Dianne Smith (202) 720-6915







        WASHINGTON, March 13, 1998--U.S. Department of Agriculture

Inspector General Roger C. Viadero announced today the unsealing of a civil

complaint in the United States District Court for the Eastern District of

Pennsylvania against Bechtel Dairies, Inc., a small milk dealer in

Royersford, Pa.  The restraining order basically puts the dairy in a court-monitored receivership, prohibits Bechtel from selling watered-down or

adulterated milk, freezes their bank accounts, and requires new receipts to

be placed in an escrow account.



        The court order also bans Bechtel from destroying or altering

company documents.  The suit seeks to assure that at least $5 million worth

of the company's assets remain to reimburse victims of the alleged fraud.



        The complaint alleges that since at least 1996 and continuing to

date, defendants have engaged in a fraudulent scheme to water down milk and

sell it to consumers without revealing that the milk has been watered down.

The complaint states that Bechtel Dairies purchases fluid milk from a local

dairy farm cooperative, adds milk powder and a large quantity of water, then

packages and sells the reconstituted milk as if it were liquid milk.



        The complaint also alleges that defendants have defrauded purchasers

of milk by routinely filling the milk containers so that the actual amount

of milk in the container is less than the amount shown on the label;

labeling milk as one type--skim milk for example--when in fact it is of a

different type; mixing old milk whose freshness date is about to expire with

fresh milk and packaging the mixture in a new container with a new freshness

data; putting a false freshness date on the label of the milk; and filing

false reports with USDA.



        "The customers of Bechtel Dairies, Inc., include schools

participating in USDA's School Lunch Program, Veterans' Administration

Hospitals, the Department of Defense, and retail stores," Viadero said.

"The defendants' actions do not appear to be a public health hazard at this




        This investigation was conducted by USDA's Office of Inspector

General; USDA's Agricultural Marketing Service, which supplied the initial

information regarding these allegations; and the Office of Criminal

Investigation, Food and Drug Administration.






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