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ChemNutra Trial Extended Until June

Company responsible for importing melamine-tainted products seeks plea

By Lisa Wade McCormick
ConsumerAffairs.com

March 18, 2009

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A federal judge has continued until June the criminal trial against ChemNutra Inc., the Las Vegas-based company that imported melamine-tainted wheat gluten used to make pet food. That contamination -- blamed for the illnesses and deaths of thousands of dogs and cats in 2007 — prompted the largest pet food recall in U.S. history.

But a plea agreement could be in the works in the government's case against ChemNutra, its owner and chief executive officer, Stephen S. Miller, and his wife, Sally Qing Miller, the company's president and controlling officer.

"Defense counsel and counsel for the government are in continuing plea negotiations," Lance D. Sandage, attorney for Stephen Miller, wrote in his petition for a continuance. "Counsel believes that these negotiations will result in the resolution of this matter in the very near future. However, additional time is needed to finalize some of the unresolved issues."

The trial against the Millers and ChemNutra was to begin March 23 in the Western District Court of Missouri. If a plea agreement is not reached, the trail will start on June 8, 2009.

News of a possible plea bargain is this case is troubling to pet owner Carol V., whose two beloved cats became gravely ill in 2007 after eating tainted pet food.

"I really hoped to hear under oath what they (the Millers) knew and when they knew it," Carol told us. "It's so sad that no one in power has tried to change regulations for this to happen again. Remember, this was 'human grade' wheat gluten. People think the peanut scandal is horrific. Imagine all the foods that contain gluten."

The Millers are charged with 26-counts of misdemeanor distribution of adulterated and/or misbranded food and one felony count of conspiracy to commit wire fraud.

They are free on a $10,000 unsecured appearance bond posted during their first appearance and arrangement in February.

In a separate, but related case, federal officials in 2008 also indicted two Chinese companies — and their officers — for allegedly manufacturing and distributing melamine-tainted wheat gluten:

• Xuzhou Anying Biologic Technology Development Co., LTD. (XAC), a Chinese processor of plant proteins that exports products to the United States;

• Mao Linzhun, a Chinese national who was the owner and manager of XAC;

• Suzhou Textiles, Silk, Light Industrial Products, Arts and Crafts I/E Co., LTD. (SSC), a Chinese broker used by XAC to export products to the United States;

• Chen Zhen Hao, 58, a Chinese national who was president of SSC.

The indictments unraveled a web of fraud and deception that stretched from Nevada and China — and ultimately across the country and into the homes of thousands of unsuspecting pet owners and their dogs and cats.

According to court records, more than 800 metric tons of wheat gluten was exported to the United States, in at least 13 separate shipments, between November 6, 2006 and February 21, 2007. Invoices reveal those shipments totaled nearly $850,000.

Those shipments, however, were tainted with melamine — a chemical used to make plastics — and falsely labeled to avoid inspection in China, the indicted stated.

Court records revealed that ChemNutra and the Millers received the melamine-tainted wheat gluten at a port of entry in Kansas City, Missouri, and then sold the products to their customers.

Those customers used the contaminated wheat gluten to make several brands of pet food, the indictments stated. Pet food makers use wheat gluten, a natural protein derived from wheat or wheat flour, as a binding agent to thicken the "gravy."

ChemNutra contracted with SSC to purchase the wheat gluten, the indictments stated. Under the terms of that contract, SSC agreed to provide ChemNutra with food grade wheat gluten that had a minimum protein content of 75 percent.

SSC then entered into a separate contract with XAC to supply the wheat gluten needed to fulfill its contract with ChemNutra. But XAC added melamine to the wheat gluten to falsely inflate the protein content, and meet the amounts specified in ChemNutra's contract, according to the indictment.

It was cheaper for XAC to add melamine to the wheat gluten than to increase its actual protein content, officials stated.

According to the indictments, SSC mislabeled the wheat gluten with a code used for products that are not subject to mandatory inspection by the country's General Administration of Quality supervision, Inspection and Quarantine (AQSIQ).

The Chinese government stated that XAC did not declare the tainted wheat gluten as a raw material for feed or as food. Instead, it falsely identified the wheat gluten as another product — one that was not subject to inspection. The indictments further alleged that SCC provided ChemNutra and the Millers with documents that used the inaccurate product code.

Citing e-mail messages, the indictments alleged that Sally Miller, holds an engineering degree in food chemistry from Hangzhou University in China and has more than 10 years of work experience in China, knew the wheat gluten would not be subject to inspections in China because the shipments were mislabeled with that product code.

The Millers have denied any wrongdoing.

"(They) deny the allegations by the Justice Department in the strongest of terms and look forward to the opportunity to prove their innocence at trial," a spokesman for ChemNutra told reporters when the couple was charged.

In a written statement, the company also said that federal authorities did not accuse the Millers of knowing the wheat gluten was tainted with melamine.

"Although Mr. and Mrs. Miller strongly deny any intent to defraud or knowledge of wrongdoing, the government does not allege that Mr. and Mrs. Miller knew of the presence of melamine or any other substance that would cause death or injury to animals," the statement read. "The Millers unequivocally support the government pursuing those with knowledge of the dangerous contaminants."

Federal officials acknowledged it might be difficult to bring the Chinese defendants to the United States for trail. The U.S. does not have an extradition treaty with China.

The Justice Department, however, said it would send arrest warrants for the Chinese defendants to international authorities – action that makes it possible for the men to be detained if they travel to a country with a U.S. extradition treaty.

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