46. Marvin Friedman was an employee of Koam during the time
period of the transactions which are the subject of Koam's
47. Marvin Friedman pled guilty to ten (10) felony counts of
Bribery of a Public Official for making cash payments to a
United States Department of Agriculture ("USDA") produce
inspector in order to influence the outcome of the inspection of
fresh fruit and vegetables conducted at Koam.
48. Koam reimbursed Marvin Friedman for the legal fees,
special assessment and fine he incurred in connection with his
49. The ten counts that Marvin Friedman pled guilty to
occurred on specific dates beginning April 6, 1999 through July
50. None of the ten counts that Marvin Friedman pled guilty to
include the produce transactions between DiMare and Koam that
are the subject of reparation proceedings now on appeal before
51. Koam was invoiced directly by DiMare for the tomatoes
which are the subject of Koam's Petition.
52. Koam remitted payment directly to DiMare on the invoices
which Koam received from DiMare for the tomatoes which are the
subject of Koam's Petition and the additional transactions
53. Koam paid for the tomatoes which are the subject of Koam's
Petition by checks drawn from Koam's checking account.
54. The proceeds from Koam's sale of the tomatoes which are
the subject of Koam's Petition were deposited in an account held
in the name of Koam.
55. As part of his job duties, Marvin Friedman had the
discretion, along with others, to request a USDA inspection of
produce on behalf of Koam.
56. As part of his job duties, Marvin Friedman communicated
directly with customers of Koam.
57. Elias Malavet, Michael Tsamis and Thomas C. Vincent are
the USDA inspectors who are identified as the inspectors on the
inspection certificates for the tomato invoice adjustments that
are the subject of Koam's petition.
58. Elias Malavet, Michael Tsamis and Thomas C. Vincent pled
guilty to multiple felony counts of Bribery of a Public Official
for receiving cash payments beginning January 20, 1999 through
July 9, 1999 from employees and owners of produce companies at
the Hunts Point Terminal Market in return for being influenced
in the performance of inspections of fresh fruits and
59. None of the counts that Elias Malavet, Michael Tsamis
and/or Thomas C. Vincent pled guilty to include the produce
transactions between DiMare and Koam that are the subject of the
reparation proceeding now on appeal before this Court.
60. The transactions that are the subject of Koam's Petition,
as well as the other transactions described herein, were not
inspected by a private surveyor nor was a United States
Department of Agriculture supervisory appeal inspection
requested by either DiMare or Koam.
It is common ground between the parties, and established law
under the Uniform Commercial Code, that when a buyer accepts the
goods but claims adjustments for defects, the buyer has the
burden of establishing the defects (N.Y. Uniform Commercial Code
§ 2-607(4): "The burden is on the buyer to establish any breach
with respect to the goods accepted.").
Koam attempts to carry that burden by (1) pointing to other
sales on which DiMare granted discounts, (2) its own employees'
statements that there were defects in the tomatoes involved in
this claim, (3) its argument that the particular inspections
involved in this claim were not shown to be fraudulent, and (4)
its argument that the bribery of inspectors by its employee
Friedman is not chargeable to Koam.
1. Inferences from Other Sales
From seven earlier sales on which DiMare granted Koam price
reductions (Uncontested Facts ¶¶ 13-26) on which DiMare makes no
claim for damages, Koam argues that one should infer that there
were pervasive defects in DiMare's shipments of tomatoes.
I decline to adopt that speculation. In the individual
negotiating environment in which the sales took place, without
established daily market prices, it is just as likely that
DiMare granted the discounts to obtain the good will of this new
customer, or in simple bargaining to consummate a sale, as that
the discounts reflected genuine product defects. Koam offers no
evidence respecting those sales to support its speculation, and
I accept Paul DiMare's explanation of the discounts as unrelated
to defects, granted to accommodate a new purchaser with whom
DiMare soon ceased doing business.
2. Statements by Koam Employees
Koam submits affidavits by two of its employees, Doo W. Lee
and Max Lee, each of whom states that he personally inspected
the produce in sales involved in this case. Each Lee states that
he found the contents were damaged and not in acceptable
condition (Doo Lee ¶ 3: "very soft texture and green in color";
Max Lee ¶ 3: "softness, over ripe condition and poor quality.")
Each of those affidavits contains the identical statement "At
no time did I or any other employee of Koam pay any money or
take an action for the purpose of creating a fraudulent
inspection." It is clear that those statements about any other
employee of Koam are false. They are flatly contradicted by
Friedman's sworn confession during his guilty plea (U.S. v.
Friedman (99 Cr. 1095) Feb. 25, 2000 Transcript, p. 7):
THE DEFENDANT: On approximately the dates
stated in the indictment, I paid cash to an
inspector of the United States Department of
Agriculture. The purpose of the payments was to
influence the outcome of the inspection of fresh
fruit and produce conducted at KOAM Produce Inc.
located in the Bronx. I was an employee of KOAM at
the time. I acted knowingly and intentionally and I
knew that the payments were unlawful.
THE COURT: Where did you make these payments to
the inspector for the Department of Agriculture?
THE DEFENDANT: At KOAM Produce in the Bronx.
The Lee witnesses swore*fn1 to their affidavits on October
10, 2000, almost eight months after their co-employee Friedman's
guilty plea. If they knew of his guilt, their affidavits were
perjury. Even if they did not know Friedman had bribed
inspectors, they must have known they had no basis for swearing
that no employee of Koam had done so. Their willingness to make
that broad statement under oath, when at the very least they
were unaware whether it was true or false, bespeaks a
willingness to testify to whatever
they see as their employer's interest. It creates distrust of
their statements concerning the condition of the tomatoes.
Accordingly, I do not credit those statements.
As justifying an inference that the tomatoes had defects, Koam
tenders the certificate of its president and joint (with his
wife) owner Jung Yong Park, who states that the tomatoes Koam
purchased from DiMare were later sold at a loss. Once again, the
suggested inference (that the losses were due to inferior
quality) is no more probable than other speculations: poor
salesmanship, market conditions, supply and demand, timing of
sales, or the host of other factors that affect market price and
performance. Accordingly I decline to draw the suggested
inference. It is, in any event, undermined by the testimony of
Hope Sanchez (Dep. pp. 40-44) that none of the other purchasers
of the same lots of tomatoes as were purchased by Koam sought
inspections of them, the evidence that there were few if any
complaints from other purchasers, and the testimony of the state
inspector in Florida that when packed the tomatoes were in
conformity with federal standards of quality and condition.
(Sneckenberg Dep. Ex's 3 and 5, part of DiMare Ex. 6).
The direct and indirect evidence tendered to show defects in
the product sold to Koam by DiMare fails to carry that burden.
3. Argument that These Inspections Were Not Shown to be
Affected by the Bribes
Drawing support from concessions by DiMare in paragraphs 50
and 59 of the Uncontested Facts that none of the counts to which
Friedman or the inspectors pled guilty specified the particular
inspections of DiMare tomatoes involved in this case, Koam
repeatedly asserts that ". . . there was no showing that the
inspections in question were falsified" (Koam Trial Memorandum,
p. 11) and points to the Judicial Officer's statement that
"There is no showing on this record that falsified inspections
were issued as to the specific lots of tomatoes listed" (id.
p. 12 quoting Decision, p. 7). The assertion is reiterated
throughout Koam's submissions, that these particular inspections
(although performed by bribed inspectors) are not shown to be
corrupt. That argument, if accepted, offers Koam an escape from
the consequences of the bribery, and the prospect of
rehabilitating the inspection certificates as evidence of
But that argument fails on the evidence. First, as Friedman
stated in his plea allocution (quoted at pp. 14-15 above) the
"purpose of the payments was to influence the outcome of the
inspection of fresh fruit and produce conducted at KOAM Produce
Inc. located in the Bronx." Second, in its letter of June 23,
2000 to DiMare, the USDA stated that its Office of the Inspector
. . . has recently forwarded inspection certificates
to us that it says directly correspond to bribes that
were offered and accepted. We are making copies of
these certificates available to you, the party
identified on the certificate as the shipper.
— and suggested that if any price adjustments had been granted,
DiMare might wish to file a claim (see DiMare Ex. 1C, No.