Former fertilizer CEO pleads guilty

San Francisco—The owner of California Liquid Fertilizer pleaded guilty Feb. 22 in federal court here to carrying out a million-dollar scheme to defraud farmers by misrepresenting his product as an organic fertilizer, according to the U.S. Attorney’s Office. Prosecutors say Peter Townsley will be sentenced June 13 on two counts of fraud, charging that he sold his Biolizer XN as an organic fertilizer that was approved for use in organic agriculture from April 2000 through December 2006, with labels claiming it was approved when it actually contained prohibited chemical ingredients. According to the plea agreement, Townsley applied for and received Organic Materials Review Institute (OMRI) approval of Biolizer XN in 1998, claiming that the fertilizer was made of fish, fish byproducts, feathermeal, and water. Townsley admitted that by April 2000 he had changed the ingredients in Biolizer XN to a product containing ammonium chloride, a material prohibited from use in organic agriculture. In addition, he did not notify OMRI of this change, falsely claiming nothing had changed in the formulation when it was time for the annual renewal of the approval and continuing to market the fertilizer as an OMRI-approved product. Townsley further admitted that by June 2001, he had again changed the formulation to include a different prohibited ingredient, ammonium sulfate, and notified OMRI that the formulation had not changed. Townsley admitted that he knew these representations to his customers were false when he made them, and that by deceiving his customers he was able to ensure continued sales of Biolizer XN to organic farmers. Townsley, 50, a citizen of Canada, was arrested in October 2010 after the unsealing of the initial indictment (GM Oct. 18, 2010). A superseding indictment was filed on July 7, 2011, charging him with one count of conspiracy to commit mail fraud in violation of Title 18, United States Code, Section 1349, and seven counts of mail fraud in violation of Title 18, United States Code, Section 1341. Townsley pleaded guilty to two counts of mail fraud based on his mailing of renewal certifications to OMRI in 2005 and 2006.