By Nat Rudarakanchana and Matt Drange
Federal prosecutors are close to concluding a criminal investigation into last fall’s deadly listeria outbreak linked to cantaloupes grown at Jensen Farms, the I-News Network has learned.
Interviews and newly obtained documents also show:
- Conflicts of interest in food safety audits of the farm near Holly are deeper and more widespread than previously reported.
- Private inspection company Bio Food Safety has joined Jensen Farms in filing for bankruptcy, while a settlement fund established for victims of the outbreak is millions of dollars short.
- A memo obtained by I-News shows how private auditing firms might escape liability in foodborne illness cases.
- The latest food safety law, characterized as a “sweeping reform” by the Food and Drug Administration, leaves untouched the problems that allowed Jensen Farms to distribute its tainted melons. Meanwhile, new efforts by members of Congress to fix the problems have gone nowhere, leaving potentially deadly gaps in the food safety inspection system.
Dozens of civil lawsuits have been filed, but await bankruptcy proceedings before they can move forward. I-News has also learned that prosecutors initiated a grand jury investigation last fall, just weeks after the melons were recalled.
Federal investigators could file criminal charges against the farm in Southeast Colorado within the next few weeks, said a source close to the investigation.
Jaime Pena of the U.S. Attorney’s Office in Denver would neither confirm nor deny the investigation, but said the case was “an important public health” issue. However, multiple sources confirmed the criminal investigation to I-News.
One of those sources was Bill Marler, an attorney who represents 42 separate victims in lawsuits against Jensen Farms. Marler said in his experience with similar outbreaks, it took years before federal investigations came to fruition.
“So this…is far more prompt than other investigations we’ve seen,” Marler said. “I certainly got the impression they were moving forward relatively quickly.”
Despite the pace of the investigation, criminal charges could lead to only a small fine.
Sources said charges might be brought under the Food, Drug and Cosmetics Act for the adulteration of food. Under the act, knowingly selling adulterated food is a felony. But doing so without knowledge or intent to defraud consumers is a misdemeanor, penalized by up to a year in prison or a $1,000 fine.
Deadly outbreak in 2011
Last year, Jensen Farms cantaloupe were found to be tainted with the pathogen listeria monocytogenes, sickening 147 people according to the Centers for Disease Control. Another 37 deaths are believed to be associated with the outbreak, making it the deadliest in nearly a century.
On July 18, an investigator from the Office of Criminal Investigations branch of the FDA collected medical releases and health department records for victims of the outbreak.
Anatomy of an outbreak: Jensen Farms
- July 25, 2011: James DiIorio inspects Jensen Farms, and awards them a “superior” rating
- Aug. 29, 2011: First reports of sickness
- Sept. 10, 2011: FDA investigators collect lab samples at Jensen Farms
- Sept. 14, 2011: FDA announces voluntary recall of cantaloupes grown at Jensen Farms
- Oct. 2011: At least one subpoena issued by U.S. Attorney’s Office for a federal grand jury investigation
- Oct. 18, 2011: FDA issues warning letter to Jensen Farms
- Oct. 19, 2011: FDA releases report assessing potential causes of listeria contamination at Jensen Farms
- Oct. 21, 2011: House Energy and Commerce Committee begins Congressional inquiry with a meeting request sent to Ryan and Eric Jensen
- Dec. 8, 2011: CDC issues final report: 146 people sickened, 30 dead and one miscarriage
- Jan. 10, 2012: Congressional Committee on Energy and Commerce issues open letter urging FDA to address problems in third party auditing industry; releases results of Congressional investigation into listeria outbreak
- May 25, 2012: Jensen Farms files for Chapter 11 bankruptcy
- July 18, 2012: Investigator from the FDA’s Office of Criminal Investigations collects medical records of victims to the outbreak
- July 27, 2012: Bio Food Safety files for Chapter 11 bankruptcy
- Sept. 14, 2012: Deadline for victims of the outbreak to submit claims to the court: one year after Jensen Farms recall
Frontera Produce, a Texas distributor of Jensen Farms cantaloupes, also confirmed through spokesman Jim Mulhern that they were aware of a criminal investigation and were contacted about the investigation earlier this year.
I-News obtained a memo prepared after the outbreak by a law firm that advises private food safety auditing companies. The memo outlined how companies could avoid liability for sickness and death because consumers never review their auditing reports.
And even if consumers did see the reports, the memo argued, they need to take steps to protect themselves. Either way, inspectors should be able to “escape with no liability.”
No food safety auditing company has ever been found liable in litigation brought by consumers, Marler said.
Two private food safety auditing companies were involved in the Jensen Farms case. Jensen Farms hired PrimusLabs, a California-based company, to audit the farm. PrimusLabs in turn subcontracted the work to Texas-based Bio Food Safety.
If either company is found partially responsible for the outbreak, the case could set a new legal precedent for an industry that critics say lacks accountability.
On July 27, Bio Food Safety filed for Chapter 11 bankruptcy. The company then filed a motion to consolidate its case with Jensen Farms’, which filed for bankruptcy in May.
The two companies, along with Pepper Equipment, have agreed to a settlement, Marler said. Together, they have placed roughly $4.5 million in a settlement pool.
As of July 23, medical bills amounted to more than $6.5 million for Marler’s clients alone, not counting the half dozen victims represented by other attorneys. This means that if everyone who’s eligible submits a claim, they will receive only a percentage of their total medical costs. Marler said he is considering suing retailers for the remainder.
Outside attorney Al Maxwell is overseeing the process as special claims administrator. Maxwell served a similar role in litigation involving the Peanut Corporation of America, which received a glowing audit by private inspection company AIB International shortly before a widespread salmonella outbreak in 2008.
Given the number of potential claimants, Maxwell said, “I think it’s fair to say that if there’s $4.5 million they could exceed that amount. Perhaps significantly.”
‘Just how the industry works’
Although the conflicts of interest inherent in private food inspections have been widely reported, the conflicts found at Jensen Farms go deeper. The company that inspected the operation had previously acted as a consultant to the farm.
Bio Food Safety founder Jerry Walzel audited Jensen Farms in August 2010, but afterward recommended as a consultant that brothers Ryan and Eric Jensen purchase different washing equipment. A used potato washing machine was shipped to the farm on July 20,invoice statements show – five days before Walzel sent one of his inspectors to audit the farm.
It was that very piece of equipment that federal investigators believe may have been one source of the listeria. When one of Walzel’s inspectors visited the farm again last July, he did not note any issues with the potato washer, and under federal guidelines is not required to notify the FDA of equipment changes.
Several auditors and industry experts said that to audit a food producer after consulting and recommending food safety changes is a serious conflict of interest, especially if the auditing and consulting both happen within a two-year window. In that scenario, they said, to audit is to examine and grade your own work as a consultant.
It’s unclear if PrimusLabs knew of Walzel’s dual roles.
“If Jerry was doing some consulting for them and didn’t tell us, that would make us pretty angry,” said a source familiar with PrimusLabs. “Most auditors will tell us if they’ve done work for a client in the past and will say that they cannot audit in this case.”
Reached at his Texas home earlier this year, Walzel would not comment on either his 2010 audit or his company’s audit last July, citing advice from his attorney Milton Colia. None of the four employees listed on Bio Food Safety’s website returned calls for comment.
Ryan and Eric Jensen declined to comment through their attorney.
Several contract auditors told I-News that employers rarely monitor or investigate conflicts of interest. If an auditor first recommends food safety measures as a consultant to a farm and later audits their own work, they are expected to disclose the relationship upfront.
Craig Bovee, a Texas farmer previously audited by Walzel, said that when it comes to consulting and auditing simultaneously, “it’s just how the industry works.”
Before becoming an auditor, Walzel worked for 18 years as a Texas game warden, his resume shows. He eventually became vice president of government affairs for the Texas Produce Association in 1987, and worked as a lobbyist.
On May 30, 2002, Walzel registered his auditing company, Bio Food Safety Inc., with the Texas Secretary of State, incorporation records show. Since 2009, Walzel has conducted numerous audits for the California-based PrimusLabs, including three produce facilities in Texas and an onion farm in Mexico.
While Walzel would not comment on his work for Jensen Farms, he estimated he had done 1,000 audits in his career, and added that he “had nothing to hide,” before declining to answer further questions.
“Nobody is going to be brought back from the grave,” if I talk to you, Walzel said.
Little comprehensive data exist on the scope of the private auditing industry, which isn’t regulated by the FDA.
The agency doesn’t track which among its 1,800 staff investigators (tasked with both foreign and domestic inspections, among other things) are responsible solely for food safety. With an estimated 186,000 farms across the country inspecting each one is impossible, said FDA investigator Jim Gorny, who visited Jensen Farms last September.
The agency had never been to Jensen Farms prior to the outbreak.
“We can’t be everywhere all the time. It’s just not possible,” said Gorny, a private auditor before joining the FDA and a key investigator in the Jensen Farms outbreak. “Our job is not to make food safe. Our job is to set the standards and make sure that people are complying with them.”
The private auditing industry in the United States remained largely untouched by the Food Safety Modernization Act signed into law last year. While the act develops a model to approve and certify foreign food safety auditors, it does not give the FDA authority to regulate domestic auditors.
The agency doesn’t track the size of the industry, does not keep a directory of individual firms, and does not investigate private auditing firms with dubious track records, an FDA spokesman confirmed.
“Unfortunately, we’re going to see more of this,” said microbiologist Mansour Samadpour, president of IEH food testing lab. He compared a third-party audit to a person who claims to be a physician, but only takes your pulse.
“Even if they do the work properly, these are not food safety audits. They are being sold as them, but they are not.”
In January, U.S. Rep. Diana DeGette of Denver and three other Democratic members of the House Energy and Commerce Committee called for the FDA to reconsider its approach to third party auditing in an open letter to FDA commissioner Margaret Hamburg. The letter emphasized that auditors often don’t require food safety flaws to be corrected, don’t conduct thorough and unannounced audits, and face serious conflicts of interest.
The lawmakers requested that the FDA reform its industry regulation and guidance in light of Jensen Farms, suggesting that the agency develop a model for U.S. auditors that could act as a standard.
Since then, the committee has done no follow up work on the issue of conflicts of interest among auditing companies, said Karen Lightfoot, spokeswoman for ranking member Rep. Henry Waxman (D-Calif.). DeGette did not respond to several requests for comment.
But one model for fixing food safety auditing may already exist. It’s called the Global Food Safety Initiative, or GFSI.
Under GFSI guidelines, auditors must be uniformly trained and qualified. Problems found during GFSI audits must be fixed before a farmer, grower or shipper can pass. Provisions safeguard against conflicts of interest like those in the Jensen Farms case.
In 2008, Walmart began requiring produce suppliers to undergo GFSI approved audits. But ensuring GFSI audits takes time, Walmart learned. As the company became more involved in implementing the new requirements, it realized the need to extend the deadline for suppliers to meet the higher standards, a spokesman said.
A letter issued by Walmart to produce suppliers in 2010 shows the retailer extended the deadline for GFSI certification to December 2011, a move that allowed Jensen Farms’ contaminated cantaloupes to reach Walmart’s shelves last year.
GFSI audits can cost thousands of dollars more than proprietary ones. In many cases smaller companies are more likely to seek a non-GFSI audit, said Bill Schwartz, a former manager at an auditing firm who now teaches an online training course for auditors.
Like other auditing companies, PrimusLabs offers both GFSI-approved audits and proprietary audits subject to their own internal standards. The latter is what Jensen Farms chose last year.
Private inspections like the one conducted at Jensen Farms are the “subprime mortgages” of food safety audits, said Benjamin Marchant, vice president of business development for private auditing firm NCSI Americas Inc., which conducts GFSI equivalent audits.
Roughly half of the audits conducted in the U.S. this year will be proprietary, Marchant said.
“They’re just accidents waiting to happen,” Marchant said. “Everyone knows that. There’s just no rules around them and there’s no consequences. There’s no one with any teeth or the ability to say, ‘No, that’s not right.’ ”
Additional reporting contributed by Jeff Green, Nathaniel Herz, Benjamin Sales and Sean Easter. All six reporters are recent graduates of Columbia University’s Toni Stabile Center for Investigative Journalism.
The I-News Network is a nonprofit newsroom collaborating with Colorado news organizations to cover important issues. Learn more at iNewsNetwork.org
Editor’s Note: This story has been updated to correct the name and the company for Benjamin Marchant. An earlier version was incorrect.