Quality Egg, Company Owner and Top Executive Sentenced in Connection with Distribution of Adulterated Eggs
The company owner, a top executive and their company, Quality Egg LLC, were sentenced today in federal district court in Sioux City, Iowa, the Department of Justice announced.
Austin “Jack” DeCoster, 81, of Turner, Maine, who owned Quality Egg, was sentenced to serve three months in prison to be followed by one year of supervised release, and fined $100,000. His son, Peter DeCoster, 51, of Clarion, Iowa, who was Quality Egg’s chief operating officer, was also sentenced to serve three months in prison to be followed by one year of supervised release, and fined $100,000. Quality Egg was sentenced to pay a fine of $6.79 million and placed on probation for three years. All three defendants were ordered to make restitution in the total amount of $83,008.19. Quality Egg also agreed to forfeit $10,000 as part of its plea agreement with the government. The defendants were sentenced by U.S. District Court Judge Mark W. Bennett in the Northern District of Iowa.
On June 3, 2014, Quality Egg, an egg production company with operations in Wright County, Iowa, pleaded guilty to one count of bribery of a public official, one count of introducing a misbranded food into interstate commerce with intent to defraud and one count of introducing adulterated food into interstate commerce. Jack and Peter DeCoster each pleaded guilty to one count of introducing adulterated food into interstate commerce. In plea agreements, the company and the father and son admitted that the company’s shell eggs were adulterated in that they contained a poisonous and deleterious substance, Salmonella Enteriditis, which may have rendered the eggs injurious to health.
During the spring and summer of 2010, adulterated eggs produced and distributed by Quality Egg were linked to approximately 1,939 reported consumer illnesses in multiple states—a nationwide outbreak of salmonellosis that led to the August 2010 recall of millions of eggs produced by the defendants.
“The message this prosecution and sentence sends is a stern one to anyone tempted to place profits over people’s welfare,” said the U.S. Attorney Kevin W. Techau of the Northern District of Iowa. “Corporate officials are on notice. If you sell contaminated food you will be held responsible for your conduct. Claims of ignorance or 'I delegated the responsibility to someone else’ will not shield them from criminal responsibility.”
“American consumers deserve to feel secure that the eggs they eat are safe and produced in sanitary conditions,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “The Department of Justice will pursue and prosecute those whose criminal conduct compromises the safety of our food supply.”
“Food manufacturers have a responsibility to produce and sell food that is safe for consumers to eat,” said Dr. Stephen Ostroff, U.S. Food and Drug Administration (FDA) Acting Commissioner. “Eggs are commonly consumed nationwide, both on their own and as ingredients in other foods. When manufacturers fail to produce safe food, the FDA will take action to protect public health.”
As noted in the government’s memorandum regarding sentencing, Quality Egg personnel had, for years, disregarded food safety standards and practices and misled major customers, including Walmart, about the company’s food safety practices. In the memorandum filed with the court, the government noted that since 2006, the company had commissioned tests to detect Salmonella Enteriditis in its layer barns and in the organs of its layer hens, that the results came back positive on 47 percent of the days tested, and that the frequency of positive test results grew in the months leading up to the August 2010 recall. As part of the memorandum, the government also argued that the evidence indicated that Quality Egg personnel took steps to conceal from regulators and customers the company’s failures to follow food safety standards and practices, that Quality Egg created food safety plans that included inaccurate claims about the company’s biosecurity and pest control practices, and that Quality Egg falsified documents for the food safety audits required by various customers.
Quality Egg pleaded guilty to bribing an inspector of the U.S. Department of Agriculture (USDA) to release eggs that had been retained for quality issues. Quality Egg acknowledged that, on at least two occasions in 2010, its employees gave a cash bribe to a USDA inspector. The USDA inspector’s job responsibilities included inspecting shell eggs at one or more of Quality Egg’s production facilities in Iowa. Quality Egg admitted that its employees provided the bribe to the USDA inspector (now deceased) in an attempt to corruptly influence the inspector to exercise his authority to release pallets of retained eggs for sale without re-processing the eggs as required by law and USDA standards. The eggs had been retained or “red tagged” for failing to meet minimum USDA quality grade standards. Former Quality Egg employee Tony Wasmund, 64, of Willmar, Minnesota, pleaded guilty in September 2012 to one count of conspiracy to bribe a public official, sell restricted eggs with intent to defraud and introduce misbranded food into interstate commerce with intent to defraud and mislead. Wasmund is scheduled to be sentenced by U.S. District Court Judge W. Bennett on May 15 at 8:30 a.m.
Quality Egg also pleaded guilty to introducing misbranded eggs into interstate commerce with the intent to defraud. As part of its plea agreement, Quality Egg admitted that, beginning no later than January 2006 and continuing through Aug. 12, 2010, its employees affixed labels to egg shipments that indicated false expiration dates with the intent to mislead state regulators and retail egg customers regarding the true age of the eggs. Quality Egg acknowledged that there were a number of ways that the company mislabeled older eggs with newer processing and expiration dates prior to shipping the eggs to customers in California, Arizona and other states. Sometimes Quality Egg personnel did not put any processing or corresponding expiration dates on the eggs when they were processed. The eggs would be kept in storage for several days or up to several weeks. Then, just prior to shipping the eggs, Quality Egg personnel labeled the eggs with processing dates that were false in that the dates were more recent than the dates that the eggs had actually been processed and with corresponding false expiration dates.
The case was prosecuted by Assistant U.S. Attorney Peter Deegan of the Northern District of Iowa and Trial Attorneys Lisa Hsiao and Christopher Parisi of the Civil Division’s Consumer Protection Branch. They were assisted by Associate Chief Counsel Michael Varrone of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division. The case was investigated by FDA’s Office of Criminal Investigations, the USDA’s Office of Inspector General and the FBI.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 14-CR-3024.