Donald C. Smaltz, Independent Counsel In Re Espy, today announced:
In the case brought by this Office entitled United States v.
Sun-Diamond Growers of California, the jury today returned a verdict finding
Sun-Diamond Growers guilty of eight counts of the nine count Indictment. The jury found
Sun-Diamond guilty of providing illegal gratuities to former Secretary of Agriculture Mike
Espy (Count One); engaging in a scheme to make illegal corporate campaign contributions
(Counts Three and Four); and of violating the Federal campaign contribution laws (Counts
Five through Nine).
Sun-Diamond could be sentenced to a maximum fine of $3,000,000. Judge
Ricardo M. Urbina, who presided over the trial, has set a sentencing date for December 10,
1996 at 9:00 a.m.
Mr. Smaltz stated: I want to thank the jury for its time, attention, and full and
impartial consideration of all of the evidence. The jury was attentive throughout, and
diligent in its deliberations. I am very pleased with the jury's verdict.
This verdict demonstrates that the jury was not in the least bit fooled by
Sun-Diamond's denial that it wilfully and repeatedly violated the federal criminal laws.
The trial evidence revealed a pervasive and persistent pattern of Sun-Diamond's efforts
to purchase favorable consideration from the USDA by showering Secretary Espy with a wide
variety of gifts -- countless meals in fancy restaurants, a crystal bowl, a 5-piece set of
luggage, a $9,000 tennis weekend in New York City.
Sun-Diamond's claims to this jury -- that it didn't know of some of the expenses, and
the other expenses were authorized only because its Senior Vice President, Douglas,
and Secretary Espy were friends -- were flatly rejected by this jury.
Similarly, Sun-Diamond's claims that it was framed by its chief outside lobbyist, James
Lake -- to whom Sun-Diamond paid a quarter of a million dollars per year -- and that it
never knowingly gave $5,000 in 1994 to retire the campaign debt of Henry Espy, Secretary
Espy's brother, were also Sun-Diamond fiction which this jury promptly rejected.
In making their claims, Sun-Diamond management:
1. Demonstrated the very height of corporate arrogance by repeatedly and wilfully
violating the law precluding gifts to government officials who regulate Sun-Diamond; and
2. Breached its fiduciary duties to its 4,500 farmer members in wilfully ignoring
Sun-Diamond's by-laws and committing criminal acts.
In September 1994, The Los Angeles Times ran a lengthy story on the Espy/Douglas
relationship which clearly served to put all of Sun-Diamond's officers and directors on
notice of the fact that criminal conduct may have occurred. Sun-Diamond management's
response was to ignore the article; not make any investigation; and then deny to its
members, deny to the public, deny to our investigators, and deny to this jury that it had
done anything wrong. That denial did not fool this jury. The jury has spoken and we move
on from here.
This is the first completed trial arising from this investigation.
Previously, James H. Lake, a former Sun-Diamond lobbyist, pleaded guilty to participating
in a scheme at the request of Richard Douglas, to circumvent the Federal campaign
contribution laws to make illegal contributions to the failed campaign of Mike Espy's
brother, Henry Espy. Mr. Lake has not been sentenced.
Four additional cases have been filed and are awaiting trial. These
are: United States v. Five M Farming Enterprises, Brook Keith Mitchell, Sr., and Brook
Keith Mitchell, Jr. (D.D.C.) - Scheduled trial date: October 21, 1996; United
States v. Henry William Espy, Jr., Alvarez T. Ferrouillet, Jr., Ferrouillet &
Ferrouillet, Municipal Healthcare Cooperative, Incorporated, and John J. Hemmingson
(E.D. LA.) - Scheduled trial date: November 4, 1996; United States v. Crop Growers
Corporation, John J. Hemmingson, and Gary A. Black (D.D.C.) - Scheduled trial date:
January 23, 1997; and United States v. Jack L. Williams (D.D.C.) - A case indicted
on: September 17, 1996. Arraignment will be on September 27, 1996 and a trial date will be
set at that time.
The Independent Counsel's investigation is continuing.