Groeb Farms, the largest honey supplier in the United States, filed for bankruptcy on Tuesday in Michigan amid impending lawsuits over its role in smuggling Chinese honey into America.
The filing puts a halt to class-action lawsuits brought by US honey producers over the largest known food fraud case in American history.
In a deal with prosecutors earlier this year, Groeb Farms admitted to having participated in a scheme to mislabel Chinese honey to avoid steep US import taxes.
Groeb along with a Germany-based trader calling Honey Holding - since renamed to Honey Solutions – illegally shipped the honey from China via third countries to the US. Some of the honey was declared as sugar.
More than 1,500 containers of Chinese honey entered the US through the scheme between 2008 and last year. The company avoided punitive US taxes on Chinese honey that have been in place since 2001 to protect the domestic industry. The Department of Justice said the scheme led to an evasion of US$180 million in tariffs.
US investigators were alerted to the scheme when some Southeast Asian countries appeared to have exported more honey to the US than they had actually produced.
Reports of fake honey, consisting of chemicals mixed with glucose, have appeared so regularly in Chinese media that state media have shared practical advice on how to detect traces of starch, an indicator for tampering.
Some of the honey smuggled to the US contained banned antibiotics. The smuggled honey was also harvested early and machine-dried, according to a Businessweek investigation . “This allowed the bees to produce more honey, but the honey often had an odour and taste similar to sauerkraut,” the report said.