Former Blue Bell CEO charged with conspiracy over listeria contamination

Published: May. 1, 2020 at 2:24 PM CDT
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The United States Department of Justice is charging former Blue Bell Creameries CEO Paul Kruse with conspiracy related to listeria contamination at Blue Bell in 2015, court documents show.

Kruse is charged with six counts of wire fraud/attempted wire fraud and one count of conspiracy to commit wire fraud. Each of those counts holds a maximum sentence of 20 years in prison and a maximum fine of $250,000.

An attorney for Kruse maintained his innocence and said Friday night that he was confident a Texas jury would agree.

Separately, Blue Bell Creameries agreed Friday to plead guilty to two misdemeanor counts of distributing adulterated ice cream products and will pay a fine and forfeiture totaling $17.25 million, and an additional $2.1 million to resolve civil False Claims Act allegations regarding products produced under insanitary conditions and sold to federal facilities, the U.S. Department of Justice said in a press release.

“American consumers rely on food manufacturers to take necessary steps to provide products that are safe to eat,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.

“The Department of Justice will take appropriate action where food manufacturers ignore poor factory conditions or fail to abide by required recall procedures when problems are discovered.”

Blue Bell issued a statement in which it said it has “revamped production facilities and procedures."

“We faced a situation our company had never dealt with before, and our agreement with the government reflects that we should have handled many things differently and better," said the statement. "We apologize to everyone who was impacted, including our customers, our employees and the communities where we live and work."

The company said that after resuming ice cream production during the summer of 2015, products are now tested and delivered to stores only after independent tests confirm the products' safety.

Kruse's 17-page charging document was filed Friday with the United States District Court for the Western District of Texas in Travis County. The filing alleges executives from the Brenham-based ice cream company, including Kruse, knew that "appropriate practices to ensure sanitary conditions were not being followed or achieved at Blue Bell manufacturing facilities" from at least 2010. The document enumerates dozens of concerns related to the company's knowledge of its listeria outbreak and alleged lack of action to protect consumers, including concealing positive listeria test results from customers.

In a statement released to KBTX, Kruse's attorney, Chris Flood, said, "It is unfortunate that after a five-year federal grand jury investigation, the prosecutors have chosen to file an information. We look forward to telling the whole story of how my client along with all of the other employees of Blue Bell did the best they could with the information they had at the time. Paul Kruse is innocent of these charges, and we have confidence that a Texas jury will see it that way and let Blue Bell get back to making the best ice cream in America."

From 2010 to April 2015, according to the document, a period during which Blue Bell had more than $2.5 billion in gross sales, `the company “regularly tested finished product for the testing of coliform bacteria,” the presence of which “is used to gauge whether other microbiological pathogens may be present.” Despite the high counts, the products were shipped to customers, according to prosecutors.

During the same period, the company occasionally arranged for third-party testing of products for Listeria and in early 2011 an employee created a program to test products with high coliform results for the presence of Listeria, “in part because of concerns about coliform levels expressed by inspectors with the United States military,” the charging document says.

Over a 10-week period, a dozen samples of finished products with high coliform levels were sent to an independent lab for Listeria testing, the document says.

In April 2011, Kruse ordered the employee to stop the Listeria testing program, although just days later two of the samples sent to the lab tested presumptively positive.

Kruse again ordered a halt to the program and “another Blue Bell quality employee destroyed hard copy and electronic records of the two presumptive positive product test results,” the charges allege.

Further, the document says Kruse and others concealed known and potential listeria contamination in Blue Bell products from customers as late as 2015.

In one instance, the government alleges Kruse and Blue Bell failed to recall affected Blue Bell products, even after stating to the FDA that the company was "recalling all Chocolate Chip Country Cookies and Great Divide bars" as quickly as possible. Instead, the government alleges Kruse and Blue Bell executives instructed delivery drivers to remove affected products from clients during regularly scheduled deliveries without sharing information about listeria contamination.

According to prosecutors, Kruse prepared a statement to provide to customers asking about why Blue Bell products were being removed from customer freezers. Kruse's explanation said in part, "there was an issue discovered with one of our manufacturing machines." The statement did not mention any listeria concerns.

Among those concerned clients were, according to the filing, hospitals and schools. In one instance, hospital employees were told the change was due to "manufacturing irregularity." That, according to the filing, includes a Texas children's hospital that was told product being removed was due to "an issue with quality" without mentioning positive tests for Listeria monocytogenes. The hospital understood the issue to be unrelated to food safety and kept the product in their freezer for nearly a month.

In February 2015, a Blue Bell sales employee told one Texas school district that products were being removed because of "an issue discovered with one of our manufacturing machines."

Similar correspondence was discovered with a school district in Florida. In February 2015, that district told Kruse and other Blue Bell executives in an email that, "the decision made not to inform [the school district] of this potential health risk and to try and quietly just pick-up the products gives the impression of deception and lack of integrity... With open and honest communication, we would have eliminated all potential risks with our guests (our children) and secured the product."

In March 2015, an FDA inspector informally notified Blue Bell of a presumptive positive listeria test in the company's Banana Pudding ice cream, which was traced to roughly 1,050 pints already in customers' stores. The filing alleges that Paul Kruse and other Blue Bell executives instructed sales employees at that time "do not pick anything up int he stores unless we notify you to do so."

In late 2015, the Department of Justice launched an investigation into Blue Bell Creamies after their ice cream was linked to a deadly listeria outbreak.

Three deaths in Kansas and seven illnesses in Texas, Oklahoma, and Arizona were linked to the outbreak. Blue Bell recalled all of its products in April 2015 following several smaller recalls.

A report from the FDA in May 2015 said the company continued to ship ice cream after the Food and Drug Administration said a manufacturing plant lacked adequate cleaning. The most extensive violations were found in Broken Arrow, Oklahoma, where the FDA listed 17 separate positive tests for listeria on equipment from March 2013 through February 2015.

An investigation later found listeria in all three of Blue Bell's production plants following the outbreak, and records indicate the Brenham-based company knew one plant was contaminated at least as early as 2013.

KBTX reached out to Blue Bell Creameries for additional comment but has not yet received a response.