Dive Brief:
- Randy Olshen of Newport Beach, CA, who pleaded guilty to money laundering and wire fraud after accusations that he over-reported earnings for his sports drink company to investors, received a four-and-a-half-year prison sentence, after which he must serve three years of supervised release. He was ordered to repay the victims.
- Olshen inflated the earnings of his sports drink company, Innovative Health Solutions, maker of drinks like H2O Overdrive, to lure people, who lost $7.9 million, according to prosecutors, from 2009 to 2013 while he lived in Park City, UT. He reported $28 million in sales for 2012, when he actually only made $579,200.
- Olshen also falsely claimed to have had accounts to sell the drinks at several national chains, including Costco, Rite Aid, CVS, and Food Lion, according to charging documents.
Dive Insight:
Olshen had made a plea deal with prosecutors in May, who dismissed some of his charges in exchange for guilty pleas to others. Olshen will begin his sentence in February, when he will turn himself in to prison officials.
Whether it's food safety or business fraud, food industry litigation is beig taken more seriously than ever before as cases are more frequent and sentences are more severe. The Justice Department announced earlier this year that it would be more stringent in holding food companies and executives responsible for food safety. Also, with the FDA's new preventive controls rule under FSMA, the Justice Department has better guidelines to follow when ensuring businesses are compliant.