Department of Justice Seal


FOR IMMEDIATE RELEASE                                      CRM
WEDNESDAY, JANUARY 7, 1998                           (202) 514-2008
                                                 TDD (202) 514-1888


JUSTICE DEPARTMENT FILES FIRST CRIMINAL ACTION IN TOBACCO FRAUD INVESTIGATION





WASHINGTON, D.C.--The Justice Department today filed its first criminal action in its ongoing investigation of the tobacco industry.

The Fraud Section of the Department of Justice and the U. S. Attorney's Office for the District of Columbia announced that a Criminal Information was filed in the U.S. District Court for the District of Columbia charging DNA Plant Technology Corporation ("DNAP") with one misdemeanor count of Conspiracy to violate the Tobacco Seed Export law, in violation of 18 U.S.C. Section 371.

DNAP has agreed to cooperate with the government in that investigation.

DNAP, based in Oakland, California, is a biotechnology company engaged in the development and improvement of various plant varieties through genetic engineering and advanced breeding techniques.

The Information charges that in 1983 DNAP entered into a contract with a United States tobacco company (which, as an unindicted co-conspirator, the government declined to name as a matter of policy), to grow and improve high-nicotine lines of tobacco. One variety of flue-cured tobacco that was a subject of the contract had a nicotine level of about six percent, which is about twice the normal nicotine level of flue-cured tobacco. The tobacco company gave the high-nicotine tobacco the code name Y-1 and provided it to DNAP, which worked on Y-1 pursuant to the contract.

The Information charges that DNAP conspired with the tobacco company and its Brazilian affiliate to violate a law that prohibited the export of tobacco seed from the United States without a permit. It charges that employees of DNAP and the tobacco companies, on numerous occasions between 1984 and 1991, conspired together to illegally export Y-1 seed and other tobacco seeds to Brazil and a number of other countries. Y-1 was allegedly being grown in these other countries in order to help conceal its development, and because domestic federal regulations prohibited the commercial growth of such a high-nicotine tobacco in the United States. The law prohibiting such exports was repealed in 1991.

The government charges that employees of DNAP and the tobacco company illegally shipped the seed by air express or courier, and smuggled it on their persons when traveling to Brazil.

The Information charges that one of the tobacco company's goals was to develop a reliable source of high-nicotine tobaccos that it could use to control and manipulate the nicotine levels in its cigarettes. It also charges that during the Food and Drug Administration's tobacco investigation in 1994, DNAP knowingly concealed from the FDA information about its contract with the tobacco company and the export of tobacco seeds.

The maximum penalty for the misdemeanor violation is a fine of $200,000 or twice the pecuniary gain to DNAP under the contract.

The Justice Department's investigation of alleged fraud in the tobacco industry is continuing.

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