Two Illinois men, William Kaufmann Jr, 47, and Ted Katz, 47, agreed to pay the Idaho Potato Commission $100,000 each in restitution for the fraud they committed in 1996 and 1997.
The pair packed 3.4 million pounds (34,000 cwt) of Wisconsin potatoes in bags with the federally registered "Grown in Idaho" seal.
They agreed to plead guilty and make the restitution. Kaufmann and Katz, president and vice president of Potato Specialties Inc. each face up to five years in prison and $250,000 fines beyond the restitution agreement, U.S. Attorney George Breitsameter said.
Idaho Potato Commissioner Doug Gross, a Wilder, ID, grower, said the fraud was discovered when a retired Wisconsin grower bought a bag of potatoes purporting to have been grown in Idaho. He soon realized they were Wisconsin potatoes and notified the Commission.
Testing at Michigan State University of potatoes from a bag that farmer shipped to Idaho officials and others that had come from Potato Specialties proved they were a variety not grown in Idaho. That prompted the four-year investigation by the Commission and the FBI.
Potato Specialties had been licensed to repackage Idaho potatoes but that license was restricted because of previous problems with the company. Among the restrictions was a required monthly report on how the company used Idaho potatoes.
Mel Anderson, executive director, said the money would be used to buy time on Chicago-area television stations in an attempt to restore the reputation of genuine Idaho potatoes.
"When consumer fraud involves a product as closely associated with Idaho as the potato, the harm goes beyond our pocketbooks," interim U.S. Attorney Marc Haws said. "It is an affront to the state."