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Big Fine and Guilty Pleas Might Keep DeCosters Out of Jail

Austin “Jack” DeCoster and his son, Peter DeCoster, will accept some responsibility today for their contaminated eggs, which made almost 62,000 people sick four years ago, but don’t look for either man to serve much in the way of jail time.

Plea agreement details released ahead of today’s federal magistrate hearing in Sioux City, IA, show the DeCosters have a deal with the government to pay about $6.8 million, which, in turn, greatly reduces their exposure to federal incarceration.

The two men and their company, Quality Egg LLC, are making their first appearance in court as defendants this morning for arraignment and a hearing to allow the court to accept the plea agreement.

Court documents show the detailed agreement was reached in mid-April, a month before the federal charges were brought against the former poultry executives. It means the pair may have to make only one more appearance in federal court, and that assumes federal Magistrate Judge Leonard T. Strand does not hand down sentences today.

The agreement is clear that a guilty plea from the company on all counts and acceptance of the $6.8-million fine is the price of more lenient handling of the DeCosters, who will each plead guilty to a single misdemeanor of introducing or causing the introduction of adulterated food into interstate commerce.

According to Peter E. Deegan Jr., the lead prosecutor, all three defendants will waive reading of the indictment and plead guilty as charged. Jack DeCoster will enter the guilty plea for Quality Egg, as he is the trustee of the DeCoster Revocable Trust, which owns the company.

Both men will acknowledge that, in August 2010, while they were in positions of authority at Quality Egg, they introduced shell eggs into interstate commerce that were adulterated because they contained a poisonous or deleterious substance in the form of Salmonella Enteriditis that may have rendered them injurious to health.

In exchange for their guilty pleas, the DeCosters will receive consideration at sentencing, limiting their personal fines to $100,000 and significantly reducing any jail time from the one-year maximum.

Jack DeCoster will also plead guilty to three counts, including felony bribery of a USDA inspector, on behalf of Quality Egg, LLC, which owned the two egg production facilities responsible for the largest shell egg recall in U.S. history.

In the plea agreement, Quality Egg agrees to pay a fine of about $6.8 million for the counts of bribery of a public official (a USDA egg inspector) and introducing misbranded food into interstate commerce. The company will pay another $100,000 fine for introducing adulterated food into interstate commerce.

Quality Egg must deposit about $1.1 million with the court’s clerk by July 9 and then pay the remaining $5.69 million at the date set for sentencing. Quality Egg is also putting up a $10,000 “forfeiture” payment connected to the proceeds of the bribery.

The company will plead guilty to a second felony for selling misbranded food in interstate commerce, beginning Jan. 1, 2006, and continuing to approximately Aug. 12, 2010, the day before the company initiated the recall of more than a half-billion shell eggs. Before that recall began, the DeCoster egg empire is charged with selling eggs labeled to make them appear “not as old as they actually were.”

© Food Safety News
  • billmarler

    From the New York Times in 2010 – I think Jack may well go to jail:

    An Iowa Egg Farmer and a History of Salmonella

    By WILLIAM NEUMAN

    Published: September 21, 2010

    On a July night in 1987, scores of elderly and chronically ill patients at Bird S. Coler Memorial Hospital in New York City began to fall violently sick with food poisoning from eggs tainted with salmonella.

    “It was like a war zone,” said Dr. Philippe Tassy, the doctor on call as the sickness started to rage through the hospital. By the time the outbreakended more than two weeks later, nine people had died and about 500 people had become sick. It remains the deadliest outbreak in this country attributed to eggs infected with the bacteria known as Salmonella enteritidis.

    This year, the same bacteria sickened thousands of people nationwide and led to the recall of half a billion eggs.

    Despite the gap of decades, there is a crucial link between the two outbreaks: in both cases, the eggs came from farms owned by Austin J. DeCoster, one of the country’s biggest egg producers.

    Mr. DeCoster’s frequent run-ins with regulators over labor, environmental and immigration violations have been well cataloged. But the close connections between Mr. DeCoster’s egg empire and the spread of salmonella in the United States have received far less scrutiny.

    While some state regulators took steps to clamp down on tainted eggs, the federal government was much slower to act, despite entreaties from state officials alarmed at the growing toll.

    Farms tied to Mr. DeCoster were a primary source of Salmonella enteritidis in the United States in the 1980s, when some of the first major outbreaks of human illness from the bacteria in eggs occurred, according to health officials and public records. At one point, New York and Maryland regulators believed DeCoster eggs were such a threat that they banned sales of the eggs in their states.

    “When we were in the thick of it, the name that came up again and again was DeCoster Egg Farms,” said Paul A. Blake, who was head of the enteric diseases division of theCenters for Disease Control and Prevention in the 1980s, when investigators began to tackle the emerging problem of salmonella and eggs.

    By the end of that decade, regulators in New York had forced Mr. DeCoster to allow salmonella testing of his farms and, along with other states, pushed the egg industry in the eastern United States to improve safety, which led to a drop in illness.

    But the efforts were patchwork. For example, Iowa, where Mr. DeCoster has five farms tied to the current outbreak, required no testing.

    And the federal government, at times under pressure from Congress and the industry to limit regulation, spent two decades debating national egg safety standards. New rules finally went into effect in July — too late to prevent the current round of illness.

    Records released by Congressional investigators last week suggest that tougher oversight of Mr. DeCoster’s Iowa operations might have prevented the outbreak, which federal officials say is the largest of its type in the nation’s history, with more than 1,600 reported illnesses and probably tens of thousands more that have gone unreported.

    According to the records, Mr. DeCoster’s farms in Iowa conducted tests from 2008 to 2010 that repeatedly showed strong indicators of possible toxic salmonella contamination in his barns. Such environmental contamination does not always spread to the eggs, and it is unclear what actions Mr. DeCoster took in response. However, when the Food and Drug Administration inspected the farms after the recalls, officials found unsanitary conditions and the presence of Salmonella enteritidis in barns and feed.

    “It’s striking that he was part of the early phase of the epidemic and that there is now a problem on his farms in Iowa,” said Dr. Robert Tauxe, deputy director of the foodborne illness division of the Centers for Disease Control.

    Mr. DeCoster, also known as Jack, is expected to testify on Wednesday before the House Subcommittee on Oversight and Investigations, which is looking into the outbreak.

    He has declined repeated requests for an interview since the egg recall began in August. But Hinda Mitchell, a spokeswoman, said in an e-mail that his farms have always “fully complied with the investigation and the orders from the states to address these situations.”

    Using an abbreviation for Salmonella enteritidis, she added, “We have committed ourselves to doing more than what is required, and that absolutely means following all SE surveillance programs, and other preventative measures, in the states where we have, or have had, farms.”

    Fifty years ago, Salmonella enteritidis (pronounced enter-IT-idis) was a minor cause of illness. But in the late 1970s and early 1980s, the number of cases began to grow worldwide. In this country, the Salmonella enteritidis epidemic appeared first in New England, where Mr. DeCoster was the largest egg producer. The first spike of illness there showed up in epidemiological records in 1979. That same year, Mr. DeCoster sold his Maine operation, although it kept the name DeCoster Egg Farms. He provided financing to the new owner, the Acton Corporation, and some of his managers stayed to help run it, according to former employees of the company. Mr. DeCoster began building new egg farms in Maryland.

    The first enteritidis outbreak recognized by public health officials came in July 1982, when about three dozen people fell ill and one person died at the Edgewood Manor nursing home in Portsmouth, N.H. Investigators concluded that runny scrambled eggs served at a Saturday breakfast were to blame. They traced the eggs to what the Centers for Disease Control reports referred to as a large producer in Maine; interviews with investigators confirmed that it was Mr. DeCoster’s former operation.

    Eggs from the same farms were also suspected in a simultaneous outbreak that sickened some 400 people in Massachusetts.

    Three years later, Mr. DeCoster bought back the Maine farms. By then, the clusters of salmonella illness had begun to spread.

    In 1987, the deadly outbreak at Coler Memorial Hospital on Roosevelt Island occurred. Investigators determined that mayonnaise made from raw eggs had caused the outbreak. They traced the eggs to Mr. DeCoster’s Maryland farms.

    After two more outbreaks were linked to DeCoster eggs the following year, New York banned Mr. DeCoster from selling eggs in the state. He was forced to agree to a rigorous program of salmonella testing on his farms in Maine and Maryland.

    Michael Opitz, a poultry expert retired from the University of Maine, said that the testing found that a Maine breeder flock owned by Mr. DeCoster was infected, meaning that hens there could be passing the bacteria to their chicks, which might grow up to lay tainted eggs. Widespread contamination was also found in laying barns.

    Mr. DeCoster’s farms were not the only ones with problems. By the mid-1980s, the bacteria had taken root in flocks in Pennsylvania and several other states. Soon after moving against Mr. DeCoster, New York embargoed eggs from at least seven other farms.

    The embargoes forced the industry to face the problem, and Pennsylvania took the lead in fashioning a program to fight the bacteria. Scientists determined the salmonella was entering eggs as they were formed in the ovaries of infected hens. A plan of attack was gradually devised, including controlling rodents that can harbor the bacteria, improving sanitation and vaccinating hens against salmonella.

    In 1991, tests revealed more salmonella contamination at one of Mr. DeCoster’s farms in Maryland. The state quarantined the eggs, allowing them to be sold only to a plant where they could be pasteurized to kill bacteria. Mr. DeCoster challenged the order and a federal judge ruled that Maryland could not block him from shipping eggs to other states. He was still barred from selling the eggs in Maryland, and in 1992, a state judge found that he had violated the quarantine by selling eggs to a local store; Mr. DeCoster was given a suspended sentence of probation and a token fine.

    Soon after interstate shipments resumed in 1992, eggs from the Maryland farm caused a salmonella outbreak in Connecticut, according to a 1992 memo from the Maryland attorney general’s office. Federal regulators insisted that Mr. DeCoster decontaminate his barns.

    Dr. Roger Olson, the former state veterinarian of Maryland, said that Mr. DeCoster complained about the cost of testing and the quarantine and insisted there was little risk associated with his eggs.

    “We never really got an acknowledgment that he was causing a problem,” Dr. Olson said.

    Mr. DeCoster sold his Maryland farms in 1993 and focused his attention on Iowa, where he built his first laying barn in 1991. The state was attractive because of its easy access to feed ingredients. And unlike Maryland and Maine, Iowa had no requirements for salmonella monitoring.

    Over the ensuing two decades, only Maine kept a close eye on salmonella at Mr. DeCoster’s farms. Despite some improvements, state-supervised testing has shown the persistent presence of the bacteria at several of his laying houses there, according to state records.

    Maine regulators became alarmed last year when toxic salmonella showed up again in some barns that had tested clean for years. State veterinarian Dr. Donald Hoenig ordered Mr. DeCoster to hire experts to devise a better prevention program. The Maine facilities have now tested clean of enteritidis for the last 11 months.

    Dr. Hoenig said he wished that the federal government had stepped in sooner to set standards for egg safety.

    “The states were left on our own, with no federal oversight or guidance, to regulate this bug as best we could,” he said.

    “It has been one big 20-year experiment.”

    • Candrew10

      Bill…clearly these guys have a multi-year history of intent and deserve some jail time as an example…if not them, who? Well, maybe Stewart, you think?

    • Oginikwe

      If they don’t get jail time, and it seems that it is warranted, then our “rule of law” is just another myth intended for the “little people.”

  • Steve Miceli

    A little jail time might humble those clowns a little. As a former Iowa I recall these people were bad actors for a long time.