Sun-Diamond Guilty of Illegal Donations
Sun-Diamond Growers, the giant California agricultural cooperative, was convicted Tuesday of giving expensive gifts to former Agriculture Secretary Mike Espy and of making illegal campaign contributions to his brother.
A federal court jury found Sun-Diamond guilty of giving more than $5,900 in meals, transportation, luggage and other gifts to Espy in 1993 and 1994 and disguising political contributions to his brother as corporate expenses.
Sources close to the case said that the investigation is continuing against Richard Douglas, who had arranged the gratuities as Sun-Diamond’s chief Washington lobbyist, and against Espy, who resigned from the Cabinet in December 1994 after the inquiry had begun. Douglas left Sun-Diamond last year.
Conviction of the Pleasanton, Calif., firm on eight of nine counts ended the first trial stemming from a two-year-old investigation by independent counsel Donald C. Smaltz.
Smaltz, a Los Angeles lawyer, said afterward that “this kind of conduct should send a strong signal” to other companies doing business with the government. Activities of Tyson Foods, an Arkansas poultry and meat processor, are among those still under investigation by Smaltz’s office.
In a statement from company headquarters, Sun-Diamond said that “while it respects the jury system, it is disappointed in and disagrees with the verdict.”
“Sun-Diamond has consistently maintained that its conduct and relationship with the former secretary of agriculture has been lawful and proper,” the statement said. “Sun-Diamond is thus considering an immediate appeal of the jury’s decision.”
The jury deliberated less than 10 hours over two days before reaching its verdict. The company will face fines of as much as $500,000 on some counts, and total penalties of about $3 million, at sentencing Dec. 10. No official of the firm will be jailed. Company President Larry Busboom testified under an immunity grant and no one else has been charged.
The politically powerful cooperative, which has contributed more than $200,000 to Gov. Pete Wilson’s state and federal political campaigns since 1989, represents 4,500 producers of raisins, nuts, figs and prunes in California and Oregon and has done extensive business with the federal government.
At the time it lavished gifts on Espy, the firm was receiving payments from his Agriculture Department to promote exports of U.S. farm products and it was seeking to slow down efforts to ban methyl bromide, a fungicide blamed for depleting the ozone layer, prosecutors said.
However, the prosecution did not try to show that Sun-Diamond received favors from the department, nor was such proof needed for conviction, according to instructions from U.S. District Judge Ricardo M. Urbina.
James H. Lake, a prominent Washington lobbyist who pleaded guilty to campaign fraud last year, testified for the prosecution that he and Douglas arranged an illegal $5,000 corporate contribution in an unsuccessful race for Congress by Henry Espy, the agriculture secretary’s brother. Lake testified that the contribution was a favor for Mike Espy, who wanted to help his brother.
The company also was found guilty of wire fraud in arranging for the contribution. The only count on which Sun-Diamond was acquitted was a charge that it paid $3,100 for Espy’s girlfriend to accompany him on a 1993 trip to Greece. Documents showed that another entity, the International Nut Council, had covered that expense.
Defense attorneys sought to convince jurors that the gifts Douglas gave to Mike Espy were based on a 25-year friendship between the two men, who first met as college students in the 1970s at Howard University in Washington.
Defense lawyer Richard A. Hibey argued that Sun-Diamond, which approved expenses submitted by Douglas, “was the true victim” because it was unaware of any illegal activities.
Times staff writer Martha Groves in Los Angeles contributed to this story.
