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Federal charges against a company owned by House of Raeford Farms could signal that efforts to negotiate a settlement with the N.C.-based poultry company broke down, according to some legal experts.
A federal grand jury this week indicted Columbia Farms, a unit of the Raeford, N.C.-based private chicken processing company, with knowingly hiring illegal immigrants at a plant in South Carolina.
Since June 2008, federal officials have arrested workers and supervisors, raided the Greenville, S.C., plant, and charged the human resource manager and top manager with immigration violations.
In most similar cases, the government attempts to forgo prosecution of the company since the consequences can be substantial and often fall on innocent employees.
Typically, charges aren't brought against a company unless the government suspects a culture that tolerates or condones wrongful behavior.
“The analogy I often use is if its bad apples, you go after the bad apples,” said former federal prosecutor Peter Anderson of Charlotte. “If it's a bad orchard you need to go after the company.”
Anderson, now a defense attorney, said the government can't send a company to jail, but it can impose stiff penalties, including substantial fines and mandatory audits. It can also take away federal contracts and licenses.
First Assistant U.S. Attorney Kevin McDonald of Columbia said the grand jury found that the hiring of illegal immigrants occurred within the knowledge of Columbia Farms.
House of Raeford managers say the company has followed all state and federal employment laws. In a statement, the company said it expects to be vindicated in court.
The family-run business is one of the nation's top chicken and turkey producers, with eight plants in the Carolinas, Georgia, and Louisiana, nearly $600 million in annual sales, and 6,000 employees.
Marvin Johnson, 82, is the chairman. His son, Bob, is the chief executive officer. They live in Eastern North Carolina.
The grand jury used to indict Columbia Farms is expected to be released, federal officials said. But McDonald said that will not stop prosecutors from pursuing other indictments should the continuing investigation uncover additional evidence.
McDonald would not say whether the U.S. attorney was investigating Marvin Johnson or any other N.C.-based executives.
“I can't comment on where this investigation may go,” he said, “but certainly there is the prospect of different jurisdictions, different U.S. attorney's offices, immigration and customs enforcement, different federal agencies in different jurisdictions working together toward a common case. Whether that happens here, I can't say.”
Lynne Klauer, assistant U.S. attorney for the Middle District of North Carolina, which has jurisdiction over Hoke County, N.C., and the city of Raeford, said she knew of no contact with U.S. attorneys in South Carolina about investigations of House of Raeford.
When deciding whether to pursue criminal indictments against a company, Anderson said prosecutors sometimes look at their regulatory compliance history.
“You're deciding do we give them a break?” he said. “…The proof is going to be in the investments that the company has made. The actions – the improvements – they've taken in response to past sins. That is how you kind of ferret out a good corporate citizen.”
Since 2001, the N.C. Occupational Safety and Health division has cited House of Raeford for more than 60 other serious workplace violations and proposed fines totaling $117,000. After negotiating with the company, it reduced the total to $26,500. Last year, state regulators cited the company for 49 serious violations at its plant in Teachey, N.C. The proposed fines total about $178,000. The case is under appeal.
Lisa Griffin, a law professor at Duke University, said convicted companies can also lose licenses, “which can be a bigger blow to the corporation than the fine.”
Griffin pointed to accounting giant Arthur Andersen, which closed after being convicted for destroying and altering Enron Corp.-related documents. Thousands of employees lost their jobs.
“The Supreme Court ultimately overturned the conviction, but the firm was long since defunct by the time that happened,” Griffin said.
