Organic Crap Sends Executive Up A Federal Creek Without A Paddle

November 9, 2012

Labeling for products that meet the USDA-NOP s...

Labeling for products that meet the USDA-NOP standards (Photo credit: Wikipedia)

This "Street Sweeper" column is about a lot of crap - figuratively and literally; so, maybe you want to get one of those green paper pine tree things to hang near you while you're reading this?  You know, given what this creek is filled with, you also might want to get yourself a sturdy, long paddle.

Congress enacted the Organic Foods Production Act of 1990 to regulate the organic agriculture industry, and out of that pile of legislative mulch, the National Organic Program ("NOP") was created to ensure that integrity of organic agricultural products through the implementation and administration of national production, handling and labeling standards.

When you stroll down the aisles at Whole Foods and you see all the organic foods, now you know what's behind all that. In fact, the whole organic foods sector is now big biz - just look at the likes of Hain, United Natural Foods, Sun Opta, Green Mountain Coffee Roasters.

All of which takes us to a pile of warm, steamy, organic fertilizer - ah yes, a natural, organic segway from a brief discussion about Congress and lawmaking!

In California, in order to be licensed as an organic fertilizer manufacturer, your products must be approved by Organic Materials Review Institute("OMRI"), a non-profit Oregon institution that purportedly provides independent review of materials and processes used in producing, processing, and handling organic food and fiber.  Imagine that, government oversees the quality of . . . lemme clean this up here . . . crap!  It's gotten to the point where you can't even take a . . . well, ummm, you know . . . you can't even take a crap without having to get certification from some state of federal agency. Wonderful. In any event, this OMRI certification is a big deal in the organic biz and if it's on your label, that's a plus; more to the point, organic farmers rely upon that certification to ensure their own compliance with NOP standards.

All of which now leads us to the crap storm (you like how I cleaned that one up?) surrounding Peter Townsley, 50, British Columbia, Canada. Seems that Townsley was the president of California Liquid Fertilizer ("CLF"), formerly located in theSalinas Valley in Gonzales, CA.

Fascinating concept if you think about it: Liquid Fertilizer.  Not exactly the business that I imagine too many young kids aspire to enter these days but, hey, it's a living, right?  On the other hand, a lot of what Wall Street sold a few years back sort of turned out to be pretty similar to liquid fertilizer, so, maybe there is a future in this sector.

In 1998, Townsley signed and submitted applications to OMRI to certify his Biolizer XN as a bona fide organic liquid organic fertilizer composed of ocean-going fish and fish byproducts, feathermeal, and water. In February 1999, OMRI certified Biolizer XN; and starting around April 2000, CLF sold the Biolizer XN organic fertilizer to California organic farms.

Then came the dark days of May 2000 when Townsley knowingly changed the chemical ingredients in Biolizer XN.  Gone was the fish. Gone was the feathermeal. Except, oops, he didn't exactly notify all those acronyms involved in certifying the organic industry about the deletions or the substitutions.

Feathermeal SIDE BAR: As part of Street Sweeper's tireless efforts to get to the bottom of every story - although getting to the bottom of a fertilizer story does present unsettling imagery - we thoroughly researched "feathermeal," having absolutely no idea as to what the hell that was or why it wound up in organic liquid fertilizer. Apparently feathermeal is made from rendering poultry feathers in high heat, and then grinding and drying the byproduct: yielding a high nitrogen level product used in animal feed and fertilizer.

Alas, Biolizer XN was bereft of fish and chicken feathers.  No, of course I didn't mean fish feathers and chicken feathers, I meant chicken feathers and fish, okay? Worse, the new liquid fertilizer parading under the organic Biolizer XN label contained ammonium chloride and ammonium sulfate, dastardly synthetic chemicals!  Needless to say, the OMRI folks would likely have had a coronary when asked to certify the product lacking the fish faces and chicken lips.

Sometime around December 2006, Townsley stopped selling Biolizer XN as an organic product but by then some $6 million bucks of this crap was fraudulently sold as in compliance with its certified organic provenance. It seems the crap hit the fan (yeah, nice euphemism) after the California Department of Food & Agriculture launched an investigation of the product. Townsley and his company were in trouble - about to get flushed down the criminal justice toilet.

On June 1, 2010, a federal grand jury in San Francisco, CA indicted Townsely on:

  • 8 counts of mail fraud;
  • 2 counts of making false statements; and
  • 1 count of conspiring to commit mail fraud.

The Indictment was unsealed on October 13, 2010, after Townsley was arrested at Los Angeles International Airport on October 9, 2010.  TheIndictment charged Townsley with engaging in a scheme to defraud purchasers of organic fertilizers, and the agency that approves fertilizers as organic, by falsely representing his company's fertilizer to be an organic product when he knew that the product contained prohibited synthetic materials. If convicted, Townsley faced the following maximum statutory penalties:

  • Mail Fraud and Conspiracy To Commit Mail Fraud (per count): 20 years of imprisonment, $250,000 fine; restitution
  • Making False Statements (per count): 5 years of imprisonment; $250,000 fine

Following the filing on July 7, 2011, of a Superseding Indictment charging one count of conspiracy to commit mail fraud and seven counts of mail fraud,  Townsley pleaded guilty to two counts of mail fraud on February 22, 2012.  On November 7, 2012, Townsley was sentenced to:

  • 364 days in prison;
  • 6 months of community confinement during which time he must perform 1,000 hours of community service in one or more community organic farming projects;
  • 3 years of supervised release with he first six months of that term in a halfway house
  • $125,000 fine.

The fraud initially came to the attention of the California Department of Food and Agriculture through a whistle-blower employed at Townsley's company. Apparently, the organic liquid fertilizer business is a cutthroat one.  You better watch where you step.