CEDAR RAPIDS, Iowa — Two related companies that distribute and certify halal food products pleaded guilty Wednesday to conspiring to export misbranded beef products for sale in Malaysia, Indonesia and elsewhere.
Midamar Corp. and Islamic Services of America each entered guilty pleas in federal court in Cedar Rapids to one count of conspiracy to make false statements on export certificates, sell misbranded meat and commit wire fraud, among other offenses.
Under the plea agreement, each company must forfeit $600,000 in proceeds derived from the scheme. They could also face a term of probation and an additional fine at sentencing.
U.S. District Judge Linda Reade has rejected the companies' claims that the charges were regulatory violations that should have been handled by the U.S. Department of Agriculture, ruling that federal prosecutors didn't overstep their jurisdiction in bringing the case. However, despite the guilty pleas, the companies can appeal Reade's decision.
Midamar is a food distributor, while ISA certifies Midamar and other companies' food products as halal and is one of the few organizations approved to certify beef for import into Malaysia, Indonesia, Kuwait, Saudi Arabia and United Arab Emirates. Both were founded and operated by the Aossey family in Cedar Rapids.
Midamar, a 40-year-old company that's considered a pioneer in halal foods, issued a statement last week saying that the plea agreements resolve all charges against the companies and executives. Midamar said it has now "taken full responsibility for wrongful conduct" that occurred from 2007 through 2012 and apologized for errors in judgment.
Midamar's founder, Bill Aossey Jr., was convicted in July of falsifying documents as part of a scheme to export beef to Malaysia and Indonesia that didn't meet those countries' strict standards of religious-based slaughter. He's in federal custody awaiting sentencing and could face several years in prison; he has asked for a new trial.
Aossey's sons, Midamar directors Jalel and Yahya "Bill" Aossey, are expected to plead guilty Friday under their own deals, court records show. Yahya Aossey entered the guilty plea Wednesday on behalf of Midamar, while Jalel Aossey pleaded guilty on behalf of Islamic Services of America.
According to the conspiracy count, Midamar made "fraudulent, deceptive, and misleading claims" about the source and nature of beef products, the way the cattle were slaughtered and the level of adherence to halal practices that were advertised.
Some Midamar products came from a Minnesota slaughterhouse that wasn't approved by Malaysia or Indonesia. Aossey directed employees to remove its establishment number from the packaging and replace it with labels that falsely showed the meat came from a certified Nebraska slaughterhouse, according to testimony.
Prosecutors allege Midamar told customers that its cattle were hand-slaughtered by specially trained Muslim slaughtermen who always recited prayer and advertised that it did not use penetrative captive bolt stunning, a process commonly used in meatpacking in which an animal is killed when a steel rod is shot into its brain.
But Midamar's primary supplier used bolt stunning and often didn't have Muslim slaughtermen present, the indictment alleges.