The president of the New Jersey-based Connell Rice and Sugar Co., a major American rice exporter, was indicted by a federal grand jury here yesterday on charges of defrauding the United States in connection with overseas rice sales and lying about it to the grand jury investigating South Korean influence-buying.
Grover Connell, of Westfield, N.J., is the second businessman to be charged in connection with the investigation.
Connell's reported one-third interest in the large trading company would be forfeited to the United States if he is convicted of the charges, which include allegations that his activities fell under antiracketeering statutes.
The indictment charges that Connell used accused Korean agent Tongsun Park as an intermediary for his rice dealings with the Republic of Korea in violation of Department of Agriculture regulations, and covered up that relationship by making payments to a South Korean firm that were acutally going to Park.
According to the indictment, Connell paid Park $600,000 in commission between 1972 and 1975 through that firm, identified as Daihan Nongsan, in connection with USDA "Food for Peace" exports. Earlier published reports stated that Connell actually paid $8 million in commissions to Park over a four-year period for his assistance in private and government sales.
Connell denied the charges in a statement issued through his attorney, Joseph Alioto. He called the indictment "an outrageous miscarriage of justice" and said the "whole business of paying commissions on rice for Korea was forced upon the rice industry by the U.S. government over my strong written protests."
Alioto said Connell did not know that Park was connected with the firm and that the Justice Department prosecutors in the case had "gone berserk" in bringing the "18-carat fake" charges. Justice Department attorneys said they would have no comment on Alioto's or Connell's statements.
Under Food for Peace regulations, commissions cannot be paid to anyone connected to the importing country. According to a letter sent to Connell in 1972, Park was clearly identified as the South Korean government agent whose services would "be required" for Korean rice deals with the United States.
The indictment charges that Connell got around the regulation by making his payments to Daihan Nongsan instead of to Park. Connell knew at the time that Park was the actual agent for the sales, the indictment stated.
Connell is charged with one count of conspiring of defraud the United States through his alleged secret arrangement with Park, two counts of wire fraud in connection with two specific financial transactions, one count of racketeering, and two counts of lying to the grand jury by denying the alleged relationship with Park.
Named as unindicted coconspirators were Park, who is a government witness, and an attorney for Connell identified as Richard Purcell.
The Connell firm is primarily a trading company which has specialized in government-financed rice transactions. It owns an office building in Westfield, N.J., but has few other substantial assets such as ships or grain elevators.