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Texas Manager Pleads Guilty to Pet Food Fraud, Company Pays $4.5 Million Restitution

OCI BadgeDepartment of Justice
U.S. Attorney’s Office
Western District of Missouri

Thursday, October 24, 2019

KANSAS CITY, Mo. – The manager of a Wilbur-Ellis Company processing facility in Texas pleaded guilty in federal court today to his role in a multi-million dollar conspiracy to sell adulterated ingredients to pet food manufacturers, for which the company has already paid more than $4.5 million in restitution.

William Douglas Haning, 48, pleaded guilty before U.S. Chief District Judge Rodney Sippel in the Eastern District of Missouri to one count of conspiracy to introduce adulterated and/or misbranded food into interstate commerce and one count of money laundering.

“For years, William Douglas Haning orchestrated a scheme similar to charging filet mignon prices for ground beef. He unjustly lined his own pockets at the expense of unsuspecting consumers,” said Acting Special Agent in Charge Alicia Corder of the FBI St. Louis Division. “Corporate fraud is one of the top white-collar crime priorities for the FBI.”

“U.S. consumers – and especially pet owners – look to the FDA to ensure that their pets’ food is not only safe and wholesome, but is also accurately labelled. When criminals introduce adulterated and falsely labelled pet food into the U.S. marketplace, they put the health of companion animals at risk,” said Special Agent in Charge Charles L. Grinstead, FDA Office of Criminal Investigations Kansas City Field Office. “We will continue to investigate and bring to justice food manufacturers who put profits ahead of the public health.”

By pleading guilty today, Haning admitted that he and others shipped adulterated pet food ingredients and products to pet food manufacturers in Indiana and Connecticut, as well as six co-packers and co-manufacturers in Kansas, Pennsylvania, and Minnesota, over a period of more than six years. Conspirators falsely labeled the shipped product as a single-ingredient premium pet food product, such as chicken meal or turkey meal, but in reality, it was a blend of different ingredients that contained by-products and feathers.

Haning was the operations manager of the Wilbur-Ellis facility in Rosser, Texas. Wilbur-Ellis marketed and distributed products and ingredients for use in the pet food industry, including animal proteins used in the manufacture of dog food and cat food. Those sales included both direct sales by Wilbur-Ellis to pet food companies and manufacturers, and sales by Wilbur-Ellis conducted through one or more intermediaries, such as Diversified Ingredients, Inc., a commodities broker and distributor in Missouri whose customers include a number of pet food companies and manufacturers.

The fraud scheme began in January 2008, before Wilbur-Ellis purchased the Rosser facility, and continued through May 2014. Wilbur-Ellis purchased the facility in 2011 from Haning and his family members. Haning continued working in his sales and management role as an employee of Wilbur-Ellis. Haning continued to be responsible for buying the food ingredients blended at the Rosser facility and selling the products shipped from the Rosser facility.

The adulteration and misrepresentations made the Wilbur-Ellis Rosser facility more profitable over the course of the fraud scheme. This profitability triggered the deferred payment or “earn-out” provisions that were part of the agreement when the facility was sold to Wilbur-Ellis. As a result, Wilbur-Ellis made a $4,608,414 deferred payment for the benefit of Haning and others in 2013, and a $4,391,586 deferred payment for the benefit of Haning and others in 2014. In addition, between July 2011 and May 2014, Haning received cash and other indirect payments.

Wilbur-Ellis already has paid $4,549,682 in restitution to the victims of this fraud scheme. Under the terms of today’s plea agreement, the government and the defendant agree that the appropriate disposition of this case is probation for a period of five years. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case was prosecuted by Special Attorneys to the United States Attorney General Kathleen D. Mahoney and Kyle Bateman. It was investigated by the FBI, U.S. Postal Inspection Service, and the FDA Office of Criminal Investigations.

Financial Fraud
USAO - Missouri, Western

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