distributed evenly to:
• Association of Arizona Food Banks
• St. Mary’s Food Bank Alliance
• United Food Bank
• The Salvation Army
• St. Vincent de Paul
• Community Food Bank of Southern Arizona

Disciplinary action and/or member terminations occurred for those who violated company policy. Additionally, all meat department members were fully retrained.

These actions were deemed appropriate by the U.S. Attorney’s Office to prevent the mislabeling from reoccurring. Fortunately, this resolution was reached due to the absence of any prior misconduct; upper management was not aware of the misconduct; and the USDA concluded that the misconduct did not pose a health risk.

Preventatively, we’ve implemented a comprehensive compliance program for our company. Under the direction of a Chief Compliance Officer, extensive monitoring of our stores and ongoing member training has already begun to ensure that this type of behavior does not occur in the future.

This mislabeling issue serves as both a challenge and impetus for everyone in our company to adhere to the highest standards of integrity with everything we do.

From Edward “Trey” Basha
President and CEO
August 30, 2013