WASHINGTON, DC - As part of its efforts to enforce the Perishable Agricultural Commodities Act (PACA) and ensure fair trading practices within the U.S. produce industry, the U.S. Department of Agriculture (USDA) has imposed sanctions on The Fruit Club, Sioux Falls, South Dakota, for failing to meet its contractual obligations to the sellers of produce it purchased. These sanctions include barring the business and the principal operators of the business from engaging in PACA-licensed business or other activities without approval from USDA. By issuing these penalties, USDA continues to enforce the prompt and full payment for produce while protecting the rights of sellers and buyers in the marketplace.

Direct from the USDA Agricultural Marketing Service:

The Fruit Club failed to pay $367,040 to four sellers for produce that it purchased, received, and accepted in interstate commerce from June 2016 to October 2017. This is in violation of the PACA. As a result of these actions, The Fruit Club cannot operate in the produce industry until August 16, 2021, and then only after they apply for and are issued a new PACA license by USDA.

The company’s Principal, Matthew Kleinsasser, may not be employed by or affiliated with any PACA licensee until August 16, 2020, and then only with the posting of a USDA approved surety bond.

USDA is required to publish the finding that a business has committed willful, repeated, and flagrant violations of PACA as well as impose restrictions against those principals determined to be responsibly connected to the business during the violation period. Those individuals, including sole proprietors, partners, members, managers, officers, directors or major stockholders may not be employed by or affiliated with any PACA licensee without USDA approval.

The PACA Division, which is in the Fair Trade Practices Program in the Agricultural Marketing Service, regulates fair trading practices of produce businesses that are operating subject to PACA, including buyers, sellers, commission merchants, dealers, and brokers within the fruit and vegetable industry.

In the past three years, USDA resolved approximately 3,350 PACA claims involving more than $63 million. PACA staff also assisted more than 8,000 callers with issues valued at approximately $156 million. These are just two examples of how USDA continues to support the fruit and vegetable industry.

To read the USDA’s press release in its entirety, click here.

USDA's Agricultural Marketing Service