At brink of trial, eight take deal in 'watered milk' case

By LORI COPE | East Texas Edition

April 18, 2002 -- Just hours prior to the start of trial on April 8, eight Northeast Texans pled "guilty" or "no contest" to federal charges of unlawful adulteration of milk products, according to the U.S. attorney's office in Fort Worth.

The eight - three milk truck drivers and five dairy farmers - were among nine persons who, in the summer of 1999, pled "not guilty" to the federal felony charges. Several trial continuances, plus an appeal hearing seeking to overturn a judge's order to strike the prosecution's witness list, created a lengthy situation.

Out of over 50 persons indicted on federal milk tampering charges in the late '90s, nine were expecting their day in court on April 8, but an agreement was reached the same day. The nine were the only ones to initially plead "not guilty" in the "milk tampering" cases that were first investigated in the early 1990s, and reportedly cost the milk cooperative Associated Milk Producers Inc. about $2.7 million.

The eight who pled "guilty" or "no contest" on April 8 - Austeen Keith, Larry Don Keith, Dale Keith, Kenneth Rydeen, Glenn Wilcox, Jimmy Dale Sullivan, Mark Garrett, and Michael Woodard - did so under a deal for an "agreed sentence" of 36 months probation, noted U.S. Assistant Attorney David Jarvis on April 10.

"The legal effect is no different," Jarvis explained about the two pleas. "After they entered their plea of 'guilty' or 'no contest,' they were all found guilty and convicted of a felony."

The ninth person who entered a "not guilty" plea in the summer of 1999, dairy farmer Steven Finklea, decided not to take the April 8 offer, according to Jarvis. "We are still hopeful we can talk (a deal) with Finklea."

The prosecuting attorney explained that because of "the history of the case - three years after we were originally ready to go - our office decided to seek closure" so there would be no further "investment of additional (federal prosecution) resources."

The eight who pled guilty on April 8 will face sentencing on July 15. Besides the guaranteed 36 months probation, the judge could impose each with a fine and/or restitution.

The milk tampering cases began developing in 1994 following investigation by the Milk Market Administrator's Office and the U.S. Office of Inspector General due to indications of production shrinkage at the Associated Milk Producers, Inc. plant in Sulphur Springs. Federal officials alleged a conspiracy between dairy farmers and the drivers who picked up the milk at their farms.

Investigative findings noted that some dairy farmers between 1991 and 1994 "conspired with and paid several milk tanker truck drivers to add water and sometimes salt to the milk these drivers collected from these dairy farms. The dairy farmers made cash payments to the drivers for their role in the scheme. ... The wrongful addition of water and sometimes salt to the raw milk increased the weight and bulk of the milk collected, fraudently inflating the true value."

On July 15, 1998, the "watered milk" scheme attracted media attention when 29 people (dairy farmers, milk truck drivers, and an employee of a Sulphur Springs milk processing plant) were indicted by a federal grand jury in Fort Worth. The indictments were for conspiracy, mail fraud, and adulteration of milk products.

Further investigations boosted the count to over 50 persons who were indicted on the milk tampering charges. Most entered guilty pleas without advent of trial - some receiving jail time and most all were fined and ordered to pay restitution.

About 25 persons who pled "guilty" were waiting to be sentenced following their testimony in the April 8 trial. Since there was no trial, "they are now on the docket for sentencing," Jarvis said. Because of the "agreed sentence" of 36 months probation taken by the eight persons on April 8, the U.S. assistant attorney offered it is likely those who have been waiting sentencing will "most likely" receive probation, but likewise, could also be ordered to pay a fine and/or restitution.