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House of Raeford Farms must pay a $1.5 million fine and overhaul its hiring practices under an agreement that will allow a subsidiary to avoid prosecution on federal immigration charges.
The deal will also let two indicted managers at the poultry company's Greenville, S.C., plant avoid criminal convictions, provided they enter a probationary program.
The settlement - signed by federal prosecutors and company officials just hours before the case was set for trial Tuesday - gives House of Raeford subsidiary Columbia Farms an opportunity to keep its record clean. It likely ends a legal clash that could have cost House of Raeford millions of dollars in federal poultry contracts.
Following a massive raid at the Greenville plant last year, Columbia Farms was charged with intentionally hiring illegal immigrants. An Observer investigation of workplace safety in the poultry industry spurred the federal probe.
Under the agreement, the government will dismiss charges against the company if it improves its hiring practices over the next two years and submits to federal monitoring at its eight plants in the Carolinas and Louisiana.
"Our goal is not to punish corporations and force them to cut jobs, especially in these economic times," Walt Wilkins, U.S. attorney for South Carolina, told the Observer. "Our goal is to make them a responsible corporate citizen. And this agreement accomplishes all of that."
The settlement stipulates that "Columbia Farms accepts responsibility for its actions associated with the employment of unauthorized workers."
House of Raeford has already begun revamping its hiring practices, Wilkins said. Over the past year, a newly hired corporate compliance officer has audited hiring procedures to ensure they conform to federal laws. "I am confident that we are seeing a true change in these companies' approach to hiring," Wilkins said.
To avoid future prosecution, the company must:
Participate in federal programs - including E-Verify - that allow employers to check workers' documents and Social Security numbers against federal databases.
Report any evidence of immigration violations to the federal government.
Use an outside auditor to help ensure those hired provide proper documents.
Provide regular training so that employees are better equipped to identify fraudulent documents and comply with federal law.
U.S. Immigration and Customs Enforcement has been monitoring the company, even after last year's raid.
"I know that ICE was looking into the hiring practices of some of the other (House of Raeford) facilities, which undoubtedly was a factor considered by the companies in entering into this agreement," Kevin McDonald, first assistant U.S. attorney for South Carolina, wrote in an e-mail.
Contracts in question
House of Raeford CEO Bob Johnson said he was pleased with the settlement.
"Today's agreement acknowledges our full cooperation with the government's investigation," he wrote in a statement. "We continue our commitment to doing business with the highest ethical standards, and to complying with all federal and state employment laws and regulations."
Under the deal, prosecutors will dismiss charges against two indicted managers - Greenville complex manager Barry Cronic and human resources director Elaine Crump - if they successfully complete a probationary program. Cronic and Crump have kept their jobs.
Some observers - including former Greenville plant supervisor Enrique Pagan - contended the government was too lenient on the multi-million-dollar company.
"It's a tiny fine considering how much money they generate," Pagan said.
But Wilkins said the company likely would have paid a much smaller penalty - probably no more than $900,000 - if it had been convicted at trial.
"In that respect, ($1.5 million) seems like a very good number," he said.
During the past year, House of Raeford has been awarded about $6.7 million in federal contracts - including nearly $1million in federal stimulus money - to supply turkey for school lunches and low-income people.
Lawyers for the U.S. Department of Agriculture will have to determine whether the company remains eligible for future contracts, department spokesman Billy Cox said.
Cleaning house
In its February 2008 series, the Observer reported that some House of Raeford managers knowingly employed illegal immigrants. Sources said the plants preferred undocumented workers because they were less likely to question working conditions for fear of being fired or deported.
Eight months later, ICE raided the Greenville plant, arresting more than 300 workers. It was the largest immigration raid ever to take place in the Carolinas. At the time, authorities said, 777 of the plant's 825 workers had apparently submitted false documents.
Among those prosecuted were 21 Latino supervisors hired with fraudulent documents. All the supervisors served time in jail, Wilkins said.
Following the federal crackdown, the company curbed its reliance on Latino workers. Workers at the company's main plant in Raeford said earlier this year that the company had stopped hiring immigrants and had let hundreds more go for using fake documents.
Over the decades, House of Raeford has climbed from a backyard bird operation to one of the nation's leading chicken and turkey producers, with eight processing plants in the Southeast, about 6,000 employees and nearly $600 million in annual sales.
It's a family-run business. Marvin Johnson, 83, is the company's chairman. His son, Bob, is the chief executive officer.
Tuesday's deal may mark the end of the company's largest legal headaches.
The federal government is increasingly offering such "deferred prosecution" deals, which allow companies to avoid criminal penalties while giving the government a chance to monitor compliance, according to Lisa Griffin, a law professor at Duke University. Over the past five years, the federal government has entered into about 80 of those agreements, Griffin said.
