“I just did the job” – StarKist’s Stephen Hodge explains role in price-fixing scheme
Stephen L. Hodge says he’s sorry for his role in the price-fixing scandal that has rocked the U.S. canned tuna industry, resulting in massive fines for two of the companies involved, including his former employer, and a prison sentence for one of the scheme’s leaders.
Hodge, a former senior vice president of sales for StarKist who testified on behalf of the U.S. Department of Justice (DOJ) in the criminal price-fixing cases against StarKist, as well as Bumble Bee Foods and former Bumble Bee President and CEO Chris Lischewski, avoided jail time in his sentencing, which took place 13 January.
Hodge pleaded guilty in June 2017 to participating in a conspiracy that fixed the prices of canned tuna in the U.S. between 2011 and 2013 and faced up to 10 years in prison and a USD 1 million (EUR 876,000) fine. Hodge agreed to cooperate with the DOJ’s antitrust investigation and his sentencing was postponed until the criminal cases against all involved parties were resolved, culminating with the sentencing of Lischewski to 40 months in prison and a USD 100,000 fine (EUR 88,000) in June 2020.
Hodge was on the stand for two full days during Lischewski’s trial, and contributed to the DOJ’s understanding of how the conspiracy worked. In recognition of the help Hodge provided to the DOJ, Hodge received a reduced punishment of three years of probation, including six months of home confinement, as well as a fine of USD 25,000 (EUR 20,550) and 120 hours of community service. Two former Bumble Bee executives who also testified for the DOJ face sentencing in the coming weeks: Bumble Bee’s former senior vice president of sales, Walter Scott Cameron, has a sentencing hearing scheduled for 10 February and Kenneth Worsham, the company’s former senior vice president of trade marketing, has his hearing set for 17 March.
A letter written by Hodge in advance of his sentencing to the judge who has overseen all the criminal cases related to the price-fixing scandal, U.S. District Court Judge Edward M. Chen of the Northern District of California, paints a clearer picture of Hodge’s involvement in the price-fixing scheme. It also reveals his apparent regret for his actions.
“For the rest of my life, I will feel remorseful and embarrassed because of my involvement in an illegal price-fixing conspiracy,” Hodge wrote. “What I did was wrong and I am completely responsible for my own actions. This price-fixing conspiracy harmed American consumers and I am sorry that I was part of it.”
In his letter, Hodge describes a situation in which an intense push for profits combined with a high employee turnover rate and cozy relationships between executives at StarKist, Bumble Bee, and Chicken of the Sea, creating a price-exchange scheme that skirted into illegality.
Hodge slid into working with StarKist via his job at Del Monte Foods, which sold StarKist to South Korean conglomerate Dongwon Industries in 2008. At first, Hodge served as the liaison between StarKist and Del Monte, and after the sale, he became a full StarKist employee, running the firm’s sales team, at the request of Don Binotto, who Dongwon had appointed as StarKist’s CEO.
“Fish costs remained advantageous enough to allow us to be aggressive in the marketplace and still maintain a decent level of profitability. However, the increased profits were not enough to satisfy Dongwon. Ultimately, Don and Chairman Kim, Dongwon's leader, clashed and Don was let go at the end of 2010,” Hodge wrote. “In late 2011, Chuck Handford, the [vice president] of our trade marketing department, left the company to go to work for Don and his new venture. Then Joe Tuza, who was my counterpart as the [senior vice president] of marketing and trade marketing, was the next member of the original executive team to be let go by Dongwon. So, I was given the responsibility for trade marketing in addition to sales at that time.”
That’s when Hodge was brought into the inner circle of senior tuna industry executives who apparently had an agreement to share pricing information with each other on a regular basis.
“During the transition, we were in Joe's office. He told me, ‘You know we have these conversations with our competitors from time to time. Now that Chuck and I are gone, it's going to be your responsibility to handle this.’ He ultimately gave me the names and contact information for John Sawyer from Chicken of the Sea and Scott Cameron from Bumble Bee,” Hodge said.
Hodge wrote that he wasn’t surprised at receiving this information.
“I didn't think much of it at the time because, as Joe said, ‘you know we have these conversations.’ It was never a secret around the company. I knew it had been going on for years even though I certainly didn't know the extent and/or the substance of what those conversations entailed. I just know that they happened,” he wrote. “From my sales side, it was usually just a simple question to Chuck or Joe regarding whether we had competitive information, or confirmation, on something and they would respond accordingly. I never asked anything more detailed than that. Sometimes Joe would come back from a meeting with some of the competitors and give me an overview of where we stood versus them on certain aspects of the business.”
Hodge said because the conversations appeared to be so normal and commonplace, he didn’t suspect they were illegal.
“I know I should have questioned why we were doing this or at least had the courage to say I wasn't going to do that. Unfortunately, I didn't do that. I just did the job that was handed to me. I reached out to John Sawyer and in the short span of two quick conversations he passed me along to Mike White. I never did call Scott Cameron. In discussing the new setup with Bob Worsham, with whom I worked closely as he consulted for StarKist and had been employed by the company for basically 40 years, he told me to forget about calling Scott. Bob's son, Ken, was the [senior vice president] of trade at Bumble Bee. I had met Ken a bit when he worked for StarKist many years ago. Bob told me to just get a relationship going with Ken. He gave me Ken's contact information and thus began that process,” Hodge wrote. “I didn't think much about this situation. To me, it just became part of my job. When the conversations started, I thought that we were probably bending the rules. I didn't think we were breaking any laws. By the time it became apparent to me that our conduct was illegal, I was too far down the path and did not do anything to stop it.”
Hodge was fired by StarKist in late 2013, and he moved on to take a position as vice president of sales at Effingham, South Carolina-based McCall Farms, which produces consumer packaged goods, primarily canned vegetables. After he was charged in 2017, Hodge was let go by the company, though he was retained as a consultant. He has since purchased a hair salon in Charleston, South Carolina, which he operates with his wife.
“I wish I could go back and get a do-over, but that is not possible. I will accept my punishment and serve my sentence in peace,” he wrote in the conclusion of his letter. “Whatever the sentence is that awaits me, I know it won't be as bad as the life sentence I've already imposed on myself for my actions and poor decisions.”
Photo courtesy of J.S. Walker & Co.