PORTLAND, Ore. (KOIN) — The Yamhill-based grass seed marketing and distribution company Ground Zero Seeds International pleaded guilty in federal court on Wednesday to a scheme that sought to defraud a Washington-based company and its former subsidiary by giving a sole employee kickbacks in exchange for repeat business.

According to court documents, Ground Zero Seeds International and its owner Gregory McCarthy regularly contracted with the Jacklin Seed Company, a subsidiary of the J.R. Simplot Company based in Liberty Lake, Washington, for the purchase and sale of grass seed. Starting in 2015, GZI and McCarthy purportedly struck a secret deal with the Jacklin Seed Company’s former order-fulfillment and warehousing operations manager Richard Dunham.

In exchange for the Jacklin Seed Company purchasing grass seed from GZI, the company would pay Dunham per-pound kickbacks. These kickbacks were purportedly built into GZI’s pricing. The U.S. Attorney’s Office says that Dunham artificially inflated the price that the Jacklin Seed Company paid for seed or reduced the price at which Jacklin sold seed to GZI.

“To help conceal the scheme from Jacklin, Dunham registered a separate business entity through which he purported to offer consulting and grass seed brokering services,” the U.S. Attorney’s Office said. “Dunham used the company and a checking account in the company’s name to accept kickbacks from GZI, McCarthy, and others.”

McCarthy and GZI allegedly paid Dunham approximately $191,790 in kickbacks between April 2015 and September 2019.  In June of 2022, Dunham pled guilty to two counts of conspiracy to commit wire fraud and is awaiting sentencing.

Upon pleading guilty to one count of misprision of felony, GZI was sentenced to one year of probation. The company was also ordered to pay $516,000 in restitution to the J.R. Simplot Company in addition to a $40,000 fine. This criminal investigation was overseen by the IRS and the U.S. Department of Agriculture.