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Reprieve from Criminal Prosecutions May Be Ending for Food Execs

Odwalla Inc., now part of Coca-Cola, paid $1.5 million after pleading guilty to 16 misdemeanors stemming from an outbreak of E. coli infection caused by unpasteurized apple juice that killed a child and sickened dozens of others in 1996.   

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And Sara Lee Corporation pleaded guilty to one misdemeanor charge and agreed to pay $4.4 million in civil and criminal penalties for producing and distributing contaminated hotdogs and deli meats in 2001, causing 15 deaths.

But those responsible for the big foodborne outbreaks since then — the ones causing multiple injuries and deaths — have skated, seemingly not drawing or keeping the attention of federal prosecutors.

Atlanta attorney William H. Kitchens, whose practice focuses on food and drug law and government investigations at the law firm of Arnall Golden Gregory, says the lack of recent prosecutions for major food safety issues “is an enigma.”

Eric F. Greenberg, a Chicago-based food and drug lawyer in private practice, agrees there’s been a scarcity of criminal prosecutions.  

“You’d have to ask FDA precisely why its use of the criminal prosecution tool is relatively rare,” Greenberg says, “though it’s easy to surmise that part of the reason is that it’s so resource-intensive.  They may believe they get substantial benefit (persuading companies to comply voluntarily) just from the threat of possible prosecution standing behind them.” 

Still, some of the apparent decisions not to light the criminal fuse are puzzling.

“For example,” Kitchens told Food Safety News, “I do not understand the failure to prosecute the Peanut Corporation of American and its CEO unless there are some major issues with the evidence needed to support such a case.

“I have no independent knowledge about this case, but based on the public information available, it’s puzzling why an indictment has not been issued by now.”

The national Salmonella Typhimurium outbreak involving Peanut Corporation of America (PCA) occurred in late 2008 and early 2009, ending with 714 illnesses and nine deaths in 46 states and Canada.  

At the time, FBI agents swept in to execute search warrants at PCA plants in Georgia and Texas. Shortly afterwards, Congressional investigators said PCA executives had knowingly shipped peanut butter they knew was contaminated. But there’s been nothing more on the case from official sources for more than three years.

Given the lack of recent criminal prosecutions in major outbreaks of foodborne illness, some might think the law’s big sticks are not being used to secure food safety. Kitchens says such a conclusion would be a mistake.

“I believe the most significant contributing factor is that FDA is part of HHS (Health and Human Services) and does not have the independent ability to bring its own enforcement actions in federal court,” explains Kitchens.  “FDA must rely on the Department of Justice to bring actions in federal court, and DOJ has its own priorities regarding how best to deploy the government’s enforcement resources.”

Kitchens says for DOJ career prosecutors, food safety violations may offer “less attractive returns” than “money-maker” targets such as health care fraud.

And more use of federal criminal law, not less, could be in the works. But it’s a slow and complicated process, and requires dialing back two years ago to when Food and Drug Administration Commissioner Margaret Hamburg told Congress her Office of Criminal Investigation (OCI) would begin using federal misdemeanor prosecutions to hold corporate officials responsible for food and drug safety.

That announcement might have surprised some, but not FDA compliance attorneys, who knew the Department of Justice (DOJ) was working to bring back what are called “Park doctrine” prosecutions.  

The doctrine allows the government to charge senior executives with federal misdemeanors without showing they had any intent to commit crimes. The tactic — used on and off for about 40 years — was employed recently to jail three executives in a medical device case that involved three fatalities.

Hamburg said FDA’s senior leadership recommended OCI increase “the appropriate use of misdemeanor prosecutions, a valuable enforcement tool, to hold corporate officials accountable.”  

While the last two years have not produced much evidence that FDA is going after corporate executives for food safety violations, experts like Kitchens and Greenberg say it may be happening.

“I think it would be foolish not to expect it, given that FDA officials’ suggestions that they might dust it off was new and different from their past statements, “Greenberg said.

“FDA rarely uses its criminal prosecution power regarding food violations, and even more rare over the years has been the misdemeanor prosecution — essentially prosecuting a company head and a company for unintentional violations,” Greenberg said.

It would be quite a change for FDA to do so.  “Indeed,” Kitchens says, “that promise must be viewed in light of FDA’s history of reserving criminal prosecutions only for gross violations, and cases where the violations are life-threatening or those where injuries or death have already occurred.”

Not having to prove intent in order to punish executives with jail time and fines sounds like an advantage for the government, but there is a down side.  “Such a case has some built-in disadvantages in terms of appeal to the jury, which may be a reason it (a Park plea) is not used much,” Greenberg says.  

Still he always explains to his new clients “the potential is there for criminal penalties, even in the absence of intentional fraud or other misconduct.”

“No mater how rarely FDA uses that power, you just can’t explain the framework of the law accurately without discussing it,” Greenberg adds.

Whether or not the two-year-old policy announcement is being implemented gets complicated because the FDA commissioner does not really have much power over the OCI director.  

Prior to 1992, the FDA chief counsel — who was appointed by the commissioner — referred criminal filings to DOJ for prosecution. But when OCI was established, it was empowered to propose criminal prosecutions to any U.S. district attorney’s office.

For the next 18 years, FDA commissioners came and went, but OCI Director Terry Vermillion, the former Secret Service agent who was the agency’s first “top cop,” stayed on.

OCI, with about 230 agents and a $41 million operating budget, put up some impressive numbers. In 2010, Hamburg said OCI obtained 4,392 convictions resulting in $9.89 billion in fines and restitutions including over $1 billion in forfeited assets.

Criticism, however, came often because many of OCI cases were said to be busts for mere drug dealing and possession cases, not mission critical investigations for FDA involving drug tests, or medical device trials or food safety.

Congress got involved with an investigation and report from the Government Accountability Office (GAO) that rapped FDA for its lack of oversight of OCI. It was in response to that report that Hamburg called for an increase in filing federal misdemeanors against company officials.

Vermillion might have escaped the GAO report, but while that investigation was underway a federal “whistleblower” went to Sen. Grassley alleging misconduct involving the OCI director.   

Among
the more troubling charges — none of which were ever really investigated — was that Vermillion was no longer working from OCI’s headquarters in Rockville, MD, but from a new personal residence 200 miles away on the Virginia coast.

Vermillion was said to be running the investigative agency by phone. He retired as one of FDA’s highest paid employees in December 2010.

Since Vermillion retired, there has been at least one complete change over of top positions in OCI area offices and its headquarters under acting director Kathleen Martin-Weis.

Her 18-month tenure will come to an end in late June when John Roth, a DOJ prosecutor, will become the second permanent OCI director in the agency’s history.

Roth, who served a stint on the 9/11 Commission staff, is an experienced criminal prosecutor with expertise in money laundering and terrorist financing, working out Paris.

The federal government’s other food safety agency, USDA’s Food Safety and Inspection Service (FSIS), is involved in enough criminal prosecutions to require a separate section (currently Table 18) in its quarterly enforcement reports.

USDA provides daily, continuous inspection for meat, dairy and eggs, which account for about 20 percent of federally regulated food.  The other 80 percent gets periodic inspection — once every four years is not uncommon — from FDA.

Almost all federal criminal prosecutions involving jail time and fines are currently originated by USDA.  Greenberg says it might be possible to make more valid comparisons between how FDA and USDA use criminal prosecutions when the new Food Safety and Modernization Act is fully implemented.

Selected Recent Criminal Prosecutions:

– On Jan. 5, 2010, in the United States District Court for the Eastern District of California, Richard Riella, owner, pleaded guilty to two misdemeanor counts of aiding and abetting the sale of uninspected meat. 

– On Feb. 11, 2010, Brown Packing Co. was sentenced on one felony count for charges related to the illegal use of growth-promoting hormone implants in non-ruminant veal calves, mail and wire fraud. The firm was ordered to pay a $2,000,000 fine. This legal action was a result of a joint investigation conducted by USDA, FSIS investigators and the FDA. On Aug. 10, 2009, Brown Packing Co. had entered a guilty plea on one felony conspiracy count to commit mail and wire fraud related to the illegal use of growth hormones in veal calves. 

– On Feb. 11, 2010, John A. Oedzes, president, was sentenced on a single misdemeanor count for violations to USDA and FDA laws and was ordered to pay a $5,000 fine. On Aug. 10, 2009, Oedzes had pleaded guilty to one misdemeanor count for preparing, selling, and transporting adulterated meat food products in violation of the FMIA. 

– On Feb. 11, 2010, Brian G. Oedzes, official, was sentenced on a single misdemeanor count for violations to USDA and FDA laws and was ordered to pay a $5,000 fine. On Aug. 10, 2009, Brian Oedzes had pleaded guilty to one misdemeanor count for preparing, selling, and transporting adulterated meat food products in violation of the FMIA. 

– On Feb. 11, 2010, Bryan S. Oedzes, firm official, was sentenced on a single misdemeanor count for violations to USDA and FDA laws and FDA laws and was ordered to pay a $5,000 fine. On Aug. 10, 2009, Bryan Oedzes had pleaded guilty to one misdemeanor count for preparing, selling, and transporting adulterated meat food products in violation of the FMIA. 

– On April 20, 2010, in the United States District Court for the Eastern District of California, Richard Riella, owner, was sentenced on two misdemeanor counts for violations to the Federal Meat Inspection Act. Riella was ordered to pay a $4,000 fine and a $50 assessment fee and was placed on 2 years probation. On Jan. 5, 2010, Riella had pleaded guilty to two misdemeanor counts of aiding and abetting the sale of uninspected meat. 

– On April 27, 2010, in the United States District Court for the Central District of California, Paisano Meat, Inc. and Jose Cruz Lopez Perez, firm president, were indicted on 10 felony counts for preparing and selling adulterated meat food products containing sodium sulfite. 

– On Oct. 20, 2010, in the United States District Court, Eastern District of Wisconsin, Klement Sausage Company, Inc. was convicted on 1 misdemeanor count for violating the FMIA by offering for transport, offering for sale, transporting and selling non-federally inspected meat food products in commerce. The firm paid $50,125.00 in fines, restitution, costs and special assessments. On Sept. 17, 2010, the firm was issued a 1 count Information. The firm entered a guilty plea to the 1 count Information. 

– On Feb. 16, 2011, in the United States District Court for the Central District of California, Paisano Meat, Inc., defendant, pleaded guilty to one felony count for selling adulterated meat food products in commerce with intent to defraud. On April 27, 2010, the firm was indicted on 10 felony counts for preparing and selling adulterated meat food products containing sodium sulfite. 

– On Feb. 16, 2011, in the United States District Court for the Central District of California, Jose Cruz Lopez Perez, defendant, pleaded guilty to one felony count for selling adulterated meat food products in commerce with intent to defraud. On April 27, 2010, the firm president was indicted on 10 felony counts for preparing and selling adulterated meat food products containing sodium sulfite. 

– On May 19, 2011, in the United States District Court, District of Puerto Rico, Filberto Berrios pleaded guilty to one felony count and agreed to 1 year of probation for offering to sell adulterated meat food products in commerce with intent to defraud. Previously, on April 27, 2010, Berrios was indicted on eight counts for acting with intent to defraud, and for offering for sale and selling, in commerce meat food products capable of use for human food. 

– On June 15, 2011, in the United States District Court, Southern District of Florida, Mauret Curbelo, manager of Danilo Ranch, pleaded guilty to two felony counts for the inhumane slaughter of a swine and the sale of uninspected and adulterated swine meat for human consumption, in violation of the FMIA. Previously, on April 19, 2011, the firm and Curbelo were indicted on four counts for illegal slaughter, for selling adulterated meat food products, for inhumane handling in violation of the Humane Methods of Slaughter Act, and for making false statements to a USDA Compliance investigator. 

– On Aug. 24, 2011 in United Stated District Court, Northern District of California, a Grand Jury returned with a two felony count and a two misdemeanor count indictment against Jenny H. Ma, owner and Linda Chen Mai, employee. The indictment charges cited causing meat food products to become misbranded, with intent to defraud and falsely representing meat as being inspected and passed with the intent to defraud.

– On Aug. 31, 2011, in United States District Court, Southern District of Florida, Mauret Curbelo, firm manager, was sentenced on two felony counts for having engaged in the inhumane slaughter of swine and the sale of uninspected and adulterated swine meat for human consumption, in violation of the Humane Methods of Slaughter Act (HMSA). Curbelo was sentenced to 2 years of supervised probation, 100 hours of community service, and was barred from any employment at any ranch, farm, or slaughtering facility for the duration of his probation. On June 15, 2011, Curbelo plead guilty to two felony counts for the inhumane slaughter of a swine and the sale of uninspected and adulterated swine meat for human consumption. Previously, on April 19, 2
011, Danilo Ranch and Mauret Curbelo, firm manager, were indicted on four counts for illegal slaughter, for selling adulterated meat food products, for inhumane handling in violation of the Humane Methods of Slaughter Act, and for making false statements to a USDA Compliance investigator. 

– On Oct. 18, 2011, in the United States District Court, San Juan, Puerto Rico, Filiberto Berrios was sentenced to a 1-year prison term, along with 1 year of supervised probation, and a $5,000 fine, for violations of the FMIA and PPIA. Berrios purchased and transported adulterated meat products and misbranded meat and poultry products. On May 19, 2011, Berrios pleaded guilty to one felony count and agreed to 1 year of probation for offering to sell adulterated meat food products in commerce with intent to defraud. Previously, on April 27, 2010, Berrios was indicted on eight counts for violations of the FMIA.

– On Oct. 20, 2011, in the United States District Court for the District of Maryland, United Source 1 was sentenced on two criminal misdemeanor counts for falsely and fraudulently altering official certificates on meat and poultry export certificates and was ordered to pay $100,000 fine for each count [total of $200,000], $75,000 restitution to the United States Department of Agriculture for the costs related to the investigation, a $250.00 special assessment, and 3 years probation. Additionally, as part of settlement of the criminal action, the corporation agreed to enter into an administrative settlement, known as a Consent Decision and Order with the USDA. Previously, on Sept. 12, 2011, the firm pleaded guilty to two counts of fraudulently forging official certificates, and using as true such fraudulent official certificates for the export of meat and poultry products, as charged in a Criminal Information filed against the firm Sept. 9, 2011. 

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