The maker of a popular brand of food for observant Muslims says it is facing a potentially crippling investigation into whether it falsely labeled meat products as processed in compliance with Islamic law.
The Midamar Corp. said in federal court documents that investigators seized its main bank account and business records under search warrants executed last month. A judge last week upheld the government's seizure of $454,000 in bank funds and rejected the company's request to return the money.
No criminal or civil charges have been filed, and U.S. District Judge Linda Reade ruled that the government's affidavit supporting its search warrant can remain secret so as not to "compromise an ongoing investigation." The U.S. attorney's office declined comment Monday on the investigation, which involves the U.S. Department of Agriculture and Internal Revenue Service.
Miramar said in court filings that the seizures relate to vague allegations that it improperly branded and sold meat products as meeting Muslim dietary requirements, called halal, when they did not. The privately held business, which has been in Cedar Rapids for 40 years, dismissed the allegations. And it claims federal investigators are trying to regulate something that must be left to religions under the U.S. Constitution's separation of church and state.
"Whether Midamar's meat is in fact halal is a religious question that may not be answered by the U.S. government," company lawyers wrote last month.
Midamar says it was the first major U.S. supplier of halal products after its 1974 founding by Bill Aossey, who declined comment Monday. The company calls itself the leading U.S. halal brand and markets more than 200 products for U.S. and international customers, including beef, turkey and chicken. It largely relies on third-party suppliers for meat that it packages.
Reade ruled that she did not believe the company's constitutional argument was "an appropriate basis to quash a warrant" and is premature because no charges have been filed.
Midamar, which has 70 employees, says it has been unable to access credit needed to maintain its operation and that some business partners have kept a distance since last month's raid became public. It warned in one filing that it could soon have to close its doors.
Reade ruled that Midamar failed to show that the money seizure amounted to shutting down the business. Midamar failed to prove it could not obtain funding from other sources, such as by liquidating assets or taking out personal loans from its executives, she said. The agents' seizure of documents and files also did not prevent the business from operating, Reade ruled, noting investigators returned seized computers within a week.
Rasheed Ahmed, president of the Muslim Consumer Group for Food Products, a watchdog group in Huntley, Ill., said cheating is common in the marketing of halal meat, which is supposed to be killed in ritual slaughter. Some companies label routinely processed "supermarket meat" as halal, he said.
Ahmed said he was not aware of the investigation or Midamar's practices but that he would be interested in the case's outcome. "A lot of consumers buy from them," he said.
Midamar says the matter does not involve food safety. Still, its lawyers made public a letter from USDA that noted the agency stopped voluntary inspections at the firm in 2010, after seizing what it called misbranded meat products, before resuming them last year. Such inspections are done at Midamar's request to ensure their products meet requirements for export.
Investigators seized thousands of pounds of beef products that came from an establishment not approved for export to a foreign country and found falsified export documents for shipments to Indonesia and Malaysia, among other problems, according to the letter.
USDA's Food Safety and Inspection Service resumed inspections after approving Midamar's "corrective and preventive measures," the letter says.