How Costa Rica Exporter Used Fruit to Cheat U.S. Consumers

Ricardo Rudin Mathieu ran a racket. He put labels bearing the U.S. Department of Agriculture’s organic seal on boxes of pineapples grown conventionally with chemicals.

Large “five count” pineapples was a red flag.

Before Rudin was caught, he managed to export more than 400,000 of the phony organics to the United States and Canada — enough to supply a pineapple to every resident of New Orleans.

Rudin confessed in 2014, USDA records show. Then something remarkable happened. The agency did nothing to him.

Like others responsible for what appears to be a rising tide of fakes in the US$43 billion U.S. organic food market, Rudin escaped consequences for duping U.S. consumers, who pay steep premiums for food that may not meet the promise of the USDA seal.

The USDA records show that a year into a meandering three-year investigation, agency managers told Costa Rican officials they had no idea whether Rudin continued selling conventional fruit as organic.

A former business partner has filed a lawsuit against Rudin, 42, accusing him of mislabeling produce again, exporting 40,000 conventionally grown pineapples to the U.S. last year at a 100% markup.

“He’s moved on to bananas and I believe avocados and plantains, from what we know,” William Umana Aguirre, co-owner of Packing House Gala Gold in Costa Rica, told NerdWallet.

Umana accused Rudin last year of misappropriating company money to export phony organic pineapples using another supplier’s certificates. He says he reported Rudin to judicial authorities but they have not taken any steps against him.

“I really need to get this guy shut down, but nobody does anything,” Umana said.

Rudin denied all of Umana’s accusations.

The Rudin case exemplifies the weakness of the USDA’s enforcement system, as purveyors succumb to the temptations of profiting from forbidden fruit, a NerdWallet investigation found. Markups are so high — anywhere from a third to almost triple, at retail — that swindlers belly up to the organic trough, with little to fear if they’re caught.

Such temptations extend to the 80 powerful certifiers the USDA authorizes to inspect organic operations worldwide. Those certifiers are accredited by the agency but then chosen and paid by the organic companies themselves, creating a conflict of interest.

Among the findings of NerdWallet’s four-month investigation: Some consumers who pay extra for organics are bilked and don’t know it. Honest organic farmers are undersold and struggle to survive. And cheaters are emboldened as culprits walk and the USDA organic seal loses credibility.

Fake organics involve far more than just pineapples. The Washington Post reported in May, for instance, on a load of conventionally grown soybeans shipped to the U.S. and sold as organic at a $4 million premium. Watchdog organizations such as The Cornucopia Institute in Wisconsin say that dairies and egg producers break organic rules while managing cows and hens.

“This industry is way, way out of control,” said Pat Dockstader, managing partner of USDA-certified Doc’s Organics LLC, whose sister company, P&T Enterprises in California’s Imperial Valley, farms 800 acres of lemons and other organic fruit.

“I’ve been around a few campfires where guys say, ‘Well, how much nighttime spraying do you do?’” said Dockstader, referring to secret application of chemicals banned for organics. He says he doesn’t do any.

Merely by relabeling, a dishonest competitor can get $35 for a $25 box of conventionally grown lemons, Dockstader said.

NerdWallet investigated the Rudin case by interviewing him and others involved, and by examining hundreds of pages of emails, documents and photos the USDA released in response to public records requests.

NerdWallet’s investigation also found another glaring example of USDA inaction, also involving Costa Rican pineapples. In the separate, ongoing mess, PrimusLabs, the same certifier as in the Rudin case, is accused by a Costa Rican government investigator of improperly certifying a big farming operation, allowing millions of dollars of bogus organics to reach the United States.

» Read more about NerdWallet’s investigation of fraudulent organics