http://www.businessweek.com/news/2013-02-21/peanut-corp-dot-of-america-executives-indicted-over-salmonella

Bloomberg News

Peanut Corp. of America Officials Charged Over Salmonella

February 21, 2013

Peanut Corp. President Stewart Parnell

Stewart Parnell, owner and president of the Peanut Corp. of America, is sworn in before a House Energy and Commerce Committee hearing on Capitol Hill in Washington, D.C. in a Feb. 11, 2009 file photo. Photographer: Mark Wilson/Getty Images

Four former officials of the Peanut Corp. of America were indicted by the U.S. over the sale of salmonella-tainted peanut products that sparked national outrage in 2009 after being tied to nine deaths.

Stewart Parnell, president of the now liquidated Peanut Corp., was charged along with three managers in a 76 count indictment unsealed yesterday in federal court in Albany, Georgia. He’s charged with conspiracy, wire fraud and introduction of adulterated food into interstate commerce with intent to defraud or mislead.

“It was part of the conspiracy that the defendants and others shipped and caused to be shipped peanut products before receiving the results of microbiological testing performed on said products,” according to the 52-page indictment.

The charges were filed four years after the salmonella outbreak set off a political firestorm in Washington. The recall sparked by Peanut Corp., one largest in the U.S., took more than 800 products made with peanuts off the shelves including cookies, crackers and cereal. Congress called Parnell to testify while President Barack Obama urged a “complete review” of the U.S. Food and Drug Administration because it failed to prevent contamination of peanut butter linked to the nine deaths and more than 700 illnesses.

Processing Plants

Closely held Peanut Corp., based in Lynchburg, Virginia, filed for bankruptcy in 2009 after the outbreak was traced to its processing plants in Georgia and Texas. Dead rodents and droppings were found near a production area, according to the Texas Department of State Health Services.

“When food or drug manufacturers lie and cut corners, they put all of us at risk,” Stuart Delery, who heads the Justice Department’s civil division, said at a news conference today in Washington.

Also named in the indictment are Michael Parnell, a vice president in charge of sales, Samuel Lightsey, an operations manager, and Mary Wilkerson, a quality assurance manager.

Daniel Kilgore, operations manager of Peanut Corp.’s plant in Blakely, Georgia, pleaded guilty yesterday to charges including conspiracy, fraud and introduction of adulterated products, according to prosecutors.

Food Companies

Kilgore conspired with the Parnells and Lightsey in a scheme to manufacture and ship salmonella-contaminated peanuts and peanut products to customers, including family-owned businesses and global food companies, according to the indictment. The customers aren’t identified by name in the indictment.

Prosecutors said that even when laboratory testing revealed the presence of salmonella in products at the Blakely facility, the conspirators failed to alert their customers. They also fabricated documents that showed the products were free of pathogens when no tests had been conducted or lab results tested positive for salmonella, according to the indictment.

Wilkerson, along with Stewart Parnell and Lightsey, are accused of trying to mislead inspectors from the FDA Administration who visited the plant on multiple occasions while investigating the salmonella outbreak.

Lawyers for Stewart Parnell said as the case develops “it will become apparent that the FDA was in regular contact with PCA about its food handling policy and was well aware of its salmonella testing protocols.”

No Intent

It will also be clear that Parnell “never intentionally shipped or intentionally caused to be shipped any tainted food products capable of harming PCA’s customers,” according to a statement from Tom Bondurant and William Gust of Gentry Locke Rakes & Moore LLP.

Lawyers for the other defendants couldn’t be immediately identified.

Internal company e-mails released by a House subcommittee in 2009 showed Stewart Parnell feared losses tied to salmonella. After some products tested positive for salmonella in one lab, no bacteria were found in re-testing and Parnell told Lightsey to “turn them loose.”

On Jan. 19, 2009, the week after the company recalled bulk peanut butter and peanut paste made at its Georgia plant, Parnell pleaded with an FDA official to let the company ship raw peanuts from the Georgia plant to the company’s Texas plant, according to another e-mail message. A truckload had been shipped the previous week.

Peanut Money

“Obviously we are not shipping any peanut butter products affected by the recall but desperately at least need to turn the Raw Peanuts on our floor into money,” according to the e-mail. “We have other raw peanuts on our floor that we would like to do the same with … This is material that would be cooked/further processed by us in our Texas facility and tested afterwards as all our products are.”

Sally Greenberg, executive director of the National Consumers League, a Washington-based advocacy group, said she was gratified that the Justice Department took action against the officials.

“When food manufacturers choose to disregard food safety rules, ignore evidence that their products are dangerous and as a result consumers become ill and even die, they should be held responsible in a court of law,” Greenberg said in an e-mailed statement.

Michael Moore, U.S. attorney in Georgia, said the investigation took time because of its complexity, as well as the alleged obstruction by the company’s executives.

“We count on people who are supplying food to be honest when we have an emergency like this,” Moore told reporters today in Washington. “When they don’t, that obviously makes law enforcement’s job and the health agencies job more difficult.”

Moore said his office has been in contact with lawyers for the individuals indicted and expects them to appear in court within the next week. No arrests were made.

The case is U.S. v. Parnell, 13-cr-00012, U.S. District Court, Middle District of Georgia (Albany).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net; Phil Mattingly in Washington at pmattingly@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net; Steven Komarow at skomarow1@bloomberg.net


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