Berkeley Resident Pleads Guilty to Wire Fraud and Tax Evasion.

Business Editors

OAKLAND, Calif.--(BUSINESS WIRE)--July 14, 2000

The United States Attorney's Office for the Northern District of California announced today that Michael L. Norton pleaded guilty to one count of wire fraud and one count of tax evasion.

Mr. Norton, 52, a Berkeley resident, was indicted by a federal Grand Jury on April 16, 1998 for multiple counts of wire fraud, money laundering and tax evasion.

The charges stem from an elaborate scheme perpetrated by Norton during 1993-1995 to defraud businesses and consumers who purchased coffee from his business believing it to be 100% Kona coffee from Hawaii when, in fact, the coffee was a significantly cheaper coffee from Central America. During the period 1993 through 1996, Norton purchased approximately 3.6 million pounds of Central American coffee. By sorting the Central American coffee to size, re-bagging and then re-labeling it as "pure Kona Coffee," Mr. Norton was able to generate profits substantially greater than he would have if he had not misrepresented the product as Kona coffee. The government contends that those additional profits exceeded $10 million.

In the years 1995 and 1996, Mr. Norton diverted approximately $1.3 million of his fraudulent coffee sales proceeds to a personal Swiss bank account. He failed to report these proceeds as income on his 1995 personal income tax return.

As part of the plea agreement entered in the case, Norton has agreed to forfeit to the government approximately $2 million which the government seized at the time Norton was first charged as well as another $1.3 million which Norton had placed in his Swiss bank account in order to avoid paying income taxes.

The sentencing of Mr. Norton is scheduled for October 20, 2000 at 10 a.m. before Judge D. Lowell Jensen in the Oakland Federal Courthouse. The maximum statutory penalties for each of the wire fraud and tax violations to which Norton pleaded guilty are: five years imprisonment, 3 years supervised release, a fine of $250,000, and a special assessment of $100. In addition, the wire fraud charge also requires that Norton make restitution for losses suffered by his customers.

The prosecution is the result of a lengthy investigation of Mr. Norton by Special Agents of the U.S. Customs Service, the Internal Revenue Service, and the Contra Costa County Sheriff's office. The prosecution was handled in court by Assistant U.S. Attorneys Laura E. Gonzales and Ben Burch with the assistance of Letty Whitworth.

All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Matt Jacobs at 415/436-7181.