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Sysco unit settles charges it overbilled U.S. military for produce

WASHINGTON (Reuters) - A subsidiary of Sysco Corp will pay $4.2 million to settle allegations brought by a whistleblower that it overcharged the U.S. military for fresh fruit and vegetables over a two-year period, the Justice Department said on Tuesday.

Sysco's FreshPoint Inc, a North American fresh produce distributor, has locations across the United States, concentrated in the South and West.

Problems with the government apparently began when FreshPoint bought East Coast Fruit Co in 2007, and in December of that year began inflating the prices of fresh fruit and vegetables that East Coast had been contracted to provide to the Defense Department, officials said.

The contract required the government to pay the company's cost of the food, plus a pre-established mark-up, officials said.

Instead, FreshPoint increased some prices to reflect its view of the market price, the Justice Department said.

From December 2007 to Sept 2009, FreshPoint increased prices for hundreds of sales of fresh fruits and vegetables, the department said.

A former FreshPoint employee who tipped off the government to systematic overcharging will receive $798,000, the department said.

Attempts to reach FreshPoint by telephone and by a contact link on its website were not immediately successful.

The case was U.S. ex rel. Hall v. SYSCO Corp., et al., Case No: 4:11-CV-57 (S.D. Ga.).

(Reporting by Diane Bartz; Editing by Ros Krasny)