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The Kona Kai Scandal and its Aftermath

The Kona Coffee Council, the local trade group representing farmers, said it “does not condone the civil action filed against the customers of Kona coffee because of this alleged fraud.” And, “The people responsible for the civil actions make up less than one percent of the people engaged in the coffee business in Kona and do not speak for the majority of the industry.” A press release put out by the council also said the civil actions are affecting the Big Island economy negatively and do nothing to promote Kona coffee or other coffee grown in the State of Hawaii. Celia Smith of Smith Farms in South Kona, a past president of The Kona Coffee Council, noted on another occasion that there were but 19 plaintiffs out of 600 Kona farmers. Some have said that the suit was driven more by Mark Davis, the plaintiff’s council, than by the convictions of the grower community. John Langenstein said that farmers were being pressured by processors whose economic interests were threatened by the suit to withhold support for the legal action taken by his group.

The suit was settled in 1999. Kona Kai and its insurance companies agreed to pay $1 million dollars to the farmers while $225,000 was added to the settlement by the other defendants. While there appeared to be no evidence the roasters were aware of Kona Kai’s fraudulent dealings, it appeared to observers that the mainland companies were embarrassed by the whole business and wanted to put the scandal behind them. Mark Davis prevailed for the farmers by having as part of the settlement an agreement on the part of the defendants to buy 161,000 lb. (1,610/ 100 lb. bags) of green Kona coffee over the next five years from Kona farmers.

In the wake of the Kona Kai scandal, Kona Coffee Council has seen its long time dream fulfilled with the granting of a registered U.S. mark by the Patent and Trademark Office for “100% Kona Coffee.” The mark is registered to the Department of Agriculture of the State of Hawaii. The mark certifies that the goods originate (are grown) within the geographic borders of the Island of North and South Kona Districts of Hawaii County, Hawaii. A mark was also granted for “100% Hawaiian Coffee.”

As for Mr. Norton, there was no trial. He eventually pleaded guilty to wire fraud and tax evasion. Attorney Penny Cooper, who represented Norton at his sentencing hearing argued, as quoted in The San Francisco Chronicle, “Nobody felt cheated. They liked the taste they were getting - that’s what coffee’s all about.” Norton told U.S. District Court judge, D. Lowell Jensen, “I’m sorry for this whole thing to have happened. I don’t think I inflicted the type of damage that has been spoken about.”

Six years after the publication of the bill of indictment, Norton was sentenced to 30 months in prison. In addition, the court ordered Norton to pay more than nine hundred thousand dollars in restitution and taxes. With good behavior he will serve less than one year, and then be free to pursue La Dolce Vita with the remainder of his considerable plunder.

The rest of us have been sentenced to the realization that fraudulent labeling of coffee both green and roasted is a real danger to our good health as an industry. We can no longer excuse and forgive the fact of some measure of fraudulent dealing as being part and parcel of our centuries old trade. A degree of acknowledged mislabeling by some small time grafters, posing as coffee people, is no longer an acceptable evil with which we can live. This is not a partisan small company issue either. Sara Lee, Maxwell House and Folgers produce origin labeled coffees too. They have a stake in protecting the integrity of the products that bear their brands just as much as do Gussy Von Wellsheim and Jane McLaughlin at Carpe Diem Coffee Roasters in North Berwick Maine, and Barry Jarrett at Thomas & Riley Coffee, Ltd., in Fairview Heights, Illinois.

The lower you go on the grade scale the harder it is to differentiate one origin from another (think Four-Horseman). Of course those who buy Kona Primes are buying the name and not the cup. The step from buying Kona Primes to buying a mild with very much the same characteristics is a small one ethically for some. Michael Norton clearly had no problem with the substitution. He is a confessed felon. For others it is an unthinkable breech of ethics. There are many whose scruples are liquid; in a constant state of flux-something akin to green Jello. They would not think of compromising their ethics unless they were comfortable with the risk vs. reward ratio. We see it across the board in all origins. We have all heard the urban legend of the private label packer asking the avaricious

and hard-bargaining distributor, “what percentage of 100% Colombian coffee do you want in your 100% Colombian coffee?”

In response to assaults on the integrity of 100% Colombian coffee, the mark has become more aggressively defended by the Colombian Coffee Federation. In addition they have stepped up their monitoring efforts of 100% Colombian brands. Juan Valdez guardian Mary Pettit at the Federation said, “The discussion surrounding the Kona scandal gives our industry an opportunity to reaffirm our commitment to treat customers with integrity, The misrepresentation of any product is harmful to the entire industry. Be assured that the Federation will continue to protect the trust our customers have placed in 100% Colombian coffee.”

There are some encouraging signs for the future from other quarters too. The SCAA Forward Planning Committee recently decided to urge the association membership to focus resources on developing a certification system for specialty coffee origin.

Superior grade assumes superior cup qualities, yet astoundingly, most origins do not include a cup standard in their classification system. There is some movement among producing countries to include cupping characteristics as part of their grading system. Past SCAA Lifetime Achievement honoree George Howell has worked on bringing cup testing to several producer nations, the most recent country being Brazil. SCAA president Paul Katzeff has been working with the Nicaraguan growers to bring cupping to their efforts, utilizing a $300,000 USAID (Agency for International Development) grant to set up ten cupping labs at ten co-ops in Nicaragua. Cupping labs in-country will help farmers understand the target taste profile in consuming countries. Higher quality, and being more focused on an individual cup profile should be one of the long term results leading to a cup standard for Nicaraguan coffee.

Costa Rica has undergone an extensive re-visit to their appellation and regional standards recently.

This unhappy Kona Kai business, and its unsatisfying conclusion, has forced all of us in the business to reflect on the importance of the integrity of the product we trade in. Beans must be traceable to origin. We must learn to inquire of the past life of the coffees we buy. Whether the coffee is Organic, Sustainable, Estate, Shade, Smithsonian Bird-Friendly, Fair-Trade or simply an origin coffee such as Juan Valdez’ 100% Colombian we must have confidence in its appellation, and its other attributes as well.

It is interesting that we have learned so little from our past experiences with fraud. We tend to trust the paperwork more than we trust our own judgement about what is good. Paperwork is nice, but documents alone do not grant us the luxury of suspending good judgement. The public relies on us to put before them coffees that taste good, whether or not they have a certain cache. If the last 30 years in coffee have proved anything at all, it has shown that ultimately the discerning consumer moves away from hype and moves toward coffee that tastes good. When we have a product of proven and provable worth, the only element lacking in our quest for ultimate success is shelf space at retail.

Past Kona Coffee Cupping Competition Judge and SCAA Founding Father, Donald N. Schoenholt can be found most any time ‘round the roaster at Gillies Coffee Company, Brooklyn New York.

Tea & Coffee - April/May 2001


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