Nogales produce distributor banned for failing to pay growers

A produce distributor in Nogales, Arizona was banned from the industry after failing to pay nearly $1.8 million to four growers in Mexico and Arizona.

The U.S. Department of Agriculture banned Nogales-based Sandia Distributors, Inc. from participating in the produce industry until Jan. 14, 2019. The owner of Sandia, Raul Paez, was banned until Jan. 14, 2018.

The USDA announced the ban on Feb. 16 after Sandia failed to pay three growers in the Mexican states of Jalisco and Sonora and one grower in Waddell, Arizona for 23 million pounds of watermelons between April 2014 and May 2015.

Paez cannot work for any company licensed under the Perishable Agricultural Commodities Act, which regulates fair trading practices among produce businesses, according to the USDA. In the past three years the USDA has resolved approximately 3,500 PACA claims worth $58 million.

The USDA said the agency is required to publish “willful, repeated and flagrant violations of PACA.”

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Paez filed for Chapter 11 bankruptcy in September 2015, according to federal bankruptcy court documents.

Paez’s lawyer and the Sandia company could not be reached for comment.

Sandia, which has had a PACA license since 1985, may reapply for a license in 2019. According to trade publications, the company was founded in the 1960s and Paez bought the company in the 1980s.

After January 2018, Paez can return to the produce industry, but only with a USDA-approved surety bond, the agency said.