Peanut Corp. of America files for bankruptcy

[samanthajane13]

By KATE BRUMBACK and GREG BLUESTEIN, Associated Press Writer Kate Brumback And Greg Bluestein, Associated Press Writer – 31 mins ago

ATLANTA – The peanut processing company at the heart of a national salmonella outbreak is going out of business. The Lynchburg, Va.-based Peanut Corp. of America filed for Chapter 7 bankruptcy in U.S. Bankruptcy Court in Virginia Friday, the latest bad news for the company that has been accused of producing tainted peanut products that may have been sent to everyone from poor school children to disaster victims.

"It's regrettable, but it's inevitable with the events of last month," said Andrew S. Goldstein, a bankruptcy lawyer in Roanoke, Va., who filed the petition.

The outbreak was traced to the company's plant in Blakely, Ga., where inspectors found roaches, mold and a leaking roof. A second plant in Plainview, Texas was shuttered this week after preliminary tests came back positive for possible salmonella contamination. So far, the outbreak has been suspected of sickening more than 630 people and may have caused nine deaths. It also has led to more than 2,000 product recalls, one of the largest in U.S. history.

Companies file Chapter 7 to liquidate their assets and distribute the proceeds to creditors. A trustee is automatically appointed to oversee the wind down, as opposed to a Chapter 11 filing that gives a company breathing room while it tries to reduce its debts and continue in business. The company said in the filing that its debt and assets both ranged between $1 million and $10 million.

The board had considered a Chapter 11 bankruptcy but decided on an outright liquidation. It said in a court filing that the recalls had been "extremely devastating" to the company's financial condition.

"It is in the best interest of creditors that all actions against the company be assembled under one roof," Goldstein said.

The company's problems have multiplied since the link to its Georgia plant.

The government is working on a criminal investigation into the case, and more than a dozen civil lawsuits have been filed. This week, Peanut Corp. president Stewart Parnell repeatedly refused to answer questions before the House Energy and Commerce investigations subcommittee, which is seeking ways to prevent another outbreak. But e-mails surfaced indicating he ordered products the company knew were tainted to be shipped anyway.

Reached by telephone, Parnell said his attorneys had advised him not to talk. "If I could do it, I would," he said.

Food safety lawyers are optimistic that victims and their families can still be compensated. The bankruptcy proceeding could postpone litigation against the company, but lawyers plan to push a judge to allow civil lawsuits to go forward anyway. And many have also filed lawsuits against Solon, Ohio-based King Nut Co. and Battle Creek, Mich.-based Kellogg Co., which they say used the tainted ingredients in their products.

"Even if Peanut Corp. doesn't have enough insurance and enough assets to cover the damages, King Nut and Kellogg will have to step up," said Bill Marler, who has filed seven lawsuits against the company on behalf of more than 40 possible victims.

___

Associated Press Writers Vinnee Tong in New York and Sue Lindsey in Roanoke, Va. contributed to this report.


http://news.yahoo.com/s/ap/20090213/ap_on_bi_ge/salmonella_outbreak_bankruptcy

[samanthajane13]

Feds mount evidence in salmonella outbreak probe
By GREG BLUESTEIN, Associated Press Writer Greg Bluestein, Associated Press Writer – 1 hr 1 min ago



ATLANTA – First, federal investigators said Stewart Parnell knowingly shipped salmonella-tainted foods even after internal tests showed they were contaminated. Then they revealed the evidence: e-mails Parnell sent to his employees urging them to ship out the products that authorities say ultimately sickened hundreds and may have caused the deaths of nine.

Federal authorities, who started an investigation last month, have remained tightlipped about possible charges against Parnell. So has the FBI, which raided the company's Georgia plant about a week ago.

But food safety attorneys say prosecutors have an array of options for what could be one of the Food and Drug Administration's most high-profile tainted food cases in decades.

"Any time you've got interstate commerce, those are the buzz words for federal prosecution," said Kent Alexander, a former U.S. attorney in Atlanta who is now general counsel at Emory University. "And prosecutors can be very creative in alleging schemes involving interstate commerce."

One tool federal prosecutors could use is the 1938 Federal Food Drug and Cosmetic Act, which carries a maximum penalty of three years in prison and a fine of $10,000 if prosecutors prove there's an intent to "defraud or mislead."

Prosecutors could also turn to a range of other laws if they are seeking a tougher punishment.

Fred Pritzker, a food safety lawyer in Minneapolis who filed a wrongful death lawsuit against Peanut Corp., said investigators could charge Parnell with federal anti-conspiracy charges.

Or authorities could charge Parnell and his company with mail fraud or wire fraud if prosecutors believe they can prove they were knowingly giving customers adulterated product, said Jim Frush, a former federal prosecutor who is now a criminal defense attorney.

And Alexander said the ongoing investigation could yield a separate, perhaps indirect, charge.

"In cases like this, sometimes the biggest vulnerability people have is lying under oath or lying to federal investigators," he said.

Authorities say a Blakely, Ga., plant run by Parnell's company, Peanut Corp. of America, is the sole source of a salmonella outbreak that has led to one of the nation's biggest food recalls. The company filed for Chapter 7 bankruptcy protection Friday.

Prosecutions in such cases are fairly rare, and they generally lead to fines against companies rather than jail time or other punishments for individuals. Recent convictions include the 1996 case against juice-maker Odwalla Inc., which was fined $1.5 million on charges of shipping unpasteurized apple juice that killed a baby. Five years later, Sara Lee Corp. was fined $200,000 after pleading guilty to misdemeanor charges of selling tainted meats in a listeria outbreak that killed 15 people.

Other, more high-profile outbreaks haven't yielded criminal charges. Prosecutors decided not to press charges against two produce companies involved in a 2006 tainted spinach case that killed three people and sickened 200 others, saying the investigation found growers and processors did not deliberately skirt the law.

Parnell's e-mails, released this week by House investigators, depict a man driven by profits who instructed his employees to ship out products despite reports that salmonella was detected. "Turn them loose," he said in one e-mail.

Parnell, summoned by congressional subpoena, repeatedly invoked his right not to incriminate himself. Reached by telephone Friday, he said his attorneys had advised him not to talk. The company, in statements, has said it is cooperating with federal investigators.

Food safety watchdogs have long argued that the FDA doesn't pursue criminal charges enough in tainted food cases, but they have little doubt that investigators are building a case as public outrage grows.

"I am no attorney," said Mike Doyle, a University of Georgia food safety scientist. "But the evidence appears to be a smoking gun. It appears that Mr. Parnell knowingly ordered shipment of salmonella-contaminated product."

Creighton Magid, a Washington-based products liability attorney often on the defense side, said prosecutors may not press charges in food safety cases because they don't want to discourage responsible companies from coming forward with their mistakes.

Parnell's case, he said, appears to be a sharp contrast.

"There's a huge difference between a recall of a product because of a flaw in manufacturing and knowingly selling a product that is contaminated," he said. "That's a different ball game entirely."

Either way, food safety attorneys say the revelations this week could be the opening act of one of the most high-profile tainted food prosecutions in recent history.

"The question is not whether there will be charges," said Bill Marler, a food safety lawyer who has filed lawsuits against Parnell's company. "But what they will charge him with."

___

On the Net:

U.S. Food and Drug Administration, http://www.fda.gov/


http://news.yahoo.com/s/ap/20090214/ap_on_bi_ge/salmonella_outbreak_prosecution

[samanthajane13]

Nation's peanut growers reeling from outbreak
By BETSY BLANEY, AP Agriculture Writer Betsy Blaney, Ap Agriculture Writer – Sun Feb 15, 2:14 pm ET



LUBBOCK, Texas – With hundreds of thousands of Americans out of work and the economy in a nosedive, the U.S. peanut industry expected sales to soar this year.

Americans tend to turn to peanut products to stretch their food dollars in tough times, avoiding more expensive protein sources such as steak and ground beef.

Enter an ongoing salmonella outbreak that has sickened some 600 people in 43 states and been linked to nine deaths, and those rosy predictions after a record growing season have been dashed.

"They've tainted our entire industry," said Shelly Nutt, executive director of the peanut producers board in Texas, the nation's second largest growing state behind Georgia. "Public perception is killing us."

More than 2,000 products have been recalled — one of the largest in U.S. history. And the damage was done by a small player in the industry — Virginia-based Peanut Corp. of America. Two of the company's plants — in Blakely, Ga., and in Plainview, Texas — have been shuttered after salmonella contamination was found.

The company, which has filed for bankruptcy, handles no more than 2.5 percent of all peanuts processed, yet sales of jarred peanut butter plummeted 22 percent nationwide for the four weeks ending Jan. 24 compared with the same period last year, Nutt said. February's numbers will likely worsen significantly, she said.

The devastating news came after peanut growers nationwide last year produced a record crop — 2.6 million tons. So many peanuts created a surplus, leading some producers to consider not planting them this year.

Texas produced 430,000 tons while Georgia had 1.2 million tons. All those peanuts are a big part of each state's economies, worth up to $1 billion in Texas and $2.5 billion in Georgia.

Patrick Archer, president of the American Peanut Council, an umbrella organization representing the industry's three major segments — growers, shellers and manufacturers — said he was aghast at the negligence he says was shown by Peanut Corp. President Stewart G. Parnell, who investigators have alleged knowingly distributed tainted products.

Parnell "failed Americans and failed again by refusing to show remorse and or accountability for those unconscionable" actions, Archer said.

Peanut Corp. denies any wrongdoing.

American food manufacturers use almost 2 billion pounds of peanuts a year in a range of products. More than 1 billion pounds go into peanut butter.

Recalls now include cookies, crackers, cereal, candy, ice cream, pet treats and much more and the government has started a criminal investigation.

Regaining consumer confidence is paramount, and food manufacturers may be hesitant to purchase large quantities of peanuts, given the plummeting demand following the outbreak, West Texas peanut farmer Ted Higginbottom said.

"It is unfortunate peanut farmers can do everything right to produce a healthy and safe product to feed both their families and the nation, and then have to carry the burden for something they could not control," he said.

The outbreak was traced to Peanut Corp.'s Blakely, Ga., plant, where inspectors found roaches, mold and a leaking roof. A Food and Drug Administration inspection report found that the company shipped peanut products that tested positive for salmonella on 12 occasions from the plant from 2007-2008.

The company, now under FBI investigation, faced more scrutiny once it was revealed that its Texas plant, which opened in March 2005 and was run by a Peanut Corp. subsidiary, Plainview Peanut Co., was not inspected by state health officials until after problems arose at the company's Georgia plant.

On Friday, companies began destroying products made with anything that came from the plant after health officials said they discovered rodents, feces and feathers in a crawl space above a production area. Texas officials took the highly unusual step of ordering all products ever made at the plant recalled.

"It's a shame that one company could tear down a complete industry," said Otis Johnson, a Seminole, Texas, peanut farmer who chairs the state's producer board. "As the story unfolds, I think there's more outrage."

Peanut shellers, which buy crops from the producers, are also bracing themselves, said Max Grice, general manager of Birdsong Peanuts, a shelling company in Brownfield, Texas.

"Obviously, we all realize it's a negative effect on consumption and it's hurting everyone," he said. "It's certainly not good for the industry."

Don Koehler, executive director of the Georgia Peanut Commission, a group representing about 4,500 growers in that state, said he's never seen the industry come under so much scrutiny and hopes it won't last much longer.

But "that's a crystal ball that we absolutely don't have," he said.

___

On the Net:

List of safe peanut products, http://www.peanutsusa.com/USA/index.cfm?fuseaction


___

Betsy Blaney has been the AP's Lubbock correspondent since 2001 and regularly reports on agricultural issues.


http://news.yahoo.com/s/ap/20090215/ap_on_bi_ge/peanut_producers_salmonella

[samanthajane13]

Georgia trying to revive peanut's good name
By GREG BLUESTEIN, Associated Press Writer Greg Bluestein, Associated Press Writer – 40 mins ago

ATLANTA – Georgia lawmakers are trying to revive the peanut's good name.

The lunch box staple didn't used to be such a tough sell, but Georgia's vital crop has taken a whipping since a nationwide salmonella outbreak tied to peanut products from a Blakely, Ga., plant, has sickened more than 600 people and been linked to nine deaths.

Lawmakers in the state that is the nation's leading peanut producer are guzzling down bags of peanuts, organizing peanut butter events and offering the legumes boiled, shelled and just about any other way to all who are willing to eat them.

Tables lined with jars of peanut butter, cookies, candies, apples and peanut butter, bags of boiled peanuts — "the caviar of the South" — and buckets of shelled peanuts greeted the hundreds who wandered by the first floor of the state Capitol Tuesday.

More than 2,000 peanut products have been recalled, and consumers are shying away from those that haven't been pulled from the shelves. Although the company that runs the plant, Peanut Corp. of America, handles no more than 2.5 percent of all peanuts processed, sales of jarred peanut butter plummeted 22 percent nationwide for the four weeks ending Jan. 24.

"This is to convince the public — the best way we know how — that peanuts are safe," said Georgia Agriculture Commissioner Tommy Irvin, licking the remnants of a peanut snack off his lips. "There are some skeptics out there that don't know this is the result of one bad player."

Georgia takes special stock in its favored crop. Its most famous politician, Jimmy Carter, was a peanut farmer, and the industry employs 50,000 people and packs an estimated economic impact of $2.5 billion — more than double that of the next leading state, Texas.

"We've got to stand behind our products," said state Sen. John Bulloch, a farmer himself who is backing stricter food testing requirements. "We want consumers to know we're trying to do what we can to put in checks and balances to make sure this doesn't happen again."


http://news.yahoo.com/s/ap/20090217/ap_on_bi_ge/salmonella_outbreak_georgia

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Texas says Peanut Corp. unresponsive to recall
By LINDA STEWART BALL
Associated Press Writer

The bankrupt company at the center of a national salmonella outbreak hasn't carried out a recall of its products manufactured in Texas, so the state is notifying customers itself, officials there said Friday.

Texas health officials ordered Peanut Corp. of America on Feb. 12 to recall all products ever shipped from a plant in Plainview after inspectors found dead rodents, feces and bird feathers in a crawl space above a production area.

But the Texas Department of State Health Services said the company hasn't responded to its order, so state workers have begun asking manufacturers, distributors and retailers to keep products from the Plainview plant away from the public.

"When you order a recall and don't get a response you've got to do something to protect the public," Doug McBride, a spokesman for the Texas Department of State Health Services, said Friday. "They weren't going to do it, so we are doing it."

The company said in a press release on its Web site Friday that the bankruptcy proceedings were hampering its ability to carry out recall orders.

"PCA is informing customers who received products from its Georgia or Texas plants not to distribute or further use those products," the release stated.

However, it wasn't clear whether the company had made efforts beyond posting the release to contact customers. The company's bankruptcy attorney Andrew Goldstein didn't immediately respond to a phone message seeking further comment.

A day after the Texas order last week, the Lynchburg, Va.-based company filed for Chapter 7 bankruptcy as it faced fallout from the outbreak that has sickened hundreds, may have caused nine deaths and prompted one of the largest food recalls in the nation's history. The outbreak had been traced to another of its plants in Georgia.

Federal investigators have launched a criminal investigation, and Peanut Corp. faces mounting lawsuits.

McBride said that while Peanut Corp. was obligated to comply with the health department's order related to its plant there, the health department has no authority to compel companies outside the state to do what it says.

However, a company that ignored a state's recall would likely run afoul of its insurance carriers, McBride said.

A company also could make itself vulnerable to civil lawsuits.

Some companies that did business with the Texas plant have already issued recall notices in response to news coverage of the recall last week. Notices are posted online at http://www.fda.gov.


http://www.buffalonews.com/260/story/585552.html

[samanthajane13]

Tests confirm salmonella at Texas peanut plant
By JAMIE STENGLE
Associated Press Writer

Tests show ground peanuts at a Texas plant were contaminated with the same strain of salmonella that has sickened hundreds of people across the nation, state health officials said Wednesday.

The peanut meal was tested at the Plainview plant Feb. 12 after the facility had voluntarily shut down, said Doug McBride, a spokesman for the Texas Department of State Health Services. Previously, private tests conducted by Virginia-based Peanut Corp. of America, which operated the plant, had tentatively indicated that there may have been salmonella at the plant. It is not yet known what strain those preliminary private tests showed, he said.

The Texas plant is the second facility operated by the embattled Peanut Corp. to test positive for salmonella. A different strain was found at the company's Blakely, Ga., plant.

The national outbreak has sickened more than 600 people and is suspected of causing at least nine deaths, and led to one of the largest product recalls in U.S. history. Unable to recover from the fallout, the company has filed for bankruptcy.

"The FDA's investigation is ongoing and the agency is looking at both the PCA Blakely plant and the PCA Plainview plant as sources of contamination for the outbreak," said U.S. Food and Drug Administration spokeswoman Stephanie Kwisnek.

Kwisnek said that since the salmonella findings at the Blakely, Ga., plant, the FDA had expanded the scope of inspections to include other plants, including the one in Plainview.

Texas health officials ordered a recall on all peanut products from the Plainview plant on Feb. 12 - the same day they took the peanut meal sample that tested positive - after finding dead rodents, rodent excrement and bird feathers in a crawl space above a production area.

It isn't clear if the batch of products tested sickened anyone, but on Tuesday, federal officials said other test results confirmed peanut butter made from peanuts processed at the Texas plant also contained the same strain.

Health officials in Colorado had traced salmonella cases there to peanut butter sold by the Vitamin Cottage grocery chain. The natural foods chain has said that the peanuts used in the Vitamin Cottage peanut butter came from PCA's plant in Plainview.

Federal authorities have launched a criminal investigation into allegations Peanut Corp. knowingly shipped tainted food. Peanut Corp. also faces a growing number of federal lawsuits seeking millions of dollars of damages from victims of the outbreak.

A message left Wednesday afternoon with Andy Goldstein, the Peanut Corp.'s bankruptcy lawyer, was not immediately returned.

The FDA said that so far, more than 2,670 products have been recalled.


http://www.buffalonews.com/260/story/589202.html