Found guilty of price-fixing, Chris Lischewski braces for upcoming sentencing
Chris Lischewski, the former president and CEO of Bumble Bee Foods, will finally face sentencing on Tuesday, 16 June after months of delays caused by the coronavirus crisis.
After a three-week-long trial ending in December, a jury found Lischewski guilty of being involved in a scheme between Bumble Bee, StarKist, and Chicken of the Sea to fix the price of canned tuna sold in the United States between 2011 and 2013. Lischewski faces a maximum penalty of 10 years in prison and a fine of USD 1 million (EUR 900,000).
In a hearing on Wednesday, 3 June, U.S. District Court Judge Edward M. Chen heard arguments both from attorneys from the U.S. Department of Justice’s Antitrust Division and from Lischewski’s attorneys regarding their disparate views on what Lischewski’s sentence should be. Lischewski’s side is asking for no more than 12 months of home confinement and 1,000 hours of community service at Big Brothers Big Sisters of San Diego County, while the government’s lawyers are pushing for a jail sentence of between 97 and 120 months and a USD 1 million (EUR 889,000) fine. 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.
With Chen set to determine whether Lischewski’s behavior qualified him to meet sentencing enhancement benchmarks for the volume of commerce involved in the crime, his level of leadership in the price-fixing, and for obstruction of justice for allegedly providing false testimony during his trial, Lischewski’s lawyers argued at Wednesday’s hearing that Lischewski “was far from the most culpable person” involved and said the prosecution had failed to prove the conspiracy had actually increased the prices of canned tuna.
“The government cites no evidence for its assertion that the conspiracy ‘cheated American consumers out of competitive prices’ because there is none,” they wrote in their sentencing recommendation. “Instead, the factual record confirms that the conspiracy caused no harm to consumers. There is no evidence that the conspiracy led to consumers paying higher prices for tuna fish.”
Nor did the conspiracy result in any material gain for Lischewski personally, they argued.
“The government has never alleged, much less proven, that Mr. Lischewski gained an extra nickel from the conduct at issue in this case,” they wrote. “The government is forced to distort the facts because it requests a distorted sentence.”
The lawyers also challenged the government’s portrayal of Lischewski as the ringleader of the conspiracy, arguing Bumble Bee Foods executives Kenneth Worsham and Walter Scott Cameron were leaders in the company’s price-fixing efforts.
“Contrary to the government’s argument, this was not a ‘top-down’ conspiracy,” they wrote. “The conspiracy was orchestrated by Mr. Cameron and Mr. Worsham in bilateral communications with their sales and trade marketing counterparts at StarKist and Chicken of the Sea.”
Lischewski has been singled out by the government for “over-the-top punitive treatment,” Lischewski’s legal team argued. It pointed to 13 tuna industry executives implicated in some level of involvement in the conspiracy that have thus far avoided any punishment, and the lighter sentences likely awaiting Cameron, Worsham, and StarKist executive Stephen Hodge for their involvement, while acknowledging their roles as cooperating witnesses
“The government has delayed the sentencings of Mr. Cameron, Mr. Worsham, and Mr. Hodge until after sentencing in this case, presumably so it does not have to go on record with its disproportionate sentencing recommendations for its cooperators before Mr. Lischewski is sentenced,” Lischewski’s lawyers argued. “The government already has agreed to request a sentence no longer than 10–16 months for Mr. Cameron – a sentence 10 times less than the government’s recommended sentence here. And, these cooperators almost certainly will enlist the government’s assistance in seeking non-custodial sentences, as Mr. Cameron and Mr. Worsham admitted they intend to do. Every one of the 16 co-conspirators identified as such by the government participated in the exact same conspiracy at issue here. Yet, the government asks the Court to sentence Mr. Lischewski alone to a term of imprisonment of 8 to 10 years while all the rest skate entirely or get slaps on the wrist. How is that fair or proportionate?”
In their own sentencing recommendation, the DOJ attorneys argued Lischewski “harmed consumers across the country seeking an affordable food for their families and left a trail of destruction in his industry.”
“Yet defendant fails to acknowledge his role in the conspiracy, even after conviction and on the eve of sentencing,” they wrote. “He is deserving of a just punishment that reflects the seriousness of his offense and deters other corporate leaders from following the same path.”
Responding to Lischewski’s attorneys claims that he had already suffered significant injury due to the loss of his job, income, and reputation, they cited previous precedent that “it is impermissible for a court to impose a lighter sentence on white-collar defendants than on blue-collar defendants because it reasons that white-collar offenders suffer greater reputational harm or have more to lose by conviction.” Moreover, they said Lischewski’s assets are still significant, including a second home in Napa for sale for USD 6.25 million (EUR 5.57 million), a USD 1.15 million (EUR 1.02 million) investment in Menon Renewable Products, and payment of nearly USD 4.4 million (EUR 3.9 million) in legal fees. Furthermore, while Lischewski claims to have sold his primary residence in San Diego, it is still identified as his legal address and utilities at the residence are still listed in his name, and have been paid for through the month of May.
“Rewarding defendant with a noncustodial sentence to be served in a home with a private movie theater, home gym, wine cellar, six bedrooms, and seven-and-a-half bathrooms shared only with two family members, while hundreds of millions of Americans shelter in place in significantly less opulent circumstances, sends a message to corporate executives that they are above the law and that their lifestyle alone is a get-out-of-jail-free card,” the prosecutors wrote.
DOJ attorney Leslie Wulff said during Wednesday’s hearing Lischewski is “totally unrepentant” and when he took the stand at his trial, ”he didn’t just issue an unembellished denial, he went above and beyond that, providing a completely alternative version of events.”
The DOJ sentencing report called out Lischewski’s performance at trial for extraordinary condemnation, saying it warranted a sentencing enhancement.
“Defendant testified substantively for several days, during which he denied all knowledge of the existence of a conspiracy or the participation of his subordinates in it, despite days of witness testimony and numerous exhibits to the contrary,” it said. “Defendant made a number of provably false and fantastical claims, any one of which would be the appropriate basis for an enhancement. Moreover, defendant’s false testimony was willful; he was prepared by vigorous and competent counsel, and there can be no claim that his repeated lies and evasions on the stand were ‘a result of confusion, mistake, or faulty memory.’”
Lischewski’s attorneys sharply criticized the DOJ’s “desperation and bloodlust” to request Lischewski go to jail during “the once-in-a-century deadly pandemic sweeping the U.S. prison system, which could transform a custodial term into a death sentence.”
“It is unreasonable for Mr. Lischewski to report to a federal prison, when incarceration raises a real risk to his life, while prisons are releasing to home confinement individuals just like Mr. Lischewski – those who are not at risk of reoffending, pose no danger to the public, and are less likely to contract COVID-19 in home confinement than they would be in prison,” they wrote.
But the DOJ said Lichewski has not proven why he deserves to be exempted from jail while others are still forced to serve their sentences behind bars.
“Although the COVID-19 pandemic is an extraordinary world event, defendant has failed to show that its impact on him differs from its impact on the American public or the federal prison population as a whole,” they wrote. “The government is not attempting to minimize the risks of the current situation. However, the existence of COVID-19, without more, is not a sufficient basis to depart or vary from a guidelines sentence.”
Separately, in a ruling issued 26 May, U.S. District Court for the Southern District of California Judge Janis L. Sammartino dismissed Lischewski from a civil case filed by Associated Wholesale Grocers, which claimed he and Bumble Bee, StarKist, Chicken of the Sea and their respective parent companies colluded to exchange pricing information, coordinate price announcements, reduce the quality of their products and restrain their product output between 2004 and 2015.
The Kansas City, Kansas-based wholesale distributor had sued in its home state, but Sammartino ruled Lischewski “lacks the minimum contacts with [Kansas] that are a prerequisite to the exercise of jurisdiction over him.”
In granting Lischewski’s order to dismiss him from the case, Sammartino ruled Associated Wholesale Grocers did not adequately prove Lischewski took actions “expressly aimed” at it.
Sammartino’s ruling alongside her denial of the Associated Wholesale Grocers’ motion to move forward with its lawsuit, which has been stalled as criminal proceedings against Lischewski and the tuna companies played out.
“Defendents have not made the requisite showing that they will suffer irreparable harm,” she wrote.” In the absence of such a showing, a stay may not be issued, regardless of the petitioner’s proof regarding the other stay factors.”