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Former president of organic fertilizer company sentenced to federal prison for fraud

POSTED November 9, 2012 10:14 p.m.

Peter Townsley was sentenced Wednesday to serve 364 days in prison and ordered to pay a fine of $125,000 for a scheme to defraud his customers in the organic farming industry, United States Attorney Melinda Haag announced. Townsley was also ordered to serve six months of community confinement, during which time he must perform 1,000 hours of community service related to organic production.

“By cheating and deceiving his organic farming customers, Mr. Townsley took advantage of their trust and undermined the integrity of an entire industry,” said U.S. Attorney Haag. “His actions are particularly troubling given the fact that consumers rely on the representations of all participants in the process when they pay a premium price for certified organic products. This prosecution demonstrates the commitment of federal and state authorities to hold those who choose to violate that trust accountable.”

Townsley pleaded guilty on Feb. 22 to two counts of mail fraud in violation of Title 18, United States Code, Section 1341. According to the plea agreement, Townsley was the president of California Liquid Fertilizer, a fertilizer manufacturing business that operated in the Salinas Valley. Townsley admitted that from April 2000 through December 2006, he sold Biolizer XN with a label that claimed it was approved for use in organic farming when it actually contained chemical ingredients that were prohibited for use in organic farming. During that period, CLF realized more than $6.5 million in gross sales from the sale of Biolizer XN.

According to the plea agreement, Congress enacted the Organic Foods Production Act in 1990 in order to establish national standards governing the production and marketing of certain agricultural products as “organic.” The United States Department of Agriculture subsequently enacted federal regulations governing organic agricultural production under the National Organic Program. The NOP specifically regulated, among other things, what materials organic farmers could use in production, including what materials could be applied to the soil as fertilizer.

 

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