'Watered milk' saga ends
Only defendant to face jury deemed 'not guilty'

By LORI COPE | East Texas Edition

October 17, 2002 -- After about a decade of investigation, court dates, and pleas, the "watered milk" scheme that rocked the Northeast Texas dairy industry has been finalized.

The only person, among over 50 indicted on federal conspiracy and unlawful adulteration of milk product charges, who pled "not guilty" was found just that by a jury on Oct. 4, according to U.S. Assistant Attorney David Jarvis.

Steven Finklea's "not guilty" verdict came after 11 hours of jury deliberation following the Sept. 30-Oct. 4 federal trial in Fort Worth. The trial wrapped up the prosecution of over 50 dairy farmers and milk truck drivers.

Finklea was offered a plea bargain earlier this spring, along with eight other defendants. Finklea, plus the eight, were the only ones who initially pled "not guilty" to the charges. But, Austeen Keith, Larry Don Keith, Dale Keith, Kenneth Rydeen, Glenn Wilcox, Jimmy Dale Sullivan, Mark Garrett, and Michael Woodard, all accepted a plea bargain deal just hours prior to the start of trial on April 8. In the deal, each agreed to plead "guilty" or "no contest" to the charges, and in return, receive an "agreed sentence" of probation and/or restitution.

Sentencing for the eight was held this summer. All were ordered to pay restitution in the amounts of: Larry Don Keith, $61,810.86; Wilcox, $38,311.55; Garrett, $20,000; Dale Keith, $20,000; Sullivan, $15,000; Austeen Keith and Rydeen, $10,000; and Woodard, $5,000.

Finklea faced the jury during a Sept. 30-Oct. 3 federal trial in Fort Worth with one count of conspiracy for the unlawful adulteration of milk products. Jarvis said one milk truck driver, Donny Ray Pipkin, who had already pled guilty to tampering charges, testified Finklea paid him $300 to $400 every two weeks to add water to Finklea's milk, according to Jarvis.

Another driver, Michael Woodard, could have testified against Finklea, according to the prosecutor, but as part of the plea bargain arrangement, Woodard could not be called during the trail.

The case against Finklea "was our weakest case," Jarvis admitted. "The age of the case" hurt the prosecution, because the alleged tampering started 10 years ago.

The trial wrapped up law enforcement efforts in the case that became known as the "watered milk" scheme. The milk adulteration cases began developing in 1994 following investigation by the Milk Market Administrator's Office and the USDA Office of Inspector General due to indications of production shrinkage at the Associated Milk Producers, Inc., plant in Sulphur Springs. Federal officials alleged collusion between some dairy producers and the drivers who picked up the milk at their farms to add water to their milk volume; thus upping the amount of milk they were paid for.

"When you look at the big picture, overall, we are pleased," said Jarvis on Oct. 11. "I think we sent a strong message to dairy farmers that they can't commit fraud to fatten their milk checks."