When the perpetrators are paid before the victims you might think something weird is going on, or maybe you are just in the bankruptcy process.
That appeared to be what was happening last week when the former executives of Peanut Corporation of America got closer to getting their hands on $1 million from a corporate liability policy.
Peanut butter and paste manufactured by PCA was responsible for a Salmonella serotype Typhimurium outbreak that peaked at this time last year before ultimately infecting 714 people in 46 states and Canada. Nine people died in the outbreak and 24 percent of those who became ill required hospital stays.
Almost 4,000 products containing the contaminated peanut products were recalled, which alone made it one of the most costly outbreaks in U.S. history. PCA filed for Chapter 7 (liquidation) bankruptcy and boarded up its peanut processing plants in Blakely, GA and Plainview, TX.
And while the proceeds from PCA’s personal injury policies–about $12 million–has been set aside for the victims, none of the more than 150 who have filed claims has yet seen a nickel.
So, it’s no wonder the victims were not happy to be hearing about funds possibility going to the former PCA executives. Seattle attorney Bill Marler, who represents about half of all the victims who’ve filed claims, compared former PCA President Steward Parnell and the other executives to being ” like vultures on a carcass.”
Here’s how it happened: Among its other insurance policies, PCA was covered for claims made against its own employees and executives by the Federal Insurance Co.
Federal Insurance deposited the $1 million into a federal court account in September, but then it received the following claim:
- $951,000 for Parnell.
- $500,000 for Samuel Lightsey, the former Blakely, GA plant manager.
- $182,000 for Joe Sams, another former manager at the Blakely plant, and Mary Wilkerson, the former quality assurance manager.
David Royster III and David Royster IV, who served on PCA’s board of directors, want unspecified amounts reserved for their use. Parnell’s request is for “legal defense” and Lightsey’s is for “defense in an ongoing criminal investigation.”
Roy Cresy, the bankruptcy trustee, said the former PCA executives violated a financial trust agreement and argued that meant some of the $1 million should go toward paying creditors.
U.S. District Court Judge Norman Moon set aside $125,000 for creditors, but left $875,000 for the former executives to divvy up amongst themselves so long as the court approves.
Judge Moon was appointed to the federal bench in 1997 by then-President Bill Clinton.
PCA filed for bankruptcy last February.
A federal criminal investigation against some of the former PCA executives is believed to be led by the U.S. Food & Drug Administration ‘s (FDA”s) Office of Criminal Investigations (OCI). The Federal Bureau of Investigation has assisted OCI.
Any cases filed will likely be brought the U.S. Attorney for the Middle District of Georgia.