State on alert for fraudulent 'nesting' of tobacco Lesser-grade leaf, other items found amid top product.

February 18, 1992|By Ted Shelsby | Ted Shelsby,Staff Writer

State officials are mustering their forces to halt a new outbreak of a form of business fraud that has plagued one of Maryland's oldest industries since Colonial days.

Called "nesting" since George Washington's time, in its most flagrant form today it involves hiding inferior-grade tobacco or other objects in the center of 300-pound baskets of top-dollar leaf being readied for market.

The new warning comes as tobacco growers are working in their barns tying the cured leaf into "hands," or bundles, and preparing it for sale at auction next month. This year's auction runs from March 24 to April 16.

Examples of nesting discovered during last year's marketing included hiding of rocks, cinder blocks, chunks of lumber and even a metal plow point in the leaf to boost the weight.

Nesting threatens the integrity of the Maryland tobacco industry, and the state will seek to put an end to the practice, said Lewis R. Riley, deputy secretary of agriculture.

It also threatens the existence of an industry that pumped nearly $17 million into the Southern Maryland economy last year.

One major buyer, Reemstma Co. of Hamburg, Germany, has threatened to pull out of the Maryland market.

Such a move could have dire consequences, industry sources say. Foreign buyers set the top price that farmers receive for their crop each year. Reemstma bought 60 percent of the leaf sold at last April's auction.

Following his visits to processing plants last year to see examples of nesting, Claude G. McKee, head of the University of Maryland's experimental tobacco farm in Upper Marlboro, also warned that some farmers "are risking the future of the industry for some small, short-term gains."

Based on what he saw at the tobacco- processing plants of Dibrell Brothers Inc. and K. R. Edwards Co. in Danville, Va., and Smithfield, N.C., Mr. McKee said the evidence was overwhelming. "We saw a lot more than we anticipated," Mr. McKee said. Twenty percent of all baskets were nested, he said, most often by hiding off-grade tobacco inside high-grade tobacco.

The Maryland Tobacco Authority sent letters to growers warning that it will be conducting random inspections of baskets of tobacco being sold at auction this year. The inspection will be made after the tobacco is sold, but before it is loaded onto trucks for the trip to processing plants. in Virginia and North Carolina.

The penalty is a $500 fine, three months in prison or both.

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