The facts are not in dispute.
Groeb Farms Inc. of Onsted, Michigan, the nation’s largest industrial honey supplier, 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 anti-dumping duties.
The company admitted that two former executives purchased Chinese-origin honey for processing at its facilities and sold that honey to its domestic retail, food service, 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 anti-dumping 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.
Lisa Noller, a partner at Foley & Lardner in Chicago, represented Groeb Farms.
A second company, Honey Holding, doing business as Honey Solutions of Baytown, Texas, admitted to charges that it purchased, processed, and sold the Polish-origin honey that was adulterated with the antibiotic.
It 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 anti-dumping duties.
According to the statement of facts, the executives involved in the alleged criminal activity at Groeb Farms mislead the board of directors of the company.
And Honey Holding cooperated with the federal investigation, going so far as to allow a federal agent undercover into the company to assume the role of director of procurement.
Groeb farms was fined only $2 million based on the firm’s “financial ability to pay, as confirmed by financial statements and other representations made by Groeb Farms and its representatives to the United States, under penalty of perjury and prosecution for false statements.”
Honey Holdings was fined $1 million.
The individual defendants charged 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 last week, 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.