Fraud Roundup

Ohio man sentenced to three years in workers’ fund scandal

An investment marketer who pleaded guilty to conspiring to bribe a former official at the state’s insurance fund for injured workers was sentenced to three years and one month in prison.

Clarke Blizzard acknowledged in court documents that he agreed to provide “things of value” to Terrence Gasper, the former chief financial officer of the Ohio Department of Workers’ Compensation, in exchange for agency business.

Blizzard, who entered his plea in January, was sentenced by U.S. District Judge David Dowd.

Gasper pleaded guilty last June to accepting bribes in exchange for doling out agency business and awaits sentencing as he cooperates with authorities.

The bureau has been beset by an investment scandal uncovered in 2005.

More than $300 million in losses were reported, and the investigation reached all the way to former Gov. Bob Taft, who pleaded no contest to charges that he failed to report golf outings and other gifts on his disclosure forms. Taft was fined $4,000.

A state audit released in March cited mismanagement and a lack of oversight as the keys to scandals at the agency. The report by Auditor Mary Taylor’s office also found during the review of operations for 2005 and 2006 that some key financial documents had been destroyed.

The scandals started with rare-coin dealer Tom Noe, now imprisoned for stealing from a $50 million rare-coin investment he managed for the bureau.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Kan. pet food maker sues supplier
A pet food manufacturer that recalled 60 million cans of its products last month has sued another company that it says supplied a contaminated ingredient.

Menu Foods Midwest Corp. wants ChemNutra Inc. of Las Vegas, to pay costs associated with the recall of dog and cat food and is seeking damages “substantially in excess of $75,000.”

An attorney for ChemNutra said it is examining whether it has legal claims against Menu Foods. ChemNutra contends Menu waited weeks to notify it about potential problems.

According to Menu Foods’ lawsuit, wheat gluten that ChemNutra sold to Menu Foods Midwest, an affiliate of Menu Foods Ltd., contained melamine, a chemical found in plastics and pesticides that is not approved for use in pet food by the U.S. Food and Drug Administration.

“ChemNutra represented itself to Menu Foods and the North American food market as a business that imports high-quality nutritional and pharmaceutical ingredients from China to the United States,” the lawsuit said.

Menu Foods Ltd., based in Streetsville, Ontario, recalled its products after 16 pets, mostly cats, died from eating contaminated food. Other manufacturers also recalled animal food; Menu Foods now faces 50 lawsuits.

But ChemNutra said a Chinese supplier is responsible for its shipments of contaminated wheat gluten. In a statement on the company’s Web site, Chief Executive Steve Miller said a Chinese company was recommended to ChemNutra by a “reliable source” and provided proof that its wheat gluten was safe.

“We are concerned that we may have been the victim of deliberate and mercenary contamination,” Miller said in the statement.

China’s Foreign Ministry said that it had banned melamine, but it rejected the chemical as the cause of pet deaths in the U.S.

Marc Ullman, the New York attorney for ChemNutra, said the lawsuit doesn’t provide an accurate picture of how events unfolded.

“They didn’t tell us or the public what they knew and when they knew it,” Ullman said. “If Menu Foods had acted as a responsible corporate citizen, Menu Foods could have saved consumers, and pet owners, specifically, needless pain and suffering.”

An attorney for Menu Foods in Kansas City, Mo., did not immediately return messages left at his office. A ChemNutra spokesman said he was reviewing the lawsuit and planned to respond.

The lawsuit says most of the wheat gluten from ChemNutra went to a plant in Emporia, about 50 miles south of Topeka, Kan., where Menu Foods Midwest is based. Wheat gluten is a vegetable protein, and Menu Foods used it in “cuts and gravy” pet foods.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.