The Government is using a new tool to attack companies and executives in the food industry — prison. Food industry executives are appearing to be easy targets to the Government, resulting in several high profile criminal prosecutions in recent years.
The Government is dedicating significant resources to prosecute the food industry and sparing no expense. In fact, the FDA’s criminal investigation arm has approximately 230 agents and a $41 million operating budget. Given these resources and recent victories, the Government is becoming more aggressive in its prosecutions by moving away from charging executives with misdemeanors or offense traditionally related to the food industry. Instead, the Government is charging federal felonies associated with fraud, such as conspiracy and wire fraud. These prosecutions seem to have become the new norm in the industry. There is a sense of urgency that the food industry needs to be on notice that the Government wants to hold executives responsible for foodborne illnesses, even if criminal intent is not present.
One high profile case was the prosecution of Eric and Ryan Jensen in Colorado. This case is particularly scary because federal prosecutors used the Park Doctrine to prosecute the Jensens. The Park Doctrine creates strict liability. It provides that a responsible corporate official can be held liable for a first time misdemeanor (and possible subsequent felony) without proof that the corporate official acted with intent or even negligence, and even if such corporate official did not have any actual knowledge of, or participation in, the specific offense.
It means executives may be held criminally responsible for the short-cuts, negligence, wrong-doings of their employees, simply because they “should have” known or supervised or simply because they were in a position of authority over employees or organization that committed wrongdoing. Executives can no longer insulate themselves from prosecution simply because they aren’t in the trenches. This can be a daunting proposition for executives of large corporations that are managing hundreds or thousands of employees and have the inability to monitor everyone and everything at all times.
The Jensens were the primary principals in a farming operation known as Jensen Farms in Granada, Colorado. Jensen Farms supplied cantaloupe to the likes of Walmart and Kroger. The Jensens were tasked with, among other things, operating a conveyor system that cleaned and packaged cantaloupe from the farm. In or around May 2011, the Jensens revamped the conveyor system that cleaned the cantaloupe. The new conveyor system was never outfitted with the chlorine spray function, which would have reduced the risk of microbial contamination of fruit. Starting in or about July 2011, Jensen Farms sent out cantaloupe contaminated with listeria that the Government alleges and the Jensens conceded killed at least 33 individuals and caused illnesses in at least 147 people. The Jensens pled guilty to misdemeanors and were sentenced to a five year probation terms with six months home detention.
The prosecution of Eric and Ryan Jensen is significant because there was absolutely no evidence that the Jensens knew the cantaloupe was adulterated before it was sent out into commerce. Instead, all the Government could show is that the Jensens should have been aware that the cantaloupes could be contaminated because the chlorine spray was not used.
In another prosecution in Iowa, the Government charged Austin (Jack) DeCoster, his son Peter, and their company Quality Egg LLC by Information. The charge by Information signals that a plea agreement was reached prior to the filing of charges. The Information charged all defendants with introducing adulterated food into interstate commerce, a misdemeanor, and Quality Egg, LLC with bribery of a public official and introducing misbranded food into interstate commerce with intent to defraud or misled.
As part of the plea agreement, the individual defendants admitted to introducing or causing to introduce eggs that contained Salmonella Enteridits into interstate commerce. The plea agreements of the individuals states that they did not have any direct involvement in the sale of the contaminated eggs and that neither they nor their employees knew the eggs were contaminated. The company, on the other hand, admitted to giving a $300 cash bribe to a USDA inspector in order to convince the inspector to release “red tagged” eggs into commerce. The company further admitted to selling contaminated and misbranded eggs that were sold with mislabeled processing and expiration dates. Finally, the company admitted to selling eggs contaminated with Salmonella. The defendants were sentenced to jail time and are appealing arguing that any prison time is a violation of due process or the Eight Amendment’s prohibition on cruel and unusual punishments. Specifically, Mr. DeCoster and his son are arguing that should not be deprived of their liberty solely because he was the responsible corporate officer of a company that breached a strict liability duty. It is certainly a righteous argument.
Like the Jensen case, given the language in the plea agreements, it appears the Government would have used the Park Doctrine to establish the criminal liability of the high level executives at trial.
Next, in Nebraska, Kelly and Paul Rosbergs, a husband and wife running a beef processions plant, were prosecuted for mixing uninspected processed beef with inspected beef on the weekends when USDA inspectors were not present. The Rosbergs had won a contract to supply the Omaha Public Schools with 5,200 pounds of USDA-inspected ground beef. The Government alleged that the Rosbergs cut corners in order to fulfill the order in time. The Rosbergs agreed to a plea agreement, wherein Kelly Rosberg pled to a misdemeanor and admitted to representing the ground beef as USDA-inspected when she knew it had not been passed or inspected by the agency and escaped jail and Paul Rosberg pled to a single charge of conspiracy.
A 2008 salmonella contamination of peanuts, peanut butter and peanut paste that gave rise the largest food recall in U.S. history also resulted in the most high profile food industry prosecutions in recent years. Specifically, in February 2013, in the Middle District of Georgia, an indictment was filed charging five former executives of the Peanut Corporation of America (“PCA”) with 67 federal felony counts, including conspiracy, introduction of adulterated food into interstate commerce with intent to defraud, wire fraud, and obstruction of justice. The indictment alleged that defendants engaged in a scheme to knowingly ship contaminated peanut butter and peanut paste to customers and faked lab tests intended to screen for salmonella.
As is the case in many federal criminal prosecutions, the Government used email correspondence of the five indicted executives to argue evidence of a crime and a cover up. One of the indicted executives, a plant manager named Samuel Lightsey, pled guilty in advance of trial in hopes of receiving a reduced sentence. As part of his plea agreement, Lightsey admitted that peanut paste was shipped to a customer without ever having submitting a sample of the paste to the laboratory for microbiological testing. Instead, the paste was shipped with a false COA from a previously manufactured lot of peanut paste. Lightsey further admitted that the paste contained salmonella.
The Operations Manager at the plant, Daniel Kilgore also pled guilty in advance of trial. Like Lightsey, in exchange for Kilgore’s cooperation against the remaining defendants, he was promised a reduced sentence as part of the plea agreement.
The three other executives, Stewart Parnell (owner), Michael Parnell, (food broker), and Mary Wilkerson (quality control manager) proceeded to trial. Kilgore and Lightsey testified against their former colleagues making the defense case difficult. The Government called 45 witnesses and aggressively pursued privileged attorney client materials from law firms representing the company. The Government’s efforts resulted in convictions of the three defendants. The defendants will be sentenced before the end of the year and all have said they will appeal.
After the PCA trial, Michael Moore, the United States Attorney for the Middle District of Georgia, reinforced the Department of Justice’s new stance against the food industry and its executives and stated that the verdicts in the PCA case put the food industry on notice that it is now going to be held responsible for foodborne illnesses.
The Government recently filed a case to the PCA California charging wide ranging felonies, including conspiracy and fraud against Jesse John Amaral Jr. and two employees of Amaral’s company, Rancho Feeding Corp. (“Rancho”) – Felix Sandoval Cabrera and Eugene Corda. Until earlier this year, Rancho owned and operated a beef slaughterhouse at Petaluma, CA. The Defendants are alleged to have been engaged in a scheme to put cattle not suitable for slaughter and consumption into commerce. The Government also alleges that the defendants participated in a scheme to remove cancerous cow eyeballs from diseased cows and replacing with healthy eyeballs in order to put diseased cattle into commerce. The Government alleges the schemes resulted in an 8.7 million pound beef recall across the United States, Guam, and Puerto Rico. Eugene Corda has already pled guilty. The contents of her plea remain sealed. Amaral and Cabrera are set to go to trial next year. Experts predict this case will end with convictions and long prison terms similar to the PCA case.
Given this new era of enforcement, the food industry needs to be weary when investigators come knocking on their door. The tell tale signs of an investigation are FDA investigators asking questions or subpoenas from the FDA, which traditionally only signaled a civil investigation. Today, these could be signs of a criminal investigation, which require immediate attention by counsel. More important, the food industry needs to act fast when faced with an employee whistleblower making allegations of wrongdoing at the company. These whistleblowers usually create the framework for a criminal prosecution. Executives should not ignore whistleblowers. Instead, internal investigations need to be immediately conducted, issues need to be corrected, and a decision needs to made on whether to self-report any bad behavior to the Government.
About the Authors
Marissel Descalzo and Angela Puentes-Leon are attorneys at the national law firm Carlton Fields Jorden Burt. Descalzo has extensive experience representing business entities and individuals in criminal investigations and prosecutions, both as targets and witnesses. She regularly counsels companies on the adoption and operation of their compliance programs. Puentes-Leon has extensive experience litigating individual and mass tort matters throughout the U.S. Her practice focuses on the defense of clients in personal injury and wrongful death actions involving products and consumer goods including food litigation.