Italy Arrests 33 Accused of Olive Oil Fraud

An Italian operation led to the arrest of 33 believed to be a part of the Piromalli clan, an organization that has allegedly infiltrated the olive oil trade in Italy and exported fake products to the U.S.
Feb. 16, 2017 09:35 UTC
Michelle Smith

Italy’s Carabinieri arrested 33 sus­pects in the Calabrian mafi­a’s Piromalli clan, a crim­i­nal enter­prise whose illicit deal­ings allegedly include export­ing fake extra vir­gin olive oil to the United States.

About $42.8 mil­lion in assets were seized and charges filed against the sus­pects includ­ing mafia asso­ci­a­tion, attempted mur­der, drug traf­fick­ing, money laun­der­ing and fraud, the police told the Investigative Reporting Project of Italy.

The Calabrian mafia, also known as the Ndràngheta, is believed to be the wealth­i­est, most pow­er­ful crim­i­nal net­work in Italy, and the Piromalli are believed to be a lead­ing clan within that orga­ni­za­tion. In addi­tion to drug traf­fick­ing, author­i­ties believe they’re major play­ers in agro­mafia, includ­ing an elab­o­rate olive oil scheme.

According to inves­ti­ga­tors, the Piromalli were import­ing olive pomace oil, a prod­uct that’s extracted from already-pressed fruit pulp using chem­i­cal sol­vents, then label­ing the low-qual­ity, adul­ter­ated oil prod­ucts as extra vir­gin olive oil and export­ing it to the U.S. Those prod­ucts were sold through retail chains in New York, Boston and Chicago, the IRPI revealed.

The Piromalli were capa­ble of exe­cut­ing this scam because they have a grip on the right peo­ple in the right places, author­i­ties allege. The clan is believed to con­trol areas in and around the south­ern munic­i­pal­ity of Gioia Tauro, includ­ing the region’s real estate, most of the food and agri­cul­ture busi­nesses, and its strate­gi­cally located port.

They have also allegedly extended their reach to pen­e­trate the dis­tri­b­u­tion chains in the north­ern city of Milan and have taken over busi­nesses that export olive oil to the U.S. the Business Standard reported.

Selling fake olive oil isn’t a pau­per’s scheme. Last year, high-qual­ity olive oil was sell­ing for as much as $50 a gal­lon while fake prod­ucts cost only $7 to make, a 60 Minutes seg­ment noted. The profit mar­gin can be three times bet­ter than cocaine,” jour­nal­ist Tom Mueller said dur­ing the show.

In addi­tion to sig­nif­i­cant eco­nomic losses, Italy faces the effects of a dam­aged rep­u­ta­tion. The coun­try is the top olive oil exporter and the U.S. is the world’s third-largest mar­ket, with $2 bil­lion in sales. According to Bloomberg, that includes hun­dreds of mil­lions of dol­lars that are spent on prod­ucts imported from Italy.

Still, olive oil only rep­re­sents a frac­tion of the over­all American cook­ing oil mar­ket. Consumption is less than one liter per capita, said Bloomberg. That leaves a lot of growth poten­tial for olive oil and sup­pli­ers like Italy, but fraud­u­lent prod­ucts could under­mine con­fi­dence in their prod­ucts.

Food fraud also raises health con­cerns. There’s the risk of some­one hav­ing an aller­gic reac­tion because they believe they’re con­sum­ing one thing while could actu­ally con­sume an aller­gen. And some agro­mafia prod­ucts have also been found to include low-qual­ity con­t­a­m­i­nants, which presents an addi­tional set of risks.

Italy has­n’t turned a blind eye to the prob­lem and has a spe­cial unit devoted to food fraud. According to 60 Minutes, as of last year, that squad included 60 police capa­ble of iden­ti­fy­ing fraud­u­lent olive oil by taste tests and 1,100 offi­cers who focus on inspec­tion and inves­ti­ga­tion.


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