(Bloomberg) -- Bumble Bee Foods LLC’s former Chief Executive Officer Chris Lischewski is pleading ignorance of any plans to fix prices of canned tuna in the U.S. to try to get a jury to clear him of criminal charges.
But prosecutors claim he conspired with other executives at rival companies on a “peace proposal” so he could boost prices and meet earnings targets set by Bumble Bee’s 2010 sale to Lion Capital.
The thinly-veiled plan included coded language between executives at Bumble Bee and Starkist Co. to fix prices by “setting their own secret rules,” in which the competitors “stepped back” to accept their historical sales, and “no one is attacking anyone,” prosecutor Manish Kumar told a jury in San Francisco Monday at the end of Lischewski’s trial.
“Even though their scheme only stole a few cents at a time, those numbers added up and they added up fast,” Kumar said.
San Diego-based Bumble Bee, owner of the largest North American brand of packaged seafood, filed for bankruptcy protection Nov. 21 after pleading guilty in 2017 to a felony charge of conspiring with Starkist Co. and Chicken of the Sea Inc. to fix and raise prices of canned tuna in the U.S. from 2011 through at least late 2013.
Bumble Bee’s sale to Lion Capital required the company to hit $140 million in earnings to justify the acquisition price, Kumar said. The companies choreographed price increases on hundreds of millions of cans of tuna sold annually, the prosecutor said.
Lischewski’s lawyer, Elliot Peters, attempted to deflect the government’s focus on the ex-CEO’s alleged peace plan by telling jurors that the “language of war” –- including the words attacks, peace, truce –- is industry lingo.
“It’s just the way these people talk,” Peters said. “This is the language people in this industry use.”
Peters challenged timelines, emails and details of the alleged conspiracy to try to show that prosecutors failed to prove a single overarching conspiracy. But the defense lawyer spent most of his time attacking the credibility of Lischewski’s colleagues, Kenneth Worsham and Walter Cameron, who in 2016 pleaded guilty to price fixing and agreed to cooperate with prosecutors.
Lischewski, who testified at trial, denied participating in any price-fixing scheme, Peters told the jury. The government offered no "credible proof" that Lischewski knew of Cameron’s and Worsham’s conspiracy, Peters said.
As part of its guilty plea, Bumble Bee agreed to pay a $25 million fine, and to cooperate with the Department of Justice’s ongoing antitrust investigation into the packaged-seafood industry.
The fine and the weight of civil lawsuits were too much for the company to carry, and it entered bankruptcy protection with a plan to be bought by FCF Co., a Taiwan-based peer.
To prevail against Lischewski, prosecutors must prove he knowingly participated in a conspiracy and that it substantially affected interstate commerce.
The trial won’t have any direct, material impact on Bumble Bee’s bankruptcy, said Phil Giordano, a partner in the antitrust practice of Hughes Hubbard & Reed LLP and a former federal prosecutor.
“For any U.S. executive to say they were unaware would be disingenuous,” Giordano said before closing arguments.
“This stuff is taught in business school, in compliance training, it’s just common knowledge,” Giordano added. “Some of the evidence is that they did things to conceal this activity -- for example with off-site meetings. That kind of thing is an automatic red flag.”
The case is U.S. v. Lischewski, 18-cr-00203, U.S. District Court, Northern District of California (San Francisco).
(Updates with defense lawyer’s arguments.)
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