Walter Scott Cameron, a former senior vice president of sales at Bumble Bee Foods, LLC has pleaded guilty to combination and conspiracy to fix, raise and maintain the prices of packaged seafood, including canned tuna. U. S. v. Cameron, No. 16-CR-0501 (N.D. Cal., information filed December 7, 2016). The criminal information accuses Cameron of conspiring with other seafood companies to fix prices of seafood sold in the United States. "Today’s charge is the first to be filed in the Antitrust Division’s ongoing investigation into price fixing among some of the largest suppliers of canned tuna and other packaged seafood,” said an attorney with the U.S. Department of Justice’s Antitrust Division in a December 7, 2016, press release. “All consumers deserve competitive prices for these important kitchen staples, and companies and executives who cheat those consumers will be held criminally accountable.” Issue 625
Tag Archives criminal
Two people have been convicted of conspiracy in charges related to a scheme to distribute counterfeit 5-Hour Energy drinks. United States v. Shayota, No. 15-0264 (N.D. Cal., verdict entered November 28, 2016). The couple, Joseph and Adriana Shayota, produced several million bottles of a drink manufactured under unsanitary conditions and labeled the drink with 5-Hour Energy's packaging. Before beginning that scheme, the couple reportedly bought 5-Hour Energy drinks intended for the Mexican market, repackaged them and sold them in the United States for a price well below the retail price. Six other defendants pleaded guilty to similar charges, and 5-Hour Energy maker Living Essentials won a $20-million civil judgment in March 2016. See Los Angeles Times, November 30, 2016. Issue 624
Christian Rivas, owner of Oasis Brands Inc., has been sentenced to 15 months in prison for two charges that he sold cheese contaminated with Listeria monocytogenes after the U.S. Food and Drug Administration (FDA) instructed the company to stop distribution until it remedied its practices. FDA inspected Oasis in August 2014, found several violations and required Oasis to halt distribution of any products until they were cleared by laboratory testing. Rivas continued distributing Oasis' cheese, which then failed a random Listeria test at a Virginia grocery store. In addition to his 15 months in prison, Rivas is subject to one year of supervised release. See South Florida Business Journal, November 16, 2016. Issue 623
A federal grand jury has indicted Jeffry Hill of Hill Wine Co. on charges that he sold wine falsely labeled as originating from Napa Valley in California. United States v. Hill, No. 16-CR-0454 (N.D. Cal., indictment entered November 1, 2016). The indictment accuses Hill of growing grapes outside the designated Napa Valley borders and selling the grape juice, bulk wine or bottled wine as made only from Napa Valley grapes, which apparently earned him more than $1.5 million. Hill also allegedly misrepresented the varietals of grapes he sold and created fraudulent bills of lading and inventory records. The indictment asserts that Hill also concealed the true origins of the grapes from his employees by moving grapes between Hill Wine Co.’s three facilities and intercepting trucks shipping grapes to alter the paperwork indicating their origin or varietal. Hill faces eight charges of mail fraud and wire fraud. Issue 622
Castle Cheese Inc. President Michelle Myrter has reportedly been sentenced to three years of probation, 200 hours of community service at a food bank and a $5,000 fine for misdemeanor charges of food adulteration for selling “100% Parmesan” cheese containing high levels of substitutes, including cellulose. Following a federal investigation and a raid on company facilities, Myrter pleaded guilty to the charges in February 2016. Additional details appear in Issue 596 of this Update. See Bloomberg, October 11, 2016. Issue 619
Following an investigation into potential criminal violations of federal immigration laws, Mary’s Gone Crackers Inc. will pay $1.5 million and establish a corporate compliance program but will not be prosecuted, the U.S. Department of Justice has announced. The investigation determined that 48 of the company’s employees were ineligible to work in the United States; Mary’s informed Immigration and Customs Enforcement that the employees had left the company, but further investigation found that Mary’s hired at least 13 of those employees back under different names. In addition to the $1.5-million payment, Mary’s must establish an anonymous tip line for employees to report noncompliance issues, provide I-9 training to employees and report compliance measures to the U.S. Attorney’s Office for two years. Issue 613
Italian police have reportedly arrested 24 people in an operation targeting the Lo Russo crime syndicate in connection with a scheme to intimidate grocers and supermarkets in Naples into buying bread at prices considerably higher than the market standard. The police also seized three bakeries allegedly identified as Lo Russo-controlled. The crime group reportedly forced merchants to buy the bread or risk seeing their shops burned or damaged in other ways. Lieutenant Colonel Giuseppe Furciniti, commander of the organized crime unit in Naples of the national financial police corps, said the scheme was common for the group, noting, “This time it was bread, other times it has been buffalo mozzarella.” See Associated Press, June 27, 2016. Issue 610
The Eighth Circuit Court of Appeals has upheld the legality of three-month prison sentences handed down to former Quality Egg, LLC executives Austin “Jack” DeCoster and his son Peter, former officials of the company deemed responsible for a 2010 Salmonella outbreak traced to its Iowa egg farms. United States v. Quality Egg, LLC, No. 15-1890 (8th Cir., order entered July 6, 2016). Convicted of misdemeanor violations of the federal Food, Drug, and Cosmetic Act (FDCA), the DeCosters argued their sentences were unconstitutional under the Due Process Clause and the Eighth Amendment because incarceration for their offenses is either altogether inappropriate or disproportionate to the crimes. Upon a de novo review of the case, the appeals court confirmed that “the DeCosters are liable for negligently failing to prevent the salmonella outbreak.” Further, the men’s sentences did not violate the Due Process Clause because the sentences were “relatively short” and the “convictions…
Former U.S. Food and Drug Administration (FDA) Commissioner for Foods David Acheson has authored an article warning food company officials to prioritize food safety in light of the U.S. Department of Justice’s (DOJ’s) increasing prosecutions against executives of food companies responsible for pathogen outbreaks. Acheson describes the Park Doctrine, which allows the government to seek misdemeanor convictions against company officials without requiring proof that the officials knew of or participated in the federal Food, Drug and Cosmetic Act violations. Further, after a misdemeanor conviction, subsequent violations are automatic felonies. “It is for all these reasons that it is critical that everyone in a food facility understand and follow all food safety practices, and that executives stay tuned in to everything going on in their operations—as they are ultimately responsible for every act that takes place,” Acheson writes. “Additionally, while I caution against simply writing up a food safety plan in order…
A Georgia federal court has reportedly ruled that four former executives of Peanut Corp. will not be forced to pay restitution to the victims of a Salmonella outbreak linked to nine deaths and 714 illnesses. The executives—Stewart Parnell, Michael Parnell, Samuel Lightsey and Daniel Kilgore—are each serving federal prison terms for knowingly shipping Salmonella-tainted peanut butter and faking related lab-test results. The court reportedly found that the loss estimates provided by the prosecutors were invalid because they included unrecoverable costs, including attorney’s fees. Further, the victims received more than $12 million from Peanut Corp.’s insurer, and the punitive factor of restitution would be reduced because requiring payment “would ultimately be for naught or close-to-naught,” as the executives received long prison sentences. See Associated Press, April 7, 2016. Issue 599
