An Oregon grass seed company pleaded guilty and was sentenced on Tuesday for its role in a scheme to defraud another grass seed company and its former subsidiary.

According to court documents, Ground Zero Seeds International pleaded guilty to one count of misprision of felony and was sentenced to one year of probation. The Yamhill, Oregon company was also ordered to pay a $40,000 fine and $516,000 in restitution to J.R. Simplot Company. The Jacklin Seed Company was a former subsidiary of Simplot.

Court documents say that Ground Zero Seeds and its president and owner, Gregory McCarthy, had a longstanding relationship with the Jacklin Seed Company, a subsidiary of Simplot, based in Liberty Lake, Washington. GZI and McCarthy contracted with Jacklin for the purchase and sale of grass seed. The contracts were typically negotiated with Richard Dunham, a former Jacklin employee who oversaw the company’s order fulfillment and warehousing operations in Oregon. He had the authority to purchase grass seed from certain Oregon growers over others.

Starting in 2015, McCarthy and Dunham agreed that DZI would pay Dunham a ‘per pound kickback’ for grass seed purchased by Jacklin. The kickbacks were built into the prices reflected on invoices to Jacklin. Dunham artificially inflated the price Jacklin paid for seed or reduced the price at which Jacklin sold seed to GZI. The documents say to help conceal the scheme from Jacklin, Dunham registered a separate business entity through which he purported to offer consulting and grass seed brokering services. Dunham used the company and a checking account in the company’s name to accept kickbacks from GZI, McCarthy, and others.

Between April 2015 and September 2019, McCarthy caused GZI to pay Dunham approximately $191,790.

Prior to GZI pleading guilty and being sentenced, a one-count superseding criminal information was filed charging the company with misprision of felony.

Dunham pleaded guilty to two counts of conspiracy to commit wire fraud on July 7, 2022. He will be sentenced in June 2023.