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Financial Crimes
05/27/2008

Two Chicago executives arrested on federal charges for allegedly conspiring to import antibiotic-tainted honey from China

CHICAGO - Two Chicago executives of a German-based food company were arrested on federal charges for allegedly conspiring to illegally import honey from China that was falsely identified as coming from other countries to avoid anti-dumping duties, and that contained an antibiotic not approved for use in food producing animals, including bees. The charges resulted from an investigation conducted by U.S. Immigration and Customs Enforcement (ICE).

According to the charges, a confidential informant who worked for the company recently told ICE agents that it was common knowledge among company executives, including one of the defendants, that shipments of imported honey frequently were contaminated with antibiotics that were banned by the Food and Drug Administration (FDA). Documents seized during the execution of a search warrant at the company's Chicago offices in March included test results showing company officials were advised that one shipment of honey was adulterated with an antibiotic, but nonetheless sold it to a company in Texas.

The complaint does not allege any instances of illness or other public health consequences attributed to consumption of the honey, nor does it identify any store brands or domestic supply chain.

ICE agents made the arrests Friday after learning one defendant was preparing to depart for Germany that night, and the other defendant was planning to depart Thursday. Both defendants are executives of Alfred L. Wolff Inc., or Alfred L. Wolff GmbH (ALW), the food ingredients component of Wolff & Olsen.  Wolff & Olsen is a worldwide distributor of food products, including honey and honey-based derivatives, based in Hamburg, Germany. Through its Chicago office, ALW has imported nearly $30 million worth of honey into the United States since 2005.

One defendant, Stefanie Giesselbach, 30, the national sales manager for ALW's Chicago office since approximately November 2006, was responsible for ALW's purchase or importation and sale of honey in the United States. Giesselbach either resigned or was transferred recently. She was arrested at O'Hare International Airport just before she was to board a flight to Germany Friday night. The other defendant, Magnus von Buddenbrock, 32, has been general manager of ALW's Chicago office since late 2006 and had overall responsibility for the office. He was arrested Friday night at the airport after dropping Giesselbach off for her flight.

Both were charged in a criminal complaint with conspiracy to illegally import adulterated honey into the United States. They appeared Friday evening before U.S. Magistrate Judge Martin Ashman and remain in federal custody pending a detention hearing at 1 p.m. Thursday in U.S. District Court.

The charges were announced by Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois, and Gary J. Hartwig, acting special agent in charge of ICE's Office of Investigations in Chicago. The Food and Drug Administration Office of Criminal Investigation also participated in the investigation, which is continuing.

"ICE will continue to aggressively pursue individuals and organizations involved with illegally importing goods that may jeopardize the safety of our communities," Hartwig said. "There is an obvious safety concern regarding illegally importing honey that is contaminated with antibiotics."

According to the complaint affidavit, the Commerce Department and International Trade Administration imposed anti-dumping duties, at a default rate of 221 percent, on the importation of honey manufactured in the People's Republic of China, effective last July. In October 2002, the FDA issued an import alert for honey containing the antibiotic chloramphenicol, a broad spectrum antibiotic that is used to treat serious infections in humans, but which is not approved for use in food producing animals, including bees. Honey containing chloramphenicol is deemed unsafe and adulterated within the meaning of the federal food and drug laws.

Between Feb. 12 - 20, 2008, ICE agents took samples from nine separate containers of honey - valued at more than $300,000 - that ALW had imported into the United States through Chicago, and which were being held at a U.S. Customs and Border Protection (CBP) facility in Itasca. The shipping documents accompanying all nine containers indicated that the honey was produced in, and exported from, Russia, which, unlike honey from China, is not subject to anti-dumping duties. Laboratory tests allegedly showed that three of the nine containers held honey produced in China.

The complaint alleges that the confidential informant told ICE agents that Giesselbach regularly would re-test shipments of honey to confirm customers' claims about the presence of antibiotics, and that she would regularly divert those shipments to customers who did not know or did not care about the contamination. The informant identified two companies - one in Texas and the other in Michigan - that would purchase contaminated honey from ALW, with the Texas company paying a discounted rate.

On March 24, 2008, ICE agents executed a federal search warrant at ALW's Chicago office and seized documents that allegedly revealed at least one instance of what Giesselbach knew was importation by ALW of adulterated honey containing chloramphenicol into the United States. That instance involved a shipment of 57 metric tons of what was identified as "Polish Light Amber Honey" that ALW purchased in September 2006, and had contracted to sell under certain conditions, including that it was free from contamination, to a company in Wisconsin. Samples of the shipment tested at a laboratory in Germany showed it contained small amounts of chloramphenicol and had possibly originated in China. The Wisconsin company rejected the order in November 2006 after it arrived in Chicago, and Giesselbach then allegedly arranged to sell the honey to a company in Texas at a reduced rate.

The search also yielded emails that allegedly showed at least one anticipated or completed importation by ALW of what von Buddenbrock knew was Chinese honey, but which he and Giesselbach were aware would be claimed as honey originating in the Ukraine.

The government is being represented by Assistant U.S. Attorneys Andrew Boutros and Donald Lorenzen.

If convicted, the conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. The Court, however, would determine the appropriate sentence to be imposed under the advisory United States Sentencing Guidelines.

The public is reminded that a complaint contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.