With three weeks until jury selection, the first sealed document with several exhibits was docketed in the United States v. Paul Krause. Its contents remain a mystery.
And ahead of the July 22 pre-trial meeting, the prosecution and defense are conducting spirited arguments over whether certain parts of the indictment will be kept from the jury. Defense motions to exclude sanitary, recall, and other language from the indictment are pending.
Jury selection will begin on Aug. 1 in Austin’s federal District Court for Western Texas. The panel selected will sit in judgment of 67-year-old Paul Kruse, the retired former president of Blue Bell Creameries. He is charged with conspiracy and fraud related to a deadly 2015 listeria outbreak traced to Blue Bell ice cream. In the four-state outbreak, there were three deaths among 10 illnesses. All ten patients were hospitalized.
In recent pre-trial filings, Kruse’s defense attorneys have debated with their prosecution counterparts about whether the indictment includes unnecessary details about the sanitary conditions at ice cream manufacturing plants and the recall of Blue Bell ice cream. Some pre-trial comprises might be possible.
“The distance between the parties on recalls appears to be slight and might not exist at all, ” defense attorneys wrote. “The government seems to agree that it will not argue or present evidence that Blue Bell should have recalled its ice cream sooner or more broadly.”
“For its part, the defense made clear in Kruse’s initial motion that Kruse does not seek to bar evidence that Blue Bell conducted recalls; the events of 2015 could not be described without mentioning them.” they continued.
“Nor does Kruse seek to bar the government from attempting to prove that he or others at Blue Bell made false or misleading statements to customers about recalls. He seeks only to bar evidence and argument suggesting that Blue Bell should have recalled its ice cream sooner or more broadly.”
Whether Kruse might have been slow to order a recall of Blue Bell ice cream is part of the debate.
“Here is the remaining zone of potential controversy: the government appears to want to argue, as evidence of the alleged scheme to defraud, that Kruse did not order a recall because he knew that a recall would require a public statement about the LM (Listeria testing) findings,” defense attorneys added.
“The fact that the defendant decided not to initiate a recall at various points in the scheme — and therefore did not notify Blue Bell’s customers and the public about the contaminated product — is an important aspect of the charged scheme to defraud.”
“This argument is doubly wrong: Blue Bell had no legal duty to initiate a recall unless directed to do so by the FDA, which never happened, and neither Blue Bell nor (more importantly for these purposes) Kruse owed a duty of disclosure to Blue Bell’s customers”
The defense also said it “respectfully suggests” that the court address the second part of the “government’s error, involving its theory that Kruse had a duty to disclose the LM (Listeria test) results to Blue Bell’s customers, in connection with Kruse’s motion addressing nondisclosures.
As for recalls, we suggest that the Court carry the issue until trial the attorneys wrote. According to the defense, the government’s references to recalls may be entirely appropriate, and no ruling is necessary.
“On the other hand, if the government states or implies in its opening, closing, or questioning of witnesses that Blue Bell had an obligation to recall its products sooner or more broadly, we will object and request an immediate curative instruction.”
The defense says the government concedes that a wire fraud charge based on omissions — a nondisclosure theory — must allege a duty to disclose. The government “concedes — at least tacitly — that Kruse owed no such duty to Blue Bell’s customers.”
But it maintains that it can pursue a nondisclosure theory here, even in the absence of a duty to disclose, because it has combined that theory with an affirmative misrepresentation theory.
The defense says “the government is wrong. A nondisclosure theory cannot stand without a duty to disclose, even when combined with an affirmative misrepresentation theory.”
Kruse issued the first recall in the company’s century-long history and suspended all production for several weeks.
A federal Grand Jury indicted Kruse in 2020 after a five-year investigation.
The Austin-based federal Western District Court for Texas “finds the United States v. Kruse a complex criminal case.”
As a corporate entity, Blue Bell pleaded guilty in a related case in 2020 to two counts of distributing adulterated food products in violation of the Federal Food, Drug, and Cosmetic Act.
The company agreed to pay criminal penalties totaling $17.5 million and $2,1 million to resolve False Claims Act allegations regarding ice cream products manufactured under unsanitary conditions and sold to federal facilities, including the military. The total $19.35 million in fines, forfeiture, and civil settlement payments was the second-largest amount ever paid in resolving a food safety matter.
Kruse is the only individual facing criminal charges due to the 2015 outbreak.
Blue Bell Creameries, founded in 1907 in Brenham, TX, today produces Blue Bell ice cream, an iconic Texan brand.
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