Ex-CEO of Subway's Miami-based purchasing cooperative and her brother indicted in alleged $80 million bribery scheme

The woman who ran Subway's Miami-based purchasing cooperative for a quarter century and her brother have been indicted on federal charges accusing them of a decades-long bribery and money laundering scheme that allegedly cost thousands of sandwich shop franchisees more than $80 million, the U.S. Attorney's Office for the Southern District of Florida announced Thursday, Oct. 1.

Janet Risi Field, 66, of Pinecrest, and Steven Louis Risi, 70, of Coral Gables, are accused of secretly collecting millions of dollars in bribes and kickbacks from vendors that wanted contracts to supply Subway franchisees and of using shell companies to hide more than $60 million of that money, according to federal prosecutors and reporting by NBC 6 South Florida. The charges are allegations, and both defendants are presumed innocent unless proven guilty in court.

Who the defendants are

Risi Field helped form the Independent Purchasing Cooperative, known as IPC, in 1996 and served as its chief executive until December 2021, according to prosecutors. IPC is the franchisee-owned, nonprofit cooperative that negotiates prices for food, packaging, equipment and services on behalf of Subway franchise owners in the United States, Canada and Puerto Rico. It is based in Miami-Dade County.

In her role as CEO, Risi Field had the authority to enter into vendor contracts that affected the prices paid by thousands of franchisees, prosecutors said. The federal release referred to the chain only as "Restaurant Chain-1," but news coverage of the case, including reports by NBC 6 and trade publications, identified it as Subway.

A federal grand jury returned the indictment Sept. 21, according to news reports, and prosecutors made the case public Oct. 1.

What prosecutors allege

According to the indictment as described by prosecutors, Risi Field entered into a secret arrangement with co-conspirators who acted as brokers for IPC vendors. Under that arrangement, the brokers allegedly shared a portion of the fees generated from vendor contracts with Risi Field and members of her family in exchange for favorable treatment. Reports on the indictment said the affected contracts involved products such as meats, cheeses and cookies.

Risi Field, her brother and other family members allegedly routed the payments through shell companies to conceal them. Prosecutors allege more than $60 million moved through those entities.

The indictment also describes how the money was allegedly spent, according to news accounts of the court filing:

• Remodeling and furnishing homes in Florida and North Carolina.
• More than $400,000 in jewelry.
• Memberships at private clubs.
• About $3.4 million in credit card expenses.
• About $25 million in what were described as slush fund payments.

Prosecutors also allege that in 2011, Risi Field had a co-conspirator pay $8 million to settle a lawsuit involving an inappropriate relationship with vendors, according to reports on the indictment. When she was terminated in 2021, she received about $6 million in severance, according to the same reports.

The charges and possible penalties

Both siblings are charged with conspiracy to commit money laundering and two counts of engaging in monetary transactions in property derived from specified unlawful activity, according to NBC 6 and other reports on the indictment. Risi Field also faces additional fraud charges, including wire fraud and honest services wire fraud counts tied to her position at the cooperative, according to those reports.

If convicted, each defendant faces up to 20 years in federal prison on the money laundering conspiracy count and up to 10 years on each monetary transaction count. The wire fraud charges against Risi Field each carry a maximum of 20 years. Actual sentences in federal cases are set by a judge after considering the U.S. Sentencing Guidelines and other factors and are typically below the statutory maximums.

No public response from attorneys for Risi Field or Risi was included in initial reports on the case. Subway did not respond to a request for comment from at least one news outlet, according to that outlet.

A long-running fight inside the cooperative

The criminal case follows civil litigation. IPC itself sued Risi Field in Miami last year, along with several brokers and vendors, accusing them of kickback arrangements that it alleged defrauded franchise operators of more than $200 million, according to news reports. That figure is far higher than the amount cited in the criminal indictment, and the civil claims are separate from the federal charges.

Purchasing cooperatives like IPC are central to how large franchise systems work. Instead of each restaurant owner negotiating with suppliers, the cooperative uses the combined buying power of thousands of locations to secure prices on everything from bread ingredients to napkins. Because franchisees are both the customers and the owners of the cooperative, any hidden markup in a vendor contract is ultimately paid by the small business owners who run individual restaurants, many of them in Florida.

Prosecutors said the alleged scheme affected thousands of franchise owners across North America. Franchise owners operate on thin margins, and the alleged kickbacks would have been built into the prices they paid for supplies over many years.

Why it matters in South Florida

The case is rooted in Miami-Dade County. Both defendants live in affluent South Florida suburbs, the cooperative at the center of the case is headquartered in Miami-Dade, and the charges were brought in federal court in the Southern District of Florida, which covers Miami, Fort Lauderdale, West Palm Beach and the Florida Keys.

The prosecution also reflects a continuing focus by federal prosecutors in Miami on large-scale white-collar and money laundering cases. In announcing the indictment on social media, the U.S. Attorney's Office described it as a decades-long scheme that siphoned more than $80 million from thousands of franchise owners.

For franchisees in Florida and elsewhere, the case revives questions that had already been raised in the civil lawsuit about whether supply costs were inflated during Risi Field's tenure. Leadership at IPC changed after her departure, and the cooperative brought in a new president and chief executive in early 2022.

What's next

The case will proceed in U.S. District Court in the Southern District of Florida, where the defendants are expected to be arraigned and enter pleas. Prosecutors will have to prove the charges beyond a reasonable doubt at trial unless the case is resolved another way. The separate civil lawsuit brought by IPC remains a parallel track that could affect any effort by franchisees to recover money.

An indictment is an accusation, and Risi Field and Risi have not been convicted of any crime.