Food for Thought re Last Week’s Peanut Sentencing in Georgia

Just over a year ago, Stewart Parnell, the former CEO of Peanut Corporation of America (PCA), was convicted by a jury in the Middle District of Georgia of charges related to a deadly nationwide salmonella outbreak.  The matter came to the government’s attention in late 2008 when people began falling ill across the country.  The illnesses were eventually linked back to PCA’s peanut processing plant in Georgia.  As investigators continued to examine the salmonella outbreak, they discovered that the case involved potential criminal misconduct by Parnell and others who allegedly knew about the contamination, attempted to cover it up, and continued to ship contaminated and potentially contaminated product.  In one now infamous email from 2007, after being informed that batch test results were not back from the lab, Parnell wrote, “Just ship it.”  The outbreak killed nine people and injured thousands more.  Eventually, Parnell and others were charged in a 76-count indictment that alleged mail and wire fraud, introducing adulterated and misbranded food into interstate commerce, conspiracy, and obstruction of justice.  A jury found Parnell guilty of 67 of the 68 charges against him on September 19, 2014. 

On Monday of last week, U.S. District Court Judge W. Louis Sands sentenced Parnell to 28 years in federal prison.  One interesting aspect of the sentencing is that because authorities charged this case as a “white collar” matter involving fraud, rather than a homicide case, the most significant factor driving the guideline sentencing range was not the deaths of nine people, but the loss of over $100 million by the various food companies that were forced to recall their products because of Parnell’s actions.

According to last week’s DOJ press release:

Judge Sands took into account the fraud loss of PCA’s corporate victims when imposing today’s sentence.  The court found that Stewart Parnell and Mary Wilkerson should be held accountable for more than $100 million but less than $200 million in losses, and Michael Parnell should be held accountable for more than $20 million but less than $50 million in losses.  The court also found the government established evidence that Stewart Parnell and Mary Wilkerson should be accountable for harming more than 250 victims, and Michael Parnell should be accountable under federal sentencing guidelines for harming more than 50 victims.  The court additionally found that the Parnells should have known that their actions presented a reckless risk of death or serious bodily injury.

Looking at the applicable 2009 Federal Sentencing Guidelines (the Guidelines in place at the time of the offense conduct), one finds the following point allocations:

• Base Offense – 7 points
• Loss of more than $100 million – 26 points
• 250 or more victims – 6 points
• Risk of death – 2 points
• TOTAL: 41 points

While there were likely other applicable sentencing points, such as obstruction of justice and role in the offense, the above point allocations alone result in 41 total points.  This translates into a guideline sentencing range of 324-405 months (27.00 – 33.75 years) for a defendant with no criminal history.  Steward received 336 months (28 years).

To highlight the importance of the loss amount in the Guideline’s calculation, note that if this case had involved nine deaths, but no financial loss to food companies, the sentencing range under section 2B1.1 of the Federal Sentencing Guidelines would have dropped to 18-24 months in the above calculation.  Obviously, this would have been a grossly unreasonable sentence given the devastating harm caused by Parnell.

I don’t know why this case was charged as a fraud and not a homicide.  Perhaps it was to send a clearer message about national food safety by bringing federal charges, including charges directly related to the introduction of adulterated and misbranded food into interstate commerce.  One additional item to note, however, as we think about the way this case proceeded, is that federal white collar sentences in high loss cases can often dwarf sentences for other crimes, including homicide.  Consider that involuntary manslaughter in Georgia carries a maximum sentence of ten years in prison.  Georgia also has automatic parole eligibility for most inmates.  By comparison, Parnell received 28 years in prison using federal fraud statutes and their applicable sentencing guidelines.  Further, there is no parole in the federal system.    

Federal fraud offenses are often attractive to prosecutors because they are broad enough to apply in all manner of situations and carry potentially significant sentences.  It should be no surprise, therefore, that we continue to see these statutes used in many cases that do not fit neatly into our traditional definitions of “white collar crime.”  For a further discussion of the way “white collar offenses” are used in a vast array of cases, many of which do not involve traditional white collar criminal activity, see “White Collar Crime”: Still Hazy After All These Years, 50 Georgia Law Review Issue 3 (Lead Article) (forthcoming).

(LED)