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121.

Sample Indictment -- Food Fraud Prosecution -- Conspiracy Count

The Grand Jury charges:

COUNT 1

Conspiracy

At times material to this Indictment:

1. Moon Down Beverages, Inc., ("Moon Down") was a corporation engaged in the business of purchasing, manufacturing, processing, labeling, holding, shipping, and selling in interstate commerce foods labeled as and otherwise represented to be unsweetened concentrated orange juice products [NOTE: names and places changed from original]. Customers for those products used them to make, among other things, consumer packages purporting to be frozen concentrated orange juice or single strength orange juice. Moon Down also sold other purported juice concentrates and various drinks. Moon Down's principal places of business were located at 1234 Blueberry Lane, Louisville, Kentucky, from at least 1985, and a location at 9876 Local Highway near Louisville, from in or about early January 1986, until on or about December 22, 1989. Moon Down did business at 1 Moon Down Road in Benton, Kentucky, from in or about July 1989 until at least the summer of 1991 when Moon Down ceased doing business under that name.

2. From on or about July 22, 1983, until at least March 1991, defendant XXXX X. XXXX was an owner, director, and officer of Moon Down. He held the title of President.

3. From on or about July 22, 1983, until at least March 1991, defendantXXXXX X. XXXX was an owner, director, and officer of Moon Down. She held the titles of Secretary/Treasurer and Registered Agent.

4. From on or about September 20, 1985, until at least March 1991, defendant XXXXX X. XXXX was an officer of Moon Down. He held the titles of Vice-President and Operations Manager.

5. From on or about September 20, 1985, until at least March 1991, defendant XXXX XXXXXXX XXXX was an officer of Moon Down. He held the title of Vice-President, Sales and Marketing.

6. From at least as early as Spring 1986 until in or about Summer 1990, defendant XXXXXX XXXXXX was an owner, officer, or agent of an entity known as "Sugar Base Company," "SBC Inc.," or "SBC Brokers." At various times, he held the titles of President, owner, and Secretary/Treasurer of that entity. At various times he also worked for Moon Down.

7. From at least as early as Spring 1986 until in or about Summer 1990, defendant XXXXXXXX XXXX XXXXXX was an owner, officer, or agent of an entity known as "Sugar Base Company," "SBC Inc.," or "SBC Brokers." At various times, she held the titles of General Manager, President, and owner of that entity. For a period of time she also worked for Moon Down.

8. From at least June 1985 until the date of this Indictment, defendant XXX XXXXXX XXXXXXXX worked at one or more of the above-described Moon Down plants. At various times, he held the titles of Production Manager and Plant Manager of Moon Down.

9. Beet sugar and cane sugar were commodities that, in commercial transactions involving large volumes, could be purchased and sold at prices that were commonly less than 35 cents per pound. A pound of orange solids (that is, the non-water portion of concentrated orange juice) was typically purchased or sold at substantially higher prices, generally in the range of $1.00 to $2.20 per pound.

10. The United States Food and Drug Administration ("FDA") was the federal agency charged with the responsibility of protecting the American consuming public by, among other things, ensuring that foods were what they were represented to be by manufacturers and distributors of those products. FDA's responsibilities included attempting to ensure that products sold as unsweetened fruit juice did not contain added sugar.

THE CONSPIRACY

11. Beginning at a time unknown to the Grand Jury but at least as early as January 1985, and continuing until at least Spring 1991, in the Western District of Kentucky, in Jefferson County, Kentucky, and elsewhere, the defendants,

XXXXX X. XXXX,

XXXXX X. XXXX,

XXXXXX X. XXXX,

XXXXX XXXXXXX XXXX,

XXXXXXX XXXXXX,

XXXXXXXXX XXXX XXXXXX, and

XXXX XXXXXX XXXXXXXX,

along with other persons known and unknown to the Grand Jury, did willfully and knowingly combine, conspire, confederate, and agree to violate the Federal Food, Drug, and Cosmetic Act, Title 21, United States Code, Sections 331(a), and (k), and 333(b) (since July 22, 1988, Title 21, United States Code, Section 333(b) has been recodified as Title 21, United States Code, Section 333(a)(2)), to violate the Federal Mail Fraud statute, Title 18, United States Code, Section 1341, and to defraud the United States and agencies thereof, including FDA.

12. It was an object and goal of the conspiracy to increase the sales and profits of Moon Down, and the salaries and other compensation of the defendants, by concealing the fact that substantially less expensive sugar and other ingredients were substituted for some of the orange concentrate in products defendants were falsely representing to be unsweetened concentrated orange juice products. In order to conceal the substitution of sugar for orange concentrate in orange juice products falsely represented to be unsweetened, defendants and their co-conspirators caused to be designed and used hidden rooms to facilitate the undetected addition of liquid sugar to orange juice concentrate, created false documents to hide the identity and usage of sugar and sugar-containing products, destroyed documents, and misrepresented their actions to government personnel and others. By substituting sugar for some of the orange concentrate and then selling the resulting mixture as unsweetened orange concentrate, defendants were able to sell products at fraudulently inflated prices. As a direct consequence of defendants' misrepresentations and unlawful acts, Moon Down's sales increased from virtually nothing in 1984 to more than $57 million in 1989, with a sales goal of $77 million for 1990. In 1990, Moon Down represented itself as "the largest bulk blender of orange juice in North America and one of the largest in the world."

13. It was part of the conspiracy that the defendants and their co-conspirators would and did, with the intent to defraud and mislead, introduce and deliver for introduction, into interstate commerce, adulterated and misbranded foods, to wit: foods labeled as, and otherwise represented to be, orange juice concentrate, concentrated orange juice for manufacturing, and frozen concentrated orange juice; and did acts, while such foods were held for sale after components of those foods had been shipped in interstate commerce, resulting in such foods being adulterated and misbranded, namely, falsely labeling and otherwise misrepresenting foods to be orange juice concentrate, concentrated orange juice for manufacturing, and frozen concentrated orange juice.

14. It was further part of the conspiracy that the defendants and their co-conspirators caused foods labeled as, and otherwise represented to be, orange juice concentrate, concentrated orange juice for manufacturing, and frozen concentrated orange juice, to be adulterated within the meaning of Title 21, United States Code, Sections: 342(b)(1), in that valuable constituents, namely, orange juice and orange juice concentrate, were, in part, omitted and abstracted therefrom; and 342(b)(2), in that beet sugar, syrup containing sugar, citric acid, and other ingredients were substituted in part for valuable constituents, namely, orange juice and orange juice concentrate; and 342(b)(3), in that citric acid was added to those foods to conceal damage and inferiority; and 342(b)(4), in that citric acid was added to and mixed and packed with those foods so as to make them appear better and of greater value than they were.

15. It was further part of the conspiracy that the defendants and their co-conspirators caused foods labeled as, and otherwise represented to be, orange juice concentrate, concentrated orange juice for manufacturing, and frozen concentrated orange juice, to be misbranded within the meaning of Title 21, United States Code, Sections: 343(a)(1), in that labeling of those foods was false and misleading, because the labeling represented and suggested that the foods consisted only of orange juice concentrate, unsweetened concentrated orange juice for manufacturing, and unsweetened concentrated orange juice, when in fact those foods contained large amounts of beet sugar, as well as citric acid and other ingredients; 343(b), in that foods composed of large amounts of beet sugar, as well as citric acid and other ingredients, were offered for sale under the name of other foods, namely orange juice concentrate, unsweetened concentrated orange juice for manufacturing, and unsweetened frozen concentrated orange juice; and 343(g), in that foods represented to be foods for which definitions and standards of identity were prescribed by regulation (21 C.F.R. §§ 146.146 and 146.153), namely, frozen concentrated orange juice and concentrated orange juice for manufacturing, failed to conform to those definitions and standards of identity, in that they were composed, in part, of ingredients not permitted by the definitions and standards of identity, including beet sugar and cane sugar (without a labeling statement), and citric acid.

16. It was further part of the conspiracy that the defendants and their co-conspirators would and did devise a scheme to defraud Moon Down's customers by selling them products that were represented to be unsweetened orange juice concentrate products when in fact the products consisted in part of cheaper ingredients such as sugar. For the purpose of carrying out that scheme, the defendants caused items to be placed in and taken from the United States mails.

17. It was further part of the conspiracy that the defendants and their co-conspirators sought to impair, impede, and defeat the United States' efforts to regulate and control the manufacture and distribution of orange concentrate products, in that defendants and their co-conspirators attempted to cover up the addition of sugar and other substances to products sold as unsweetened orange juice products, and to prevent government personnel from uncovering those activities.

MEANS AND MANNERS

18. The defendants and their co-conspirators used the following means and manners, among others, in furtherance of the conspiracy:

a. Defendant XXXXX X. XXXX and his co-conspirators, including other defendants, caused Moon Down and related entities to acquire over 20,000,000 pounds of sugar (including liquid sugar), the vast majority of which was mixed with, and thereafter sold as though it were in fact, orange concentrate, thereby defrauding Moon Down's customers, others, and the consuming public of in excess of $20,000,000.
b. Defendants XXXXXXX XXXXXX and XXXXXXXXX XXXX XXXXXX operated an entity called "Sugar Base Co.," "SBC, Inc.," and "SBC Brokers" to purchase sugar for use by Moon Down and related entities in a way that disguised Moon Down's connection with the sugar.
c. Defendant XXXXX X. XXXX controlled the paperwork related to Moon Down's acquisition of sugar.
d. Defendant XXXXX XXXXXXX XXXX and other defendants tried to learn how added sugar could be detected by scientific tests on fruit juices, in an attempt to maintain a type and amount of sugar in their products at levels that could not be detected through scientific analysis.
e. Defendants XXXXXX X. XXXX and XXXX XXXXXX XXXXXXXX directed the secret mixing of sugar with orange concentrate at Moon Down's plants and other locations, including a facility in Russellville, Kentucky, owned by Mid South Juice Processors, Inc., a corporation owned and controlled by defendants XXXXX X. XXXX and XXXXX X. XXXX.
f. Defendants XXXXX X. XXXX, XXXXXX X. XXXX, and XXXX XXXXXX XXXXXXXX caused "secret rooms" to be created and maintained in Moon Down's plants in which sugar was stored, and from which sugar could be pumped through pipes whose presence and purpose were deliberately hidden.
g. Defendant XXXXX X. XXXX caused Moon Down and related entities to purchase and sell products containing sugar, the documentation for which disguised the true identity of those products.
h. Defendants and co-conspirators used codes such as "solids," "liquid," "preblend," and "blend" to refer to sugar and orange syrup, and caused other employees of Moon Down to use such codes.
i. Defendants XXXXX X. XXXX, XXXXX X. XXXX, and XXXXXX X. XXXX caused Moon Down to do business with various entities to provide a plausible basis for false explanations in the event defendants were ever questioned about sugar that Moon Down was acquiring and in fact mixing with products later sold by Moon Down as unsweetened orange concentrate products.
OVERT ACTS

19. In furtherance of the conspiracy, and to effect the objects thereof, in the Western District of Kentucky and elsewhere, the defendants and co-conspirators, committed the following overt acts, among others:

a. Between approximately January 1985 and August 1985, Moon Down acquired approximately 16 shipments of beet sugar from a firm in Michigan.
b. Between approximately September 1986 and April 1990, defendants XXXXXXXXX XXXX XXXXXX and XXXXXXX XXXXXX ordered hundreds of truckloads of beet sugar from a firm located in Heart, Indiana.
c. On numerous occasions between 1985 and 1990, defendant XXXXX X. XXXX wrote checks to pay for beet sugar that Moon Down or related entities acquired.
d. On or about August 14, 1986, Moon Down created an invoice for a shipment of sugar to a firm in Florida, falsely identifying the product shipped as "ORANGE CONCENTRATE."
e. On or about July 27, 1988, defendant XXXXXX X. XXXX, on behalf of Moon Down, ordered six storage tanks of approximately 13,000 gallons each that were subsequently delivered to a facility Moon Down was building in Benton, Kentucky.
f. In or about April 1989, defendant XXXXXX X. XXXX, on behalf of Moon Down, caused the delivery of two storage tanks of approximately 7,360 gallons each to a facility Moon Down was building in Benton, Kentucky.
g. In or about spring or summer 1989, defendant XXXXXX X. XXXX directed the creation of a room in Moon Down's Benton, Kentucky, plant that was hidden from view and accessible only through a fake electrical control panel, the purpose of which was to hide the presence of two tanks and related pipes, pumps, and valves in the plant, in order to facilitate the undetected addition of liquid sugar to orange juice concentrate.
h. On various occasions between 1986 and April 1990, defendant XXXX XXXXXX XXXXXXXX caused loads of sugar to be delivered during daylight hours to locations near, but not visible from, Moon Down's Louisville and Benton plants, which loads of sugar were subsequently moved to the plant and unloaded under cover of darkness.
i. On or about February 14, 1988, defendant XXXXX X. XXXX signed a "Continuing Commodity Guaranty" falsely assuring a customer that a food represented to be orange juice concentrate that Moon Down was sending the customer was not adulterated or misbranded under the Federal Food, Drug, and Cosmetic Act.
j. On or about July 20, 1988, defendants XXXXXXX XXXXXX and XXXXXXXXX XXXX XXXXXX arrived at a workshop on detection of adulterated fruit juices, falsely identifying themselves as representatives of an accounting firm.
k. On or about August 18, 1988, defendant XXXXX XXXXXXX XXXX falsely assured representatives of a customer that Moon Down's products represented to be orange juice concentrate were not being adulterated by Moon Down.
l. On or about August 9, 1989, defendant XXXXX XXXXXXX XXXX arrived at a workshop on detection of adulterated fruit juices, falsely identifying himself as a representative of an accounting firm.
m. On or about January 23, 1990, defendants XXXXXXX XXXXXX and XXXXXXXXX XXXX XXXXXX caused the mailing of invoice stubs and payment for invoices to a firm in Heart, Indiana.
n. On or about May 2, 1990, defendant XXXXX XXXXXXX XXXX sent a sample of product to a laboratory in Massachusetts, identifying the product for analysis as "Orange Concentrate."
o. On numerous occasions between September 1986 and December 1990, defendants XXXXX X. XXXX, XXXXXX X. XXXX, and XXXX XXXXXX XXXXXXXX caused Moon Down to ship to customers products falsely certified to be unsweetened concentrated orange juice for manufacturing when in fact the products shipped contained substantial quantities of beet sugar. The false certification documents said in words or substance that "Any person who [does] knowingly falsely make, [or] issue, . . . this certificate, or participate in any such actions, is subject to a fine . . . or imprisonment . . . or both."
p. In the period of approximately February to March, 1990, defendant XXXXX X. XXXX caused approximately 8 tankers of sugar to be shipped from a firm in St. Louis to a firm related to Moon Down, but which were invoiced so as not to identify the product as sugar.
q. On or about May 25, 1990, defendant XXXXX X. XXXX wrote to a customer in Yonkers, New York, falsely stating that "Moon Down Foods does not ship any product . . . that is adultered [sic] in any way. . . . As always, we are continuing to do business in an honest and forthright manner."
r. On or about May 29, 1990, defendant XXXXX X. XXXX wrote to a customer in Whitehouse, New Jersey, falsely stating that "Moon Down Foods does not ship any product . . . that is adultered [sic] in any way. . . . As always, we are continuing to do business in an honest and forthright manner."
s. On or about May 31, 1990, defendant XXXXX X. XXXX, responding to allegations that one of Moon Down's orange juice products had been found to contain sugar, wrote a letter to a trade association in which he disputed claims that Moon Down's products contained sugar, and stated that he had "no confidence that its [FDA's] tests will ever accurately identify the existence of added sugar" in orange juice products.
t. On or about July 6, 1990, defendant XXXXX X. XXXX falsely wrote to a representative of FDA that he and others at Moon Down "do our very best to ensure that the laws of this country, including all laws and regulations of the Federal Food, Drug and Cosmetic Act, are followed."
All in violation of Title 18, United States Code, Section 371........

[cited in USAM 4-8.255]