Chris Lischewski hopes to avoid prison, while prosecutors push for 10-year sentence
Former Bumble Bee President and CEO Chris Lischewski is fighting to avoid being sent to prison as part of his criminal sentencing for playing a leading role in a conspiracy that fixed the prices of canned tuna sold in the United States from 2011 to 2013.
After having his sentencing date pushed back several times due to the coronavirus outbreak, Lischewski faces sentencing on 3 June. On 13 May, Lischewski’s lawyers and attorneys for the U.S. Department of Justice’s Antitrust Division who successfully prosecuted the case against Lischewski filed competing sentencing memorandums in an effort to guide California Second District Court Judge Edward Chen in his decision on whether Lischewski should be sent to jail and for how long, as well as how much of a criminal fine to levy.
Prosecutors are pushing for a prison term of between 97 and 120 months – roughly between eight and 10 years – plus a USD 1 million (EUR 925,000) fine. Lischewski’s lawyers have countered with a request for a sentence of 12 months of home confinement and a fine of USD 25,000 (EUR 23,000). A pre-sentencing report set a middle ground, calling for Lischewski to receive a four-year prison sentence and a USD 100,000 (EUR 92,500) fine.
“Defendant committed this crime while he was the president and chief executive Officer of a major American company and a prominent member of his community. These facts do not make him a sympathetic figure or warrant a reduced sentence. Instead, they underscore the willfulness of defendant’s crime, the extent to which defendant misused his position to cheat American consumers out of competitive prices, and the absence of mitigating factors in this case,” prosecutors wrote in their filing. “Defendant’s desire for continued growth at Bumble Bee was financially motivated. Defendant stood to receive USD 43 million [EUR 39.8 million] if Bumble Bee met the growth projections defendant himself set on the Lion Capital’s timeline for projected sale of Bumble Bee to a new owner.”
Lischewski and prosecutors agree that Lischewski had invested USD 8 million (EUR 7.3 million) of his own money into an ownership stake in Bumble Bee. But the terms of many of those shares only promised a return if Bumble Bee grew at least 8 percent year-over-year at the time of Lion Capital’s exit from the company, according to prosecutors.
“Rising fish costs and continued ‘price wars’ between Bumble Bee and StarKist jeopardized the company’s ability to meet defendant’s aggressive forecasts, and with it, his payout,” they wrote.
Prosecutors also argued that Lischewski should face a sentence enhancement for obstruction of justice and for providing false testimony during his trial.
“Defendant had no obligation to testify in his defense, but he chose to do so and he should be held accountable for his own false testimony. He gave self-serving, implausible, and self-contradictory testimony regarding key facts and documents. In doing so, defendant went well beyond merely denying his guilt or exercising his right to testify in his own defense,” they wrote. “Rather, he gave demonstrably false testimony regarding his knowledge and actions that ‘ha[d] the potential for obstructing’ the prosecution of the case.”
Regarding the financial penalty, prosecutors argued in favor of the statutory maximum fine of USD 1 million due to the volume of commerce Bumble Bee engaged in during the timeframe of the conspiracy.
“With a volume of commerce of USD 1.002 billion [EUR 924.7 million], even the bottom of the range, 1 percent of the volume of commerce – approximately USD 10 million [EUR 9.3 million] – would exceed the statutory maximum fine,” they wrote.
Lischewski’s status as a leader of his company and in the seafood industry merits a higher financial penalty, as does his significant wealth, the prosecutors argued.
“When defendant decided to engage in this crime, he already was a wealthy man and CEO of a major company. By his own admission and that of every other witness during trial, defendant was one of the most, if not the most, prominent figures in the packaged-seafood industry. And he led a multi-year conspiracy to raise the price of canned tuna – all to satisfy his own greed. A guidelines prison sentence and fine is the only way to hold defendant accountable for his criminal conduct and disregard for the rule of law. A guidelines prison sentence also is the only way to deter other executives driven by greed who may be tempted to cheat others and follow in defendant’s footsteps. Similarly, only a significant financial penalty will serve as adequate deterrence for other wealthy executives. Imposing the Probation Office’s recommended fine, which amounts to a mere fraction of an average executive salary – and less one-seventh of defendant’s annual salary for the time period of the conspiracy – sends a message to those in the position to price fix that, if they are caught, the financial cost will be significantly less than they stand to gain by their crime. Here, defendant stood to make USD 43 million if he could meet the aggressive profitability projections he made to Lion Capital in connection with a sale of the company. A criminal fine amounting to 0.23 percent of what defendant stood to gain by his criminal conduct is no deterrent at all.”
In their own memorandum, Lischewski’s lawyers said Lischewski’s personal circumstances belied the need for a harsh sentence or fine.
“He is a conscientious businessman who as a CEO provided employment, leadership, and economic security to persons around the globe,” they wrote. “Lischewski’s personal circumstances and the actual characteristics of this offense, in particular in the midst of a global pandemic, countenance mercy, and a sentence of 12 months of home confinement.”
Lischewski has suffered enough punishment through the personal humiliation of public scrutiny of his life and behavior unearthed by the trial, his lawyers said.
“The very fact of Mr. Lischewski’s indictment and the jury’s verdict have been deeply humiliating and damaging for Mr. Lischewski and have imposed on him, his family, and his friends a public shaming,” they wrote. “Although many of Mr. Lischewski’s friends and family have steadfastly remained by his side and lent him support during this challenging time – as demonstrated by the dozens of letters of support submitted to this court – this investigation and trial have caused Mr. Lischewski great anguish and emotional pain. This case has been followed closely by the media, and Mr. Lischewski has been the subject of numerous unflattering news stories in major news publications, including the Los Angeles Times, CNN, and Bloomberg, as well as trade publications that are followed and read by Mr. Lischewski’s colleagues. For someone deeply proud of his professional accomplishments, seeing his face on CNN under a headline about the jury’s verdict has been punishment in itself.”
Lischewski has faced severe damage to his reputation that is likely to jeopardize his ability to work in the seafood industry ever again, his lawyers said in plea for mercy.
“Lischewski has suffered severe and lasting professional consequences as a result of this investigation and case. He was forced to step down from his position as president and CEO of Bumble Bee, a company that he believed in and cared about, and he was ultimately terminated. He has been completely shunned by many of his colleagues, both inside and outside of Bumble Bee,” they wrote. “Lischewski was a highly respected industry leader and a champion of global sustainability. His nearly 20 years at the helm of Bumble Bee was his life’s work and one of his greatest accomplishments. To have all of that evaporate as a result of this case has been shattering. Further, Mr. Lischewski will likely never be able to return to the packaged seafood industry, and to the sustainability efforts that were a focus of his life. He is unlikely to ever again have the opportunity to run a company anything like Bumble Bee, even though it was a job in which he thrived and excelled, and one that he loved.”
Lischewski also faces the prospect of having to pay millions of dollars in damages as the result of an ongoing civil lawsuit filed on behalf of Bumble Bee customers who were victims of the price-fixing conspiracy. And he has already lost much of his net worth through the evaporation of his investment in Bumble Bee, his lawyers said.
“The carnage caused by this criminal investigation has had devastating financial effects on Mr. Lischewski and his family. Bumble Bee filed for bankruptcy and has sold its key assets to a Taiwanese company. It has wrongfully abandoned all of its advancement and indemnity obligations to Mr. Lischewski, including its duty to advance funds for his defense in the civil and criminal cases. Mr. Lischewski’s personal investment in the company of over USD 8 million, is now worthless. He has sold his home. He has liquidated many of his personal assets. He no longer has an income and fears he may never again be able to be gainfully employed or to serve his community,” they wrote. “The impact of this case on Mr. Lischewski and his family already has been far-reaching and severe. These significant additional forms of punishment counsel in favor of a humane sentence.”
The coronavirus crisis is another reason given by Lischewski’s lawyers in asking Chen for home confinement rather than a prison sentence.
“[Lischewski] will be 60-years-old in September and thus in the category of ‘more vulnerable’ individuals; he has no risk of recidivism; he would be released to his home, where he would be at a significantly lower risk of contracting COVID-19 than in a prison; and he poses no danger to any other person or the community,” they wrote. “To compel Mr. Lischewski to serve a sentence in a federal prison in the midst of this pandemic – during a time when the Attorney General, the [Bureau of Prisons], and courts across the country are working to release prisoners with similar risk profiles – would not only unnecessarily endanger Mr. Lischewski’s life, but also undermine these efforts to reduce the prison population.”
COVID-19 was also mentioned by the prosecutors in arguing for Lischewski to pay the maximum allowable fine.
“Defendant’s conduct is particularly egregious because canned tuna is a staple household product. For many Americans, canned tuna is one of the only affordable sources of protein. The surging demand for canned tuna during the coronavirus pandemic demonstrates the importance of affordable protein for Americans during economic downturns,” they wrote. “Defendant’s price fixing not only deprived American consumers of the benefit of competition, it also deprived shoppers of the option and ability to spend lost money on other products. As a result of the fixed prices – when cans of tuna jumped from USD 1.00 to USD 1.50 [EUR 0.92 to EUR 1.39] a can— a shopper buying a few cans of tuna might be unable to also buy a loaf of bread.”
Photo courtesy of Bumble Bee Foods