Kona Distributor Sold Bogus Beans

A coffee supplier was indicted on federal fraud charges for allegedly selling thousands of pounds of bogus gourmet coffee beans to upscale coffee shops.

Michael L. Norton, owner of Kona Kai Farms, was arraigned Thursday in federal court in Oakland on fraud and money laundering charges. Authorities said he may have earned as much as $5 million in recent years from the sale of the bogus beans.

Court documents alleged Norton bought Central American beans and sold them to unsuspecting customers as Kona coffee beans, a gourmet variety grown in Hawaii. The alleged fraud began in 1987.

The counterfeit Kona coffee beans were sold to wholesalers and the likes of Starbucks, Peet’s Coffee and Tea, Peerless Coffee and other gourmet coffee shops.

From February 1995 to March 1996, for example, court documents allege that Norton transferred about $2 million from a Northern California bank to a financial institution in Costa Rica to buy coffee beans there.

Beans from Costa Rica, Panama and other Central American countries cost about $1 to $1.60 a pound, while Kona coffee costs about $8 a pound, according to coffee experts.

Norton’s attorney, Christopher Cannon, called the charges “ridiculous” and said that Kona beans do not necessarily have to come from the region on the island of Hawaii that is their namesake.