Dairy Owners Charged with Milking Customers. (Investors' Reports)

Article excerpt

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. …