U.S. district court Judge Philip Brimmer delayed the price-fixing trial of Pilgrim’s Pride chief executive officer Jayson Penn to 2021 after both sides asked for additional time to prepare for the trial. The trial is now set to begin at 8 a.m. on Feb. 16 at the federal courthouse in Denver, Colo. Pre-trial motions are due by Dec. 28.
Brimmer approved a joint motion from federal prosecutors and Penn’s attorneys to declare the case as complex, which waived Penn’s right to a trial within 180 days.
In a June 14 announcement, Pilgrim’s Pride said Penn had begun a paid leave of absence, during which Penn intends to focus on his defense of the recently disclosed indictment against him, to which he has pleaded not guilty. The Pilgrim’s board of directors appointed Fabio Sandri, Pilgrim’s chief financial officer, as interim president and CEO.
“Pilgrim’s operates with the highest standards of integrity and is committed to free and open competition that benefits both customers and consumers,” Pilgrim’s chairman of the board Gilberto Tomazoni said. “The board takes the recent allegations very seriously and believes it is in the best interests of both Jayson and the company that he is given the opportunity to focus on his legal defense during this time. Jayson has built a strong leadership team at Pilgrim’s. The board has complete confidence in the ability of Fabio and the team to continue to implement Pilgrim’s strategy and successfully run day-to-day operations.”
A federal grand jury in U.S. district court in Denver returned an indictment June 3 against four executives, including Penn, for their alleged role in a conspiracy to “fix prices and rig bids" for broiler chickens, the U.S. Department of Justice said.
According to the indictment, from at least as early as 2012 until at least early 2017, Penn, Roger Austin, Mikell Fries and Scott Brady, together with co-conspirators “known and unknown to the grand jury,” allegedly conspired to fix prices and rig bids for broiler chickens across the U.S. During that time frame, Penn was an employee at a supplier but was hired as president and CEO of Pilgrim’s in March 2019. Austin is a former vice president of Pilgrim’s. Fries is the president and a member of the board, and Brady is vice president of Claxton Poultry Farms headquartered in Georgia.
Penn, Austin, Fries and Brady are the first to be charged in an ongoing criminal investigation into price fixing and bid rigging involving broiler chickens, DOJ said.
The offense charged carries a statutory maximum penalty of 10 years in prison and a $1 million fine. 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.
Pilgrim’s shareholders with losses exceeding $500,000 are filing a separate class action lawsuit.
On June 3, 2020, The Wall Street Journal reported that Pilgrim’s CEO and others had been indicted "for allegedly conspiring to fix prices on chickens sold to restaurants and grocery stores." After this news, the company's share price fell $2.58, or more than 12%, to close at $18.29 per share on June 3, 2020, thereby injuring investors.
The complaint filed in this class action alleges that throughout the class period, defendants made materially false and/or misleading statements as well as failed to disclose material adverse facts about the company’s business, operations and prospects. Specifically, defendants failed to disclose to investors: (1) that the company and its executives had participated in an illegal antitrust conspiracy to fix prices and rig bids from at least as early as 2012 and continuing through at least early 2017; (2) that the company received competitive advantages, which persisted during the class period, from its anticompetitive conduct, and (3) as a result, defendants’ statements about the company’s business, operations and prospects lacked a reasonable basis.
Law Offices of Howard G. Smith reminded investors of the upcoming Sept. 4, 2020, deadline to file a lead plaintiff motion in the class action filed on behalf of investors who purchased Pilgrim's Pride securities between Feb. 9, 2017 and June 3, 2020.