A federal grand jury in San Francisco indicted Peter Townsley, 49, of British Columbia, Canada, with eight counts of mail fraud, two counts of making false statements, and one count of conspiring to commit mail fraud. The indictment was unsealed Oct. 12 after Townsley was arrested Oct. 9 at the Los Angeles Airport. The indictment charges Townsley with engaging in a scheme to defraud purchasers of organic fertilizers, and the agency that approves fertilizers as organic, by falsely representing his company’s fertilizer to be an organic product when he knew that the product contained prohibited synthetic materials.
The news of the “spiking” of organic fertilizers with synthetics broke in California in early 2009 (GM Jan. 5, Jan. 29, Feb. 2, 2009).
According to the indictment, Townsley was the president of California Liquid Fertilizer (CLF), a business formerly located in the Salinas Valley in Gonzales, Calif. CLF sold what it represented as organic fertilizers to organic farms in California. Beginning in approximately April 2000 and continuing until December 2006, Townsley allegedly engaged in a scheme to defraud that involved a CLF product called Biolizer XN.
The indictment charges that in 1998, Townsley signed and submitted applications to the Organic Materials Review Institute (OMRI), an agency that approves fertilizers and other products as organic, to have OMRI certify the Biolizer XN product as organic.
Townsley’s final application on behalf of CLF stated that Biolizer XN was a liquid organic fertilizer composed of ocean-going fish and fish byproducts, feathermeal, and water. In reliance on these representations, in February 1999, OMRI approved Biolizer XN to be listed as an organic fertilizer. CLF then began marketing Biolizer XN as an organic fertilizer that was OMRI listed.
The indictment alleges that in approximately May 2000, Townsley knowingly changed the chemical ingredients in Biolizer XN so that it no longer contained fish or feathermeal; instead, it allegedly contained synthetic ingredients, including ammonium chloride and subsequently ammonium sulfate. Despite knowing that the new formulations did not contain fish and feathermeal, had not been approved by OMRI, and contained synthetic ingredients, Townsley allegedly continued to sell Biolizer XN as an organic product until December 2006. CLF only stopped selling the Biolizer XN as an organic product when the California Department of Food & Agriculture launched an investigation of the product.
The indictment states that Townsley, via CLF, marketed and sold approximately $6 million worth of Biolizer XN between May 2000 and December 2006.
In addition to labeling Biolizer XN as organic and OMRI-approved, the indictment alleges that Townsley submitted annual renewal applications to OMRI stating that Biolizer XN continued to contain organic inputs when he knew that it did not. As a result, OMRI continued to list Biolizer XN as a certified organic fertilizer and Townsley continued to label and market Biolizer XN as an organic product.
Townsley is free on a $150,000 bond
The maximum statutory penalty for each count of mail fraud, in violation of Title 18, United States Code, Section 1341, and for each count of conspiracy to commit mail fraud, in violation of Title 18, United States Code, Section 1349, is 20 years of imprisonment, a fine of $250,000, plus restitution.
The maximum statutory penalty for each count of making false statements, in violation of Title 18, United States Code, Section 1001, is five years of imprisonment and a fine of $250,000.