Jayson Penn Indicted By Federal Grand Jury In Denver; Feds Find A Chicken Conspiracy At Greeley-Based Firm
by Glen Richardson
A federal grand jury in Denver has indicted Jayson Penn, the CEO of Greeley-based Pilgrim’s Pride, and three other current or former chicken industry executives for price fixing. The grand jury in U.S. District Court here indicted all four with one count of conspiring to fix prices for broiler chickens from at least 2012 through 2017. A trial is scheduled to begin this month (August).
The indictments came after grocers, retailers and consumers accused Pilgrim’s Pride, Tyson Foods Inc., and other poultry processors in a lawsuit of conspiring since 2008 to inflate prices for broiler chickens. Fabio Sandrio, chief financial officer, is serving as interim president and CEO.
The other executives allegedly involved in the scheme include former Pilgrim’s Pride vice president Roger Austin, Claxton Poultry Farms President Mikell Fries, and Scott Brady, a former Pilgrim’s Price executive who joined Claxton in 2012. Pilgrim’s Pride supplies chicken for Costco and Yum Brands’ KFC, while Claxton is a supplier for Chick-fil-A.
$11.4 Billion Income
Pilgrim’s Pride is the second-largest U.S. chicken company, with reported annual revenue last year (2019) of $11.41 billion. It is majority-owned by Brazilian meat giant JBS. Tyson Foods Inc. — the largest U.S. poultry processor by sales — meanwhile says it is cooperating in the Justice Department’s probe into the matter, under a leniency program that will let Tyson avoid criminal prosecution.
Penn pleaded not guilty to the federal charges, while a judge barred him from contacting poultry buyers allegedly victimized by the scheme. He also agreed to surrender his passport and not leave the country.
U.S. Magistrate Judge Kristen Mix said at the hearing that Mr. Penn can remain free on personal recognizance, and can travel. She imposed conditions on his actions while he awaits trial, most notably that he can’t contact employees of eight companies that are customers of Pilgrim’s and are alleged victims of price-fixing by Mr. Penn and co-conspirators. The Judge also said Mr. Penn couldn’t contact price negotiators at other chicken suppliers who allegedly participated in the price fixing.
Penn On Paid Leave
Jayson Penn joined Pilgrim’s in March of 2011 as Senior Vice President of the Commercial Business Group. He moved up to President of Pilgrim’s USA in 2017 and was promoted to President-CEO in March of 2019.
Pilgrim’s Board placed Penn on leave with pay following the hearing. He makes $4,418,340 as President-CEO at Pilgrim’s Pride.
“The Board takes the recent allegations very seriously and believes it is in the best interest of both Jayson and the company that he is given the opportunity to focus on his legal defense at this time,” Board Chairman Gilberto Tomazoni said in a statement.
Ruffled Feathers
“After years of talk, the feds finally pounced,” observe legal experts familiar with how the Department of Justice executes prosecutions of business organizations. They say it is one of the stranger examples of alleged market-rigging in a long history of cases, made more unusual in that the chief executive of a company that big is actually facing criminal charges and as many as 10 years in prison. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by victims if either amount is greater than $1 million, according to the Department of Justice.
The charges the U.S. Justice Department laid out in its indictment appear to document executives at competing companies colluding to share pricing and bidding information from 2012 through 2017 in the cut-throat world of commodity chicken. Makan Delrahim, the head of the government’s antitrust division, said in a statement: “Executives who cheat American consumers, restaurateurs, and grocers, and compromise the integrity of our food supply, will be held responsible for their actions.”
Vertically integrated, Pilgrim’s Pride is involved in breeding, hatching, raising, processing and distributing chicken. The company produces some 11 billion pounds of chicken products annually and serves more than 6,000 retail food outlets, distributors and food service operators.
Chicken Feed Start
Pilgrim’s Pride traces its roots to Pittsburg, Texas, where Lonnie Alfred “Bo” Pilgrim opened a chicken feed store in 1946 with his older brother, Aubrey. They grew the fledgling company by handing out free chicks along with purchased bags of feed sold to customers.
Bo Pilgrim would often dress in pilgrim garb, complete with a pet chicken named “Henrietta,” to perform in advertisements. The extravagant Texas mansion where he lived was dubbed “Cluckingham Palace.” Set on 43 acres, it had 10 bathrooms, an indoor pool, cinema and gymnasium.
He sold the international poultry operation to Brazilian company JBS in 2009, and its headquarters was moved to Greeley. He died in 2017 at age 89.
