Prepared Statement of Steven Goodman
Date: May 7, 1998
Subcommittee on Commercial and Administrative Law


Mr. Chairman and Members of the Committee,
Thank you for allowing me the opportunity to appear here 
today.

My name is Steve Goodman. I'm President of JSG Trading, a 
small New Jersey corporation engaged in the interstate produce 
business.
Since it started operating 1988, JSG has gradually grown 
from a desk and a telephone in a room of my house to a company 
with five full time salesmen, a transportation manager, two 
secretaries, its own office building, and an industry credit 
rating of $2,000,000 with an excellent reputation for fair and 
honest trading.

JSG purchases truckload quantities of fresh produce from the 
origin growers and shippers and then resells the produce to 
wholesale receivers. We have also grown, packed, and marketed our 
own tomatoes. JSG, like all other businesses operating legally in 
the produce business, is licensed under the Perishable 
Agricultural Commodities Act, commonly referred to as the PACA. 
Unlike many produce firms, JSG is a fully capitalized company 
that is able to pay all of its debts and suppliers without having 
to depend on collection of its account receivables, and pays its 
bills in accordance with its agreements and USDA regulations.

In February 1993 USDA investigators showed up unannounced at 
JSG's office in New Jersey, and demanded to be given access to 
all of the company's records in order to investigate a complaint 
the Department had received. They refused to give us any 
information concerning the complaint except to say that it 
generally involved an "unfair trade practice". I flew back from 
California the next day, and the agents began their search, still 
without giving us any indication of
what they were investigating. I later learned that they were 
acting on an anonymous phone "tip" the USDA had received about 3 
days after I fired one of JSG's salesmen for apparent 
embezzlement. We since obtained a court judgment against the man 
for more than $30,000 for the fraud he perpetrated on us.

The Department's investigators spent two weeks combing 
through JSG's records and files. From computer financial records, 
to bank accounts, to thousands of transaction files, they were 
given everything they asked for, and made well over 5,000 copies 
of documents. Only on their last day in our office did they 
finally tell me that they were investigating a charge of 
commercial bribery.

Department investigators next went to several of JSG's 
customers and apparently told them that we were paying bribes to 
their employees. Several of the customers stopped doing business 
with us. When one of those customers went further and refused to 
pay for produce they had received, we had to sue them. The 
customer stated in its answer to the Federal Court complaint that 
it was told by the USDA investigators not to pay JSG for the 
shipments of produce. After JSG spent thousands of dollars in 
attorney's fees, the Federal Court ordered the ex-customer to pay 
the $ 13,000 it owed for what it had received.

The USDA filed a formal complaint against JSG charging us 
with a scheme of commercial bribery involving others who acted as 
customer's produce buyers.  Because of the potential disastrous 
effect on JSG's business reputation, we asked that the USDA case 
docket be sealed during the case. USDA refused. After the 
District Court declined to grant an immediate injunction sealing 
the docket so that information about the case would not be leaked 
to the industry, the Washington correspondent for the produce 
industry's largest trade-newspaper, The Packer, got an anonymous 
"tip" from someone inside the USDA to "look at the complaint in 
the case docket." News of the complaint's allegations was then 
quickly spread across the country. The Department repeated its
"publication" as soon as the ALJ filed his decision in the case 
last June even though we had the right to appeal and even though 
the PACA law specifically states that the Secretary may publish 
only final decisions.

Between the time the Complaint was filed in 1993 and the 
trial in 1995, we had several meetings with the USDA officials 
here in Washington seeking to explain the transactions and events 
which they alleged constituted the corruption we were accused of, 
and tried to resolve the case. They were not interested in any 
explanations. We offered to pay a large sum of money as 
reparation for any harm done if they would tell us who should be 
paid and in what amounts. Our attempts and offers to settle the 
case without the costs of a hearing were all brushed aside. The 
Department has demanded nothing less than the destruction of our 
business, and our attempts to resolve the case on some rational 
basis fell on deaf ears.

The PACA's officials were apparently not satisfied with 
their efforts to destroy my company and the people involved in 
the case. Prior to the start of the Hearing, the prosecuting 
attorney from the Department's Office of General Counsel, plus 
their lead investigator in the case, went to the customers who 
were being called as government witnesses at the trial, and, 
under the guise of "preparing" their witnesses' testimony, 
proceeded not to discuss what the witnesses knew about the 
situation, but rather spread before the people JSG's confidential 
internal financial records and transaction files, apparently in 
an effort to make them angry and improperly influence their 
testimony. At the Hearing the witnesses who had been shown the 
records were never asked to testify about them. We finally 
notified the USDA's own Inspector General's office about what had 
occurred, but as far as I know, nothing has been done about such 
outrageous behavior.

The formal Hearing was held in late 1995 before a USDA ALJ 
whose experience, I'm informed, had been primarily with PACA 
license complaints where the Department seeks revocation

of an offending company's produce license for failure to timely 
pay its suppliers for produce shipments, and has never ruled 
against the Department in any case referred to him. The ALJ 
finally filed his decision in June, 1997. To no one's surprise, 
he ruled against JSG, and, before we could even ask for the 
docket to be sealed, the Packer newspaper got another "tip" and 
published the results of the decision. We are currently appealing 
the ruling.

I wish the panel to understand that I firmly believe that 
commercial bribery is evil and wrong and that it strikes at the 
heart of our free enterprise system. Commercial bribery is a 
felony in New York where all of the events in my case took place, 
and it is also a crime in New Jersey where I live and work. It 
not only corrupts the people involved, but also makes 
unattainable that part of the American Dream that hard work and 
honesty will result in success for ourselves and our children. In 
years past I was approached by potential produce customers' 
representatives with business that I would have to "pay to get." 
I refused, and have never regretted my decision although 
undoubtedly I could have made a lot of money if I had decided to 
play their game.

I don't wish to burden this Hearing with a blow-by-blow 
description of every aspect of my case with USDA that has taken 
years, many tens of thousands of dollars in costs, and untold 
sleepless nights for myself, my family, and the other people 
involved, to reach its present state; especially since the case 
is still being appealed. There are, however, two parts of the 
circumstances involved that I will use to illustrate what I feel 
to be the biased, mean spirited, and heavy handed way the entire 
case has been handled.

One of the gentlemen who we are accused of bribing, Mr. Tony 
Gentile, was a salesman and buyer for one of my customers in New 
York. Tony and I have been close personal friends for almost 
fourteen years, and he taught me almost everything I know about 
the wholesale fresh tomato business. Tony and I also started a 
small trucking company in 1989 with the full knowledge and 
consent of the company he worked for. We had three refrigerated 
18-wheeler trucks that we
dispatched up and down the East Coast carrying all kinds of 
perishable freight, as well as produce for JSG and Tony's 
employer. Since Tony obtained a lot of the shipments from his 
contacts in the New York produce market and would be on call to 
check the trucks and their loads both in New York and in Florida 
where he spent the winter months, the trucking company decided to 
lease a business car for his use in May of 1990. The ALJ ruled 
that the car, a Mercedes, was actually leased by Tony and paid 
for by JSG as a bribe even though the documents in the case 
Record prove that our trucking company leased the car. When we 
appealed the ALJ's decision to the USDA Judicial Officer and 
specifically pointed out the error, the Judicial Officer ignored 
the unquestionable proof in the documents, refused to correct the 
error, and held that the car was a bribe made to induce Tony to 
buy more tomatoes from JSG when, in fact, he actually purchased 
less from JSG than he had in the past. The ALJ ignored the 
undisputed facts in order to support the Department's 
"interpretation" of the case.

Tony Gentile was stricken with prostate cancer in August of 
1990, and had to undergo radical surgery and extensive radiation 
and chemotherapy treatments. The illness forced him into early 
retirement from his salesman's job, although Tony continued to 
act as the customer's outside tomato buyer, and he continued to 
help with our trucking company. In the Summer of 1992 we got the 
wonderful news that medical tests showed that Tony had remained 
cancer-free for the two years since his surgery. To celebrate his 
Second-Year milestone as a cancer survivor, I bought Tony a 
stainless steel Rolex watch, and gave it to him on his birthday 
that Summer. Both the ALJ and the Judicial Officer have decided 
that my gift to my dear friend, teacher, and trucking partner was 
a bribe. PACA, while stating the fact that commercial bribery is 
a serious crime, has completely removed the usual requirement 
that evidence of guilty intent should be shown. When it comes to
violations of the PACA, whether for non-payment of suppliers or 
commercial bribery or anything in between, it is irrelevant 
whether the person being prosecuted meant to do anything wrong or 
not.

I have now seen, first hand, that what I thought was a basic 
part of our legal system, "innocent until proven guilty" is, in 
practice, more of a myth that any of us choose to believe. I have 
seen, first hand, a "regulatory" agency of my own government that 
is more intent on using legal processes to destroy the businesses 
it is entrusted with overseeing, than it is with correcting good 
faith mistakes and encouraging fair trading, apparently all in 
the name of enforcement." I have now seen, first hand, how small 
businesses such as mine are used as "examples" so that their 
destruction may strike terror into others, while large companies, 
arguably engaged in massive dishonesty, either escape scrutiny 
entirely or receive a governmental wrist slap. USDA wants JSG to 
be put out of business and its employees thrown out to try to 
find new jobs, when at the same time Sun Diamond Growers, a major 
California agri-business cooperative that was convicted of paying 
bribes and illegal gratuities to the Secretary of Agriculture, 
Michael Espy, merely has to pay a fine and have its members' 
books audited for a few years.

Mr. Chairman, Members of the Committee, there is something 
seriously wrong with a system that allows, apparently even 
encourages, a government agency to investigate and prosecute 
based upon half the facts and circumstances, and then to try 
completely destroy, through a pattern of backdoor, incomplete and 
inaccurate press releases, a business and the personal 
reputations of its owners that have been built over years of 
honesty and fair dealing. It cannot be fair for a government 
agency to force the object of its institutionalized anger, 
without the vast resources of the Federal government, to "prove" 
the rest of a story before a supposedly impartial judge who has 
never ruled against that same Agency that pays his salary. An 
agency which apparently allows its legal staff to tamper with or 
improperly try to influence the testimony of hearing witnesses is 
an agency and
tribunal with a fatal flaw. I have come to truly understand my 
attorney's statement at the hearing that a half truth is the 
worst kind of lie because it can't be disproved, only explained. 
It is even worse when the explanation falls on ears that are 
intentionally deaf to the truth.

As I sit here today and address you, I wonder about one of 
my other co-defendants in the case, an honest, hardworking man, 
whom we paid for work he performed for me. Although accused of 
taking bribes, the man couldn't afford a lawyer to represent him 
at the Hearing so he had to try to be his own attorney. He 
couldn't afford to buy a copy of the 3,300 page transcript of the 
Hearing, and wasn't able to pay an attorney to appeal the ALJ's 
decision. Consequently, even though I and my company continue to 
fight, he has been banned from working in the only business he 
knows, even though neither he nor I thought that what we did was 
wrong, let alone that it amounted to the crime of commercial 
bribery. That seems offensive to me in a country which prides 
itself on the fundamental principal that a person shall not be 
deprived of his property without due process through a fair and 
impartial hearing.

I wish to thank you for this opportunity to relate my 
experience with the USDA's PACA Branch. I do indeed wish you 
success in your efforts to "level the field" between government 
and governed, between regulators and the people whose lives and 
livelihood they control. Some of you on this Committee may 
remember the near repeal of the PACA in 1995 and the changes to 
the statute that grew out of the anger of many of the people who 
operate under its rules. The tactics and means still being used 
by the USDA's PACA Branch to enforce their policies, if not their 
arbitrary wielding of personal power, will only renew the 
dissatisfaction of the people in this country who must deal with 
this agency.

One of the major changes to the PACA law in 1995 allowed the 
USDA to impose fines instead of just having to revoke produce 
companies' licenses for violations of the PACA. That
change was actually requested by the USDA officials who testified 
before Congress. Since the new PACA provisions became effective 
in 1995, USDA has apparently refused to use the very same "civil 
penalty" option that they, themselves, stated they wanted. USDA's 
continuing to simply revoke PACA licenses and destroy businesses 
is not only the opposite of what they testified they wanted to 
do, but it is also the opposite effect of what the new Small 
Business Regulatory Enforcement Fairness Act seeks to accomplish. 
I've been told that under the Regulatory Fairness Program 
established under S.B.R.E.F.A., the Small Business Administration 
is currently handling a number of complaints against the USDA's 
PACA Branch from people in the produce business including JSG, 
and I encourage you to speak with Mr. Peter Barca, the S.B.A.'s 
National Ombudsman for the RegFair Program, about that situation.
I urge you to look deep, ask the tough questions, and then 
take corrective actions to prevent a continuation of the way the 
PACA is presently being administered and enforced. I most 
strongly urge you to take steps to halt the kinds of actions by 
the USDA and its staff that have led to the tainted and biased 
proceeding that I and my company have been involved in for the 
last five years.