Local company pays $15M to settle food expiration lawsuit

HOUSTON A company in Houston accused of selling expired food to military contractors and taking extreme measures to cover it up.

Samir Itani, the owner of Houston-based American Grocers, is accused of trying to defraud the government of millions of dollars and potentially jeopardizing the health of U.S. troops stationed in the Middle East. Now, the woman who blew the whistle on him is breaking her silence and speaking exclusively to Eyewitness News.

Fighting two wars overseas, U.S. troops in combat are constantly in harm's way. Unaware they were facing a different kind of threat from right here at home.

"It's wrong," Delma Pallares said. "It's definitely wrong."

As a logistics manager for almost eight years at American Grocers, Pallares sued the company, claiming the owner bought food products that were about to expire at bargain prices, had the expiration dates changed, then shipped the food to U.S. troops in the Middle East, charging the U.S. government much higher prices as if the food were fresh.

"So he would alter the dates to usually one year, even though the product was only good for three months or six months, he would alter it for one year," Pallares said.

Pallares says Itani instructed employees to get rid of the expiration dates with spray paint or acetone, an ingredient in nail polish remover. Her attorneys say federal agents witnessed this after she complained and they raided a warehouse five years ago.

"There's no question it has the potential to harm our troops, it has the potential to harm anybody that receives products because nobody wants to buy a product that is out of its shelf life," KTRK Legal Analyst Joel Androphy said. "Nobody wants to buy a product that is near or close to expiring."

While American Grocers disputes the allegations, the company went ahead and settled to avoid a long and uncertain litigation process, shelling out more than $28 million to the government and Pallares.

"We remain committed to furnishing quality products and superior service at a fair price," the company's CEO told Eyewitness News.

We spoke to the mother of a Houston-area marine. She told us she was extremely disappointed that an American company would take advantage of the men and women fighting for our freedom overseas.

Itani pleaded guilty to a criminal charge of conspiring to defraud the government, not to tampering with those expiration dates. He has yet to be sentenced.