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FOR IMMEDIATE RELEASE

May 30, 1996

 

PRESS RELEASE

 

Donald C. Smaltz, Independent Counsel In Re Espy, today made the following statement:

   A federal Grand Jury sitting in the District of Columbia has returned a 17 count criminal Indictment against Crop Growers Corporation, John J. Hemmingson and Gary A. Black. At the time material to the charges in the Indictment, Crop Growers Corporation was a public company with business pending before the United States Department of Agriculture. John J. Hemmingson was Chairman of the Board of Directors, President and CEO of Crop Growers Corporation and Gary A. Black was Executive Vice President, Chief Financial Officer, Treasurer and a director. The Indictment alleges that the defendants, among other things, made illegal corporate campaign contributions totaling approximately $46,000.00 and reimbursed 26 conduits for each of their $1,000.00 contributions to the Henry Espy for Congress Committee. The Indictment further alleges that the defendants falsified the financial books and records of Crop Growers in order to conceal the illegal contributions and reimbursements.

   Count One of the Indictment charges the defendants with conspiracy to commit various offenses, including conspiracy to defraud the United States by concealing corporate campaign contributions to Henry Espy for the purpose of gaining access to Secretary of Agriculture Espy, in violation of Title 18, United States Code, Section 371. In Counts Two and Three the defendants are charged with causing the Henry Espy for Congress Committee to make false statements to the Federal Election Commission in the Reports of Receipts and Disbursements that it filed with the FEC in violation of Title 18, United States Code, Section 1001 and Title 18, United States Code, Section 2.

   Count Four further charges the defendants with false corporate books and records in violation of Title 15, United States Code, Sections 78m(b)(2)(A) and 78ff(a) and Title 18, United States Code, Section 2. Count Five of the Indictment charges Hemmingson and Black with falsification of Crop Growers' accounting records in violation of Title 17, Code of Federal Regulations, Section 240.13b2-1 and Title 15, United States Code, Section 78ff(a).

   The Indictment further charges the defendants in Counts Six through Fifteen with false statements by omission to the Securities Exchange Commission in securities offering documents and an annual report, in violation of Title 18, United States Code, Section 1001 and Title 18, United States Code, Section 2. Count Sixteen of the Indictment charges the defendants with securities fraud as a result of Crop Growers' omission to state material facts in violation of Title 15, United States Code, Sections 77q(a) and 77x and Title 18, United States Code, Section 2. Count Seventeen of the Indictment further charges the defendants with false statements to auditors in violation of Title 17, Code of Federal Regulations, Section 240.13b2-2 and Title 15, United States Code, Section 78ff(a). Not all defendants are charged in all counts of the Indictment.

   As to the individual defendants, a conviction on the conspiracy and false statements counts is punishable, on each of the thirteen counts (Counts One through Three, and Six through Fifteen), by a maximum term of imprisonment of five years, up to three years of supervised release following imprisonment, and a fine of up to $250,000.00. As against Crop Growers Corporation, a conviction on each of these counts is punishable by a maximum fine of $500,000.00 per count.

   Regarding the charges under the Securities Exchange Act of 1934 against the individual defendants in Counts Four, Five and Seventeen, a conviction on these counts is punishable, on each count, by a maximum term of imprisonment of ten years, up to three years of supervised release following imprisonment, and a fine of up to $1,000,000.00. As against Crop Growers Corporation, a conviction on Count Four is punishable by a maximum fine of $2,500,000.00.

   Finally, with respect to the charge contained in Count Sixteen alleging securities fraud under the Securities Act of 1933, as against the individual defendants, a conviction on this count is punishable by a maximum term of imprisonment of five years, up to three years of supervised release following imprisonment, and a fine of up to $10,000.00. As to Crop Growers Corporation, a conviction on Count Sixteen is punishable by a maximum fine of $10,000.00.

   The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The Independent Counsel's investigation is ongoing.

NOTE: Copies of the Indictment are available from the Office of Independent Counsel.

 

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