Rancho boss charged with conspiracy, bad meat and mail fraud

08/21/2014

A federal grand jury indicted three Rancho Feeding Corporation employees last week for deliberately selling meat from cancer-afflicted cows, a criminal action that instigated a nationwide recall. 

Jesse “Babe” Amaral, the 76-year-old co-owner of the Petaluma slaughterhouse and the manager of daily operations, allegedly directed his employees to slaughter cattle that a veterinarian had declared unfit for human consumption by carving out the “USDA Condemned” stamps from the carcasses and swapping the severed heads of sick and healthy cows during inspectors’ lunch breaks. An estimated 101 condemned cows and 79 cows infected with eye cancer made their way into the market, prosecutors say. Indicted on 11 counts, Mr. Amaral appeared in federal court Monday morning, pled not guilty and was released on a $50,000 bond.

His alleged criminal behavior launched a January recall of 8.7 million pounds of meat that temporarily closed the Bay Area’s last slaughterhouse and set West Marin beef ranchers back hundreds of thousands of dollars, no longer able to sell the recalled meat. Despite repeated requests and additional funding from Congress, the United States Department of Agriculture’s internal investigators have yet to reveal whether its inspectors were partially responsible for allowing the unhealthy cows to enter the food supply.

The indictment, filed in United States District Court in San Francisco last Thursday and unsealed Monday morning, also names Felix Sandoval Cabrera, the plant’s 55-year-old foreman and “knocker” responsible for stunning the cattle before slaughter, and Eugene Corda, 65, the yard-person responsible for receiving cows and directing them from pens to the kill floor, as conspirators in distributing adulterated and misbranded meat and in mail fraud.

Robert Singleton, the 77-year-old co-owner, was also accused of circumventing meat inspections in a separate case that did not require a grand jury’s approval. He will face a judge Friday morning.

Mr. Singleton was responsible for purchasing cattle and acquired animals from livestock auction houses in northern California and Nevada as well as directly from ranchers. “Some of the purchased cattle exhibited signs of epithelioma, that is lumps or other abnormalities around the eye”—an indication of cancer—“and were thus less expensive than cattle that appeared completely healthy,” the charging document says.

Out in the plant’s yard, cattle were held in separate pens and moved into a designated area for antemortem inspection at the owners’ instruction. Usually, a cow that passed inspection would be immediately taken by the yard-person to the kill floor to be stunned with a bolt between the eyes, killed and inspected again. But prosecutors allege that the U.S.D.A. veterinarian’s stamp held no authority: Mr. Amaral told Mr. Cabrera which animals should be processed, and Mr. Cabrera in turn told the kill floor employees to carve the stamps from the carcass and process them for distribution.

At his employers’ instruction, Mr. Corda also allegedly circumvented inspection by exchanging uninspected, diseased cattle for cattle that had already passed inspection on the way to the kill floor. After Mr. Cabrera stunned a cow, he or another employee would toss the diseased head into the “gut bin” with other condemned carcasses and place heads of cows they had saved next to the sick cattle. This “switch and slaughter” occurred during inspectors’ lunch breaks when slaughter was supposed to cease, the indictment says. When inspectors returned, they had no idea the meat they were examining did not belong to the apparently healthy heads beside it.

For about 17 cattle, Mr. Amaral mailed farmers a falsified invoice claiming their cows had died or been condemned and actually charged them extra handling fees to dispose of the supposed remains, instead of compensating them based on the sale price, the charging document alleges.

For each cow that made its way around the inspection process and into frozen Hot Pockets, beef jerky, drive-through burgers and dinner plates, Rancho’s owners paid their foreman a $50 bonus.

The maximum penalties for conspiracy to distribute adulterated meat are five years in prison, three years of supervised release and a $250,000 fine. If he is found guilty of mail fraud, Mr. Amaral could serve an additional 20 years in prison and have to forfeit any proceeds he earned.

An internal investigation by the U.S.D.A.’s Office of Inspector General appears to be ongoing. A statement from the United States Attorney’s Office credited the O.I.G.’s work in establishing the prosecution’s case, but the O.I.G.’s other findings about government inspectors have not been made public. Emails to the U.S.D.A.’s Office of Communications and to the Food Safety and Inspection Service’s public affairs division asking for clarification about the investigation went unanswered.

“Importantly, this recall has significantly harmed affected ranchers, who continue to raise questions about the cause of the recall and any recourse available to compensate them for damages,” Reps. Jared Huffman and Mike Thompson wrote in a letter to Secretary of Agriculture Tom Vilsack last month. “Unfortunately, despite our requests, our constituents have received very little information from USDA in response. This recall demands a serious investigation, so that answers can be provided to ranchers and the public as a whole as soon as possible. The longer this investigation drags on, the more uncertainty business face.”

In the wake of the recall early this year, allegations emerged about the dysfunctional relationships and power dynamics within Rancho: CNN alleged an inspector had an intimate relationship with Mr. Cabrera, and the Light reported that the veterinarian regularly deferred to slaughterhouse management in approving suspect cattle inspectors tagged as unhealthy. Across the country, the limited number of food safety inspectors overseeing the nation’s slaughterhouses was sharply criticized.

In 2010 an additional inspector was placed at Rancho, funded by the 2008 Farm Bill. But two years later, the Food Safety and Inspection Service said it had reassessed the need and reassigned the employee to oversee humane handling at another establishment.

The slaughterhouse, which the owners shuttered without reimbursing all their customers, was purchased by Dave Evans of Marin Sun Farms, with the backing of a group of investors, and reopened in April.

After months of requests to sell $300,000 worth of beef that they had frozen in storage and for which an employee had been present at each slaughter, Bill and Nicolette Niman of BN Ranch finally gave up their pleas to the federal government for a reprieve, no longer able to justify the storage costs. BN Ranch employees and family members stocked their freezers to the brim with the best cuts of meat, and then the Nimans paid for the rest—nearly 60,000 pounds of top-notch beef—to be trucked to a rendering plant for disposal.

Ms. Hahn Niman said she was surprised by the level of detail in the indictment, which makes references to specific animals and dates when Rancho’s managers circumvented inspection. On one hand, she was pleased that the facts had vindicated BN Ranch and other custom producers as uninvolved, but she was also angry that inspectors had used a blanket recall of an entire year’s worth of meat for 180 uninspected cows, causing local farmers “significant financial hardship.”

“I think this reinforces the idea that the U.S.D.A. is not well-equipped for dealing with smaller, independent entities in the food system. Everything they do, all of their systems are designed for dealing with big corporations,” Ms. Hahn Niman said. “ If we want a sustainable food movement to flourish in this county, we have to have regulatory approaches that can handle smaller operators.”