"Groeb Honey Farms" Case
Two Companies and Five Individuals Charged With Roles in
Illegal Honey Imports; Avoided $180 Million in AntiDumping Duties
CHICAGO — Five individuals and two domestic honey
processing companies have been charged with federal crimes in connection
with a nationwide
investigation of illegal importations of honey from
China that was mislabeled as coming from other countries to avoid
antidumping duties or was
adulterated with antibiotics not approved for use in
honey. Altogether, the seven defendants allegedly avoided antidumping
duties totaling more
than $180 million.
None of the charges allege any instances of illness or other public health consequences attributed to consumption of the honey.
The charges represent the second phase of an
investigation led by agents of U.S. Immigration and Customs
Enforcement’s (ICE) Homeland
Security Investigations (HSI). In June 2011, an
undercover agent assumed the role of director of procurement at
defendant HONEY HOLDING I,
LTD., which by then was cooperating with the
investigation.
Honey Holding, doing business as Honey Solutions, of
Baytown, Tex., and defendant GROEB FARMS, INC., of Onsted, Mich., two of
the nation’s
largest honey suppliers, have both entered into deferred
prosecution agreements with the government, subject to court approval,
with Honey Holding
agreeing to pay a $1 million fine and Groeb Farms
agreeing to the payment of a $2 million fine. Both companies have
agreed to implement corporate
compliance programs as part of their respective
agreements.
The individual defendants include three honey
brokers, as well as DOUGLAS A. MURPHY, former director of sales for
Honey Holding, and DONALD COUTURE,
president of Premium Food Sales, Inc., a broker and
distributor of raw and processed honey in Bradford, Ontario.
In December 2001, the Commerce Department determined
that Chinese-origin honey was being sold in the United States at less
than fair market value, and
imposed antidumping duties. The duties were as high as
221 percent of the declared value, and later were assessed against the
entered net weight, currently
at $2.63 per net kilogram, in addition to a “honey
assessment fee” of one cent per pound of all honey. In October 2002,
the Food and Drug Administration issued
an import alert for honey containing the antibiotic
Chloramphenicol, a broad spectrum antibiotic that is used to treat
serious infections in humans, but which is
not approved for use in honey. Honey containing certain
antibiotics is deemed “adulterated” within the meaning of federal food
and drug safety laws.
In 2008, federal authorities began investigating
allegations involving circumventing antidumping duties through illegal
imports, including transshipment
and mislabeling, on the “supply side” of the honey
industry. The investigation resulted in charges against 14 individuals,
including executives of Alfred L.
Wolff GmbH and several affiliated companies of the
German food conglomerate whose U.S. honey-importing business was based
in Chicago, and others for allegedly
avoiding approximately $80 million in antidumping
duties on Chinese-origin honey. Authorities seized and forfeited more
than 3,000 drums of honey that entered
the country illegally.
The second phase of the investigation, announced
today, involves allegations of illegal buying, processing, and trading
of honey that illegally entered the
U.S. on the “demand side” of the industry. The
investigation is continuing.
“We applaud the efforts of HSI, Customs and Border
Protection, and other agencies involved in this complex, long-term
investigation to enforce the laws that exist
to protect U.S. consumers and the honey market,” said
Gary S. Shapiro, United States Attorney for the Northern District of
Illinois.
“These businesses intentionally deprived the U.S.
government of millions of dollars in unpaid duties,” said ICE Deputy
Director Daniel Ragsdale. “Schemes
like these result in legitimate importers and the
domestic honey-producing industry enduring years of unprofitable
operations, with some even being put out of
business. We will continue to enforce criminal
violations of antidumping laws in all industries and ports of entry so
American businesses and foreign producers
of goods all play by the same rules.”
Also announcing the charges were Gary Hartwig,
Special Agent-in-Charge of HSI Chicago; William A. Ferrara, Acting
Director of Field Operations for U.S.
Customs and Border Protection (CBP) in Chicago, and
Daniel Henson, Special Agent-in-Charge of the Chicago Field Office of
the Food and Drug Administration’s
Office of Criminal Investigations.
The U.S. Food and Drug Administration operates a toll-free number for consumer inquiries: 1-888-INFO-FDA (463-6332).
The government is being represented by Assistant U.S. Attorney Andrew S. Boutros.
The public is reminded that indictments and
informations contain only charges and are not evidence of guilt. The
defendants are presumed innocent and are
entitled to a fair trial at which the government has the
burden of proving guilt beyond a reasonable doubt. If convicted,
courts must impose a reasonable sentence
under federal statutes and the advisory United States
Sentencing Guidelines. Three of the five individuals charged have
authorized the government to disclose that
they intend to plead guilty to the charges against them.
Details of the six separate cases follow:
United States v. Groeb Farms, Inc., 13 CR 137
GROEB FARMS, INC., of Onsted, Mich., described as the
largest industrial honey supplier in the United States, was charged
with buying 1,578 container loads of
Chinese-origin honey between February 2008 and April
2012, knowing that it was illegally imported into the United States to
avoid more than $78.8 million in antidumping duties.
The company has entered into a deferred prosecution
agreement in which it accepted and acknowledged responsibility for its
conduct and that of its current and former executives
and employees. The agreement requires the company to
continue cooperating fully for two years, to pay a $2 million fine based
on its ability to pay, and to dispose any
illegally-entered Chinese-origin honey in its
possession.
The company admitted in a factual statement that two
former executives purchased Chinese-origin honey for processing at its
facilities and sold that honey to its domestic
retail, foodservice, and industrial customers as
mislabeled non-Chinese honey, and at other times, as Chinese honey, all
while knowing that it had been illegally imported
to avoid antidumping duties and, at times, honey
assessment fees. The honey was variously described falsely as sugars
and syrups instead of Chinese-origin honey, and as
having originated in Indonesia, Malaysia, Mongolia,
Thailand, and Vietnam, instead of China.
The two former executives engaged in fraudulent
practices despite the company’s own audits and inspections that raised
substantial concerns that the honey was illegally
imported. They also provided false information to the
company’s board of directors, customers, and the public regarding Groeb
Farms’ involvement in knowingly purchasing,
processing, and selling illegally smuggled
Chinese-origin honey.
The corporate compliance program is designed to ensure that
Groeb Farms maintains supply chain integrity and conducts reasonable
inquiries to safeguard against any illegal activity.
United States v. Douglas A. Murphy and Honey Holding I, 13 CR 138
DOUGLAS A. MURPHY, 56, of Kingwood, Tex., and HONEY
HOLDING I, LTD., doing business as Honey Solutions, a large industrial
honey supplier based in Baytown, Tex., were charged
together with violating the federal Food, Drug, and
Cosmetic Act for allegedly purchasing discounted Polish-origin honey
containing the prohibited antibiotic Chloramphenicol from
Alfred L. Wolff USA in 2006. Murphy was director of
sales between 2003 and 2008 and was responsible for the purchase of
wholesale quantities of honey, maintaining relationships with
suppliers, and the sale of honey to U.S. customers.
DOUGLAS A. MURPHY, 56, of Kingwood, Tex., and HONEY
HOLDING I, LTD., doing business as Honey Solutions, a large industrial
honey supplier based in Baytown, Tex., were charged
together with violating the federal Food, Drug, and
Cosmetic Act for allegedly purchasing discounted Polish-origin honey
containing the prohibited antibiotic Chloramphenicol from Alfred
L. Wolff USA in 2006. Murphy was director of sales
between 2003 and 2008 and was responsible for the purchase of wholesale
quantities of honey, maintaining relationships with suppliers,
and the sale of honey to U.S. customers.
Murphy pleaded guilty today and, under the terms of
his cooperation plea agreement, subject to court approval, he will
receive a sentence of six months’ imprisonment and a fine of $26,624
when he is sentenced on May 31.
Honey Holding has entered into a deferred
prosecution agreement in which it accepted and acknowledged
responsibility for its conduct and that of its employees and agents.
The agreement
requires the company to continue cooperating fully for
two years and to pay a $1 million fine based on its ability to pay.
The agreement describes Honey Holding’s “extensive cooperation,
including its agreement to allow an undercover law
enforcement agent to assume the role of [its] director of procurement in
an undercover capacity since June 2011.”
The company admitted in a factual statement that
Honey Holding defrauded its downstream customers of approximately
$26,624 by purchasing, processing, and selling the Polish-origin honey
that was adulterated with the antibiotic.
The company also admitted that it purchased
Chinese-origin honey from at least seven shell and front companies that
were controlled by various Chinese honey producers and manufacturers.
These illegal honey imports avoided more than $33.4
million in antidumping duties.
Honey Holding also agreed to establish a corporate
compliance program to ensure that it maintains supply chain integrity
and takes steps to safeguard against any illegal activity.
United States v. Jun Yang, 13 CR 139
JUN YANG, 39, of Houston, who brokered the sale of
honey to Honey Holding among others, and who operated National Honey,
Inc., which did business as National Commodities Company in Houston,
was charged with brokering the sale of illegal
Chinese-origin honey, which was misrepresented as originating in India,
into the United States to avoid antidumping duties.
Yang, through his attorney, has authorized the
government to disclose that he will plead guilty, admitting
responsibility for fraudulently avoiding antidumping duties totaling as
much as $37.9
million on Chinese-origin honey that entered the
country illegally as Malaysian and Indian honey between 2009 and 2012.
Yang has agreed to pay a fine of $250,000 and restitution totaling $2.64
million, in addition to whatever other sentence is
imposed by the court. The government has agreed to recommend a sentence
of 74 months in prison.
United States v. Urbain Tran, 13 CR 140
URBAIN TRAN, 78, of Culver City, Calif., an
agent of Honey Holding who brokered honey transactions for the company
since 2006, was charged with two counts of brokering the sale and
transportation of illegal Chinese-origin honey, which was misrepresented
as originating in Malaysia and Vietnam, into the United States to avoid
antidumping duties.
Tran, through his attorney, has authorized the
government to disclose that he will plead guilty under the terms of an
agreement calling for a fine of $500,000 and restitution totaling
$204,403, in addition to whatever other sentence is imposed by the
court. Tran faces a maximum of 20 years in prison on each fraudulent
sales and transportation count.
United States v. Hung Yi Lin, 13 CR 125
HUNG YI LIN, also known as “Katy Lin,” 42, of
Temple City, Calif., was charged in a federal grand jury indictment
returned yesterday with one count of transporting 10 container loads of
Chinese-origin honey through the Chicago area after it entered the
country illegally. Lin owned and operated KBB Express Inc., of South El
Monte, Calif., and served as the U.S. agent for at least 12 importers
that were controlled by Chinese honey producers and manufacturers. She
was initially charged in a criminal complaint and arrested on Feb. 9 in
California. She was released on a $100,000 secured bond and will be
arraigned on a later date in U.S. District Court in Chicago.
According to the indictment, between 2009 and
2012, Lin schemed to falsify the contents of hundreds of shipping
containers of Chinese-origin honey by misrepresenting them as sugars and
syrups during the importation process. As a result, the honey, which
had an aggregate declared value of nearly $11.5 million when it entered
the country, avoided antidumping duties and honey assessments totaling
$39.2 million, the charges allege.
The charge carries a maximum penalty of 20 years in prison and a $250,000 fine.
United States v. Donald Couture, 11 CR 781
DONALD COUTURE, 60, of Bradford, Ontario, the
president, owner, and operator of Premium Food Sales, Inc., a Canadian
broker and distributor of raw and processed honey, was indicted on four
counts of violating the Food, Drug, and Cosmetic Act. In May 2009,
Couture allegedly caused four container loads of his company’s honey
that were rejected by one U.S. customer because of the presence of a
prohibited antibiotic, Tetracycline, to be delivered to a second U.S.
customer without disclosing that the honey contained the antibiotic.
The honey was shipped through the Chicago area when it was transported
from one customer to the other.
An arrest warrant was issued in the U.S. for
Couture. Couture was initially charged in a sealed complaint in
November 2011 and the complaint was unsealed after he was indicted last
week. Each count carries a maximum penalty of three years in prison and
a $250,000 fine./.
http://www.justice.gov/usao/iln/pr/chicago/2013/pr0220_02.html
