When Paul W. Kruse three years ago stepped down as the CEO of the 111-year old Blue Bell Creameries, he was hailed for practicing “stellar crisis communications” in bringing the iconic Texas company through the worst troubles in its history when it sickened ten customers and killed three with deadly listeriosis.
Texas billionaire Sid Bass helped Kruse restore consumer confidence in Blue Bell ice cream with a multimillion investment in the company that helped put the product back on retail shelves. Kruse was credited with putting Blue Bell in the “the best possible position” for a rebound from the 2015 crisis.
Five years later, Kruse waived his right to indictment by a Grand Jury, accepting an Information filing on May 1 by the Department of Justice (DOJ) of federal felony charges alleging he conspired with others at Blue Bell to cover up unsanitary conditions that caused the deadly listeria outbreak.
He is also charged with six counts of wire fraud and attempted wire fraud. If convicted on all charges, Kruse could be sentenced to as much as 20 years on each count and fines totaling $1 million.
He has engaged prominent attorney Chris Flood of Houston’s Flood and Flood for his defense Flood told the Austin Statesman newspaper that they look forward to “telling the whole story” of how Kruse and others at Blue Bell “did the best they could” with the information they had at the time.
Along with the criminal charges against Kruse, himself a member of the Texas Bar Association for the past four decades, Blue Bell Creameries, L.P. was charged with two counts of introducing adulterated foods into interstate commerce.
The company has pleaded guilty to the two misdemeanor charges and agreed to pay $19.35 million in fines, forfeitures, and civil payments to the federal government. As food safety fines go, the amount Blue Bell has agreed to pay is second only to the $25 million criminal penalties Chipotle Mexican Grill Inc. agreed to pay to resolve charges for sicking more than 1,100 people from 2015 to 2018.
The Kruse defense, however, may have more reason to be concerned about a plea agreement between the government and Blue Bell that has been sealed by the Court. The contents of that agreement are not known beyond the parties who signed it. Federal prosecutors often use plea agreements to line up testimony that is favorable to their cause.
Blue Bell has been in a settling mood in recent days. Right before an April 27 trial was to get underway, Blue Bell agreed to pay $15 million to settle with shareholders who sued, charging mismanagement in the 2015 listeria outbreak. There does not appear to be any spill-over from that settlement into the criminal case involving Kruse.
The 111-year old creamery is headquartered in Brenham, TX with additional manufacturing in Broken Arrow, OK, and Sylacauga, AL Blue Bell admitted to delivering adulterated ice cream from Brenham, TX to Lexington, SC, and Broken Arrow, OK to Big Springs, TX.
Kruse retired as both president and chairman of Blue Bell in early 2017 but remained on the Board of Directors. He took over from his Uncle, Howard Kruse in 2004. And Howard’s son, Jim Kruse because chairman when his Uncle stepped down. Ricky Dickson, not a Kruse family member, became president.
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