Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 1 of 42 PageID #: 655

~~lED
NOV~~
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,

v.
WILLIAM DOUGLAS HANING,
Defendant.

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LJ S DISTRICT COURT

EASTERN DISTRICT OF MO
ST. LOUIS

No. Sl-4:18-cr-00139-RWS

SUPERSEDING INDICTMENT

The Grand Jury charges that:
· Count 1
(Conspiracy: 18 U.S.C. § 1349)

1.

Beginning sometime prior to July of2007, the exact date being unknown to the

Grand Jury, and continuing through October of2014, in the Eastern District of Missouri, and
elsewhere, the defendant,
WILLIAM DOUGLAS HANING,

did lrnowingly and willfully combine, conspire, confe.derate and agree with others both known
and unknown to the Grand Jury, to commit various offenses defined in Title 18, United States
Code, Part 1, Chapter 63, that is:
a.
""

having lrnowingly devised and intending to devise a scheme to defraud,

and to o[>tain money and property by means of false and fraudulent pretenses, representations
and promises, and for the purpose of executing and attempting to execute that scheme, did mail,
cause to be mailed, cause to be delivered by mail, and deposit and cause to be deposited matters
r
and things to be sent and delivered by private and commercial interstate carriers, in violation of
Title 18, United States Code, Section 1341; and

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b.

having knowingly devised and intending to devise a scheme to defraud,

and to obtain money and property by means of false and fraudulent pretenses, representations
and promises, and for the purpose of executing that ~cheme, transmit and cause to be transmitted
by means of wire communication in interstate and foreign commerce, writings, signs, signals,

,.
pictures and sounds, in violation of Title 18, United States Code, Section 1343.
2.

The allegations of Paragraphs 1through82 of Counts 2-33 ofthis Indictment are

re-alleged and incorporated by reference as if fully set forth herein, all in violation of Title 18,
United States Code, Section 1349 (Title 18, United States Co4e, Sections 1341and1343).

COUNTS2-33
(Wire Fraud: 18.U.S.C. § 1343)
The Grand Jury further charges:

I.

INTRODUCTION AND OVERVIEW OF THE ADuLTERATION SCHEME
At all times material to this Indictment:
1.

"Adulterated" pet food ingredients and products refer to food in which any

valuable constituent has been in whole or in part omitted; food in which any substance has been
substituted wh~lly or in part therefor; and food to which any substance has been added or mixed
so as to make it appear the food is better or of greater value tlian it is.

A.

Pet food ingredients and products generally
2.

Food ingredients and products used in pet foods include chicken meal, chicken

· meal (low ash), turkey meal, chicken by-product meal, and turkey by-product meal.
3.

As understood in the feed and pet food industry,
a.

chicken meal, chicken meal (low ash), and turkey meal are dry rendered

poultry products that do not contain feathers? heads, feet, and entrails;
b.

chicken by-product meal and turkey by-product meal are dry rendered
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poultry products that do not contain feathers. Chicken by-product meal and turkey by-product
meal, however, include parts such as necks, feet, undeveloped eggs, and intestines;
c.

blending is the process of mingling or combining two or more ingredients;

d.

adding or blending feather meal or by-product meal .or both to chicken

meal results in the product no longer being chicken meal;
e.

· adding or blending feather meal or by-product meal or both to chicken

meal (low ash) results'in the product no longer being chicken meal (low ash);
f.

adding or blending feather meal or by-product meal or both to turkey meal

results in the product no longer being turkey meal;
g.

adding or blending feather meal to chicken by-product meal results in the

product no longer being chicken by-product'meal;
h.

adding or blending feather meal to turkey by-product meal results in the

product no longer being turkey by-product meal;
1.

a blended product consisting of feather meal and chicken by-product meal

is not chicken meal;

J.

a blended product consisting of feather meal and chicken by-product meal

is not chicken meal (low ash);

k. '

a blended product consisting of feather meal and chicken by-product meal

(and/or turkey by-product meal) is not turkey meal;

1.

a blended product consisting of feather meal and chicken by-product meal

is not chicken by-product meal.
4.

As to the products and ingredients referenced in paragraphs 3.a through

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3.1, the pet food and feed industry generally made exceptions for trace amounts of expressly
excluded parts, which occur unavoidably in good manufacturing practices.
5.

At all relevant times, the pet food industry considered chicken meal, low ash

chicken meal and turkey meal to be premium products and were typically more expensive to
purchase than by-product meals.
6.

The pet food manufacturers used and relied upon Bills of Lading ("BOLs") and
'
\

Certificates of Analysis ("COAs") to identify ingredients and products shipped and received
from suppliers.

B.

Entities
7.

American By-Products ("ABP") ~as a Texas corporation located in Rosser, Texas

and Dallas, Texas. ABP was a protein blender for the pet food industry that emphasized
marketing chicken meal and chicken by-product meal. ABP's blending facility in Rosser, Texas
("ABP-Rosser") was not a rendering facility. Instead, ABP-Rosser purchased its raw poultry
materials from rendering facilities and based its business model on its ability to grind, screen,
classify, blend, and stabilize animal proteins that needed to be processed. ABP owners and
shareholders included Defendant William Douglas "Doug" Haning and other Haning family
members.
8.

Diversified Ingredients, Inc. ("Diversified Ingredients") is a Missouri corporation

located in Ballwin, Missouri, within the Eastern District of Missouri. Diversified Ingredients is a
commodities broker and distributor whose customers include a number of pet food companies
and manufacturers. From 2008 through 2014 and thereafter, Diversified Ingredients brokered
and distributed pet food products and ingredients from the facility ill Rosser, Texas.
9.

Wilbur-Ellis Company ("Wilbur-Elllis") is a California LLC with headquarters in

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San Francisco, California. Wilbur-Ellis is an international marketer and distributor of
agriculturaf products, animal feed, and specialty chemicals and ingredients. On or about April
2011, Wilbur-Ellis purchased the assets of ABP, specifically the blending facility in Rosser,
Texas. At the time of the acquisition, Wilbur-Ellis identified the role of ABP owner DOUG
HANING in the operations of ABP-Rosser as follows:
Doug Haning is the· day to day man on the street. He is in charge of buying and
selling. He also manages the logistics of the business. -Doug is responsible for all
ofthe marketing ofproducts and maintains the relationships with the customer and
supplier base for the business.
10.

Custom AG Commodities, LLC ("Custom AG") is a Texas company (and-sole-

proprietorship) established on or about April 2011, with a physicai address in Winnsboro, Texas
and a mailing address in Sulphur Springs, Texas. ·custom AG served primarily to facilitate
transactions involving Wilbur-Ellis' newly acquired facility in Rosser, Texas (''WE-Rosser") and
Diversified Ingredients.
11.

Pet Food Manufacturer "A" is a pet food manufacturer with a facility in

Mishawaka, Indiana. Between 2012 and May 2014, Pet Food Manufacturer "A" received
multiple adulterated shipments from Rosser, Texas, including adulterated shipments falsely
identified, labeled and branded as chicken meal, chicken meal (low ash), and turkey meal.
12.

Pet Food Manufacturers "B-1" through "B-6" are pet food manufacturers
'

identified as "co-packers" and "co-manufacturers." Pet Food Manufact1:1fers "B-1" through "B6" contracted with Pet Food Manufacturer "B," a pet food company located in Wilton,
Connecticut, to manufacture and bag finished pet food products for Pet Food Manufacturer "B."
These co-manufacturers and co-packers included:
a.

Pet Food Manufacturer "B-1" and its facility in Fairview, Kansas;

b.

Pet Food Manufacturer "B-2" and its facility in Bern, Kansas;
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c.

Pet Food Manufacturer "B-3" and its facility in Frontenac, Kansas;

d.

Pet Food Manufacturer "B-4" and its facility in Hazle Township,

e.

Pet Food Manufacturer "B-5" and its facilities in Owatonna, Minnesota

Pennsylvania;

and St. Marys, Ohio; and
f.
13.

Pet Food Manufacturer "B-6" and its facility in Perham, Minnesota.

Between 2012 and May of2014, Pet Food Manufacturer "B-1" through "B-6"

received multiple adulterated shipments from Rosser, Texas, including adulterated shipments
falsely identified, labeled and branded as chicken meal, chicken meal (low ash), and turkey meal.
14.

From 2008 through October 2014, in the Eastern District of Missouri, and

elsewhere, the defendant,
WILLIAM DOUGLAS HANING,

and other persons known and unknown to the Grand Jury, devised and intended to devise a
scheme and artifice to defraud, and to obtain money and property by means of materially false
I

and fraudulent pretenses, representations, and promises, and for the purpose of executing the ""
scheme to defraud, carried out the.scheme and the conspiracy in the manner and means as
follows:
IT.

MANNER AND MEANS OF THE SCHEME AND THE CONSPIRACY

15.

From at least 2008 and continuing through May of2014, the facility in Rosser,

Texas, shipped poultry protein products to pet food manufacturers in the United States and
abroad. As part of a conspiracy and scheme and artifice to defraud, the facility in Rosser, Texas,
operating under the direction of WILLIAM DOUGLAS HANING (referred to herein as "DOUG
HANING"), and others, for the purpose of financial gain, regularly produced and shipped
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j

adulterated poultry products and ingredients and misrepresented the products and ingredients.
While corporate ownership of the Rosser, Texas facility changed over the course of the scheme
and conspiracy, DOUG HANING, at all relevant times, directed and participated in the scheme
and conspiracy with others. As part of the scheme and conspiracy and in furtherance of the
scheme and conspiracy, DOUG HANING, and others, shipped adulterated pet food ingredients
and products through the Eastern District of Missouri and elsewhere. As part of the scheme and
conspiracy and in furtherance of the scheme and conspiracy, DOUG HANING, and others,
shipped adulterated pet food ingredients and products through the Eastern District of Missouri
that included BOLs and COAs that misrepresented the products and ingredients. As part of the
scheme and conspiracy, and in furtherance of the scheme and conspiracy, DOUG HANING, and
others, negotiated and authorized the purchase of raw materials, such as feather meal, utilized in
adulterated pet food ingredients and products. As part of the scheme and conspiracy, and in
furtherance of the scheme and conspiracy, 1DOUG HANING, and others, utilized brokers and
distributors in the Eastern District of Missouri and elsewhere to ship and distribute adulterated
and misrepresented pet food ingredients and products.

A.

The role of adulteration and mislabeling/misbranding in the scheme to defraud and
conspiracy
16.

From before January 2008 through May of2014, DOUG HANING, and others,

by and through ABP, Wilbur-Ellis, Diversified Ingredients and/or Custom AG, m~rketed and
sold chicken meal and low ash chicken meal from Rosser, Texas. However, the product shipped
from ABP-Rosser and WE-Rosser was an adulterated product that was mislabeled and
misbranded.
17.

From May of2011 through May of2014, DOUG HANING, and others, by and

through Wilbur-Ellis, Diversified Ingredients and/or Custom AG, marketed and sold turkey meal

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from Rosser, Texas. However, the product shipped from WE-Rosser was an adulterated product
that
was mislabeled and misbranded.'
\
18.

From before January 2008 through May of 2014, DOUG HANING, and others,

by and through ABP, Wilbur-Ellis, Diversified Ingredients and/or Custom AG, marketed and
,-

sold chicken by-product meal from Rosser, Texas. However, the product shipped from ABPRosser and WE-Rosser was an adulterated product that was mislabeled and misbranded.
19.

As part of the scheme to defraud and in furtherance of said scheme and the

conspiracy, DOUG HANING, and others, adulterated and misrepresented ingredients and
products, and in doing so:
a.

omitted and caused to be omitted, in whole or in part, the raw material

ingredient chicken meal from premium pet food products and ingredients, specifically chicken

r
meal and chicken meal (low ash), that was shipped and supplied to pet food companies and
manufacturers from ABP-Rosser or WE-Rosser;
b.

omitted and caused to be omitted, in whole or in part, the raw material

ingredient turkey meal from premium pet food products and ingredients, specifically turkey
meal, that was shipped and supplied to pet food companies and manufacturers from ABP-Rosser
or WE-Rosser;
c.

substituted and caused to be substituted, in whole or in part, chicken by-

product meal for premium pet food products and ingredients, such as chicken meal, chicken meal
(low ash), and turkey meal, that was shipped and supplied to pet food companies and
manufacturers from ABP..:Rosser or WE-Rosser;
d.

substituted and caused to be substituted~ in whole or in part, a "B-Grade"

poultry by-product meal (also referred to as chicken bone by-product meal) for premium pet food ·
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products and ingredients, such as chicken. meal and turkey meal, that was shipped and supplied
to pet food companies and manufacturers from ABP-Rosser or WE-Rosser;
e.

substituted and caused to be substituted, in whole .or in part, turkey by-

product meal for premium pet food products and ingredients, such as turkey meal, that was
shipped and supplied to l?et food companies and manufacturers from ABP-Rosser or WE-Rosser;
f.

substituted and caused to be substituted, in whole or in part, hydrolyzed

poultry feathers (also referred to as feather meal) or hydrolyzed feather meal for premium pet
food products and ingredients, such as chicken meal, chicken meal (low ash), and turkey meal,
that was shipped and supplied to pet food companies and manufacturers from ABP-Rosser or
WE-Rosser;
g.

mixed and blended and caused to be mixed and blended, chicken by-

product meal with one or more raw materials to make the products and ingredients shipped and
supplied to pet food companies and manufacturers from ABP-Rosser or WE-Rosser appear better
and of greater value than the. product actually was;
· h.

mixed and blended and caused to be mixed and blended, turkey by-

product meal with one or more raw materials to make the products and ingredients shipped and
supplied to pet food companies and manufacturers from ABP-Rosser or WE-Rosser appear better
and of greater value than the product actually was;

i.

mixed and blended and caused to be mixed and blended, a "B-Grade"

poultry by-product meal (also referred to as chicken bone by-product meal) with one or more
raw materials to make the products and ingredients shipped and supplied to pet food companies
and manufacturers from ABP-Rosser or WE-Rosser appear better and of greater value than the
1

product actually was; and

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J.

mixed and blended and caused to be mixed and blended, hydrolyzed·

poultry feathers and feather meal with one or more raw materials tb make the products and
ingredients shipped and supplied to pet food companies and manufacturers from ABP-Rosser or
WE-Rosser appear better and of greater value than the product actually was.

B.

Administrative and Regulatory Investigations of ABP-Rosser by the State of Texas
20.

At all relevant times, the Texas Feed and Fertilizer Control Service ("TFFCS")

operates under the direction of the Director of the Texas Agricultural Experiment Station ("TX
Ag Station"). The TX Ag Station is an entity responsible for exercising the powers and
("

performing the duties assigned to the TFFCS by the Texas Commercial Feed Control Act, Texas
~

Agriculture Code (1981), Chapter 141. The Office of the Texas State Chemist ("OTSC") is also
part of the TFFCS. As a licensed feed facility, ABP-Rosser was regulated by the TFFCS and the
OTSC. Applicable regulations included prohibitions specific to the adulteration and mislabeling
of ingredients used in pet foods.

21.

On or about July 2007, TFFCS investigators inspected the ABP-Rosser facility.

TFFCS investigators held discussions with the ABP-Rosser Quality Assurance Manager
I

concerning the receipt and u~e of hydrolyzed feather meal in the facility. Specifically, a TFFCS
Investigator, who had.routinely checked incoming and outgoing ABP-Rosser records, noticed
that the facility consistently received feather :rq.eal, but had never distributed products containing
feather meal.
22.

The Quality Assurance Manager, who at all relevant times reported to ABP

ownership, including DOUG HANING, indicated to TFFCS investigators that ABP-Rosser used
feather meal as "a proprietary secret." At that time, the Quality Assurance Manager represented
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that the feather meal lowered the ash level of the chicken meal, thus providing a higher value
ingredient, low ash chicken meal, for use in the pet food industry.
23.

TFFCS Investigators advised the Quality Assurance Manager and one of the ABP

owners that that practice was unacceptable.
24.

The TFFCS informed the Quality Assurance Manager and the ABP owner that the

mixing of two ingredients creates a blended product that ~a:llnot be labeled as an individual
ingredient. The TFFCS Investigator consulted with the Quality Assurance Manager and assisted
ABP-Rosser in creating an appropriate blended produd label for the product actually being
shipped.
25.

The designated name for the blended product was "ABP Poultry Blend" and the

ingredients required to appear on the label were "poultry by-product meal" and "hydrolyzed
poultry feathers." .

26.

A TFFCS Investigator visited the ABP-Rosser facility again in October 2008.

27.

The TFFCS Investigator held discussions with the same ABP owner concerning ,

the continued practice of blending feather meal into other ingredients (without identifying the
product as a blend or identifying feather meal as an ingredient). The ABP owner stated that the
practice was no longer occurring. The TFFCS Investigator, however, noted that there were no
· records of "ABP Poultry Blend" being marketed after the label was created. The TFFCS
Investigator reiterated to ownership that mixing feather meal into other ingredients was not an
I

acceptable practice, unless distributed as a blended product and appropriately labeled as a blend
with the actual ingredient identified on the blend label.
28.

A TFFCS audit conducted on or about November 4, 2008 confirmed the
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continued use of feather meal by ABP-Rosser in its products and ingredients.

29.

On or about May 12, 2010, OTSC auditors and investigators met with DOUG

HANING and other owners and managers of ABP-Rosser. The OTSC investigators and auditors
. wanted to discuss an OTSC microscopic evaluation of ABP-Rosser's product(s) as well as an
OTSC audit report. Both the evaluation and the audit confirmed the continued use of feather
meal in ABP-Rosser products and the regular distribution of adulterated, misbranded pet food
products and ingredients. An ABP-Rosser sales manager "alluded to the fact" that customers
requested ABP-Rosser put feather meal into their product, but wanted it labeled as a single
i

ingredient product such as "chicken meal." In response, the OTSC told the owners and
·managers of ABP-Rosser that they should not be involved in deceptive practices.
30.

DOUG HANING and another manager then provided OTSC investigators access

to the ABP-Rosser plant for inspection. After inspecting the plant, the investigators concluded
that ABP-Rosser's routine practice was "that everything that left the facility had feather meal in
it" and that ABP-Rosser products were adulterated and misbranded.
31.

After seeing the blending equipment and the amount of feather meal at the ABP-

Rosser facility, the OTSC investigator "was compelled to stop-sale/seize the low-ash chicken
meal based on reasonable cause by the agency and the supporting evidence from previous
microscopic evaluation of the product."
32.

On or about May 12, 2010, the OTSC ultimately seized 33,720 lbs. (in 18 bulk

bags) oflow-ash chicken meal. The OTSC also collected samples of other ingredients for
additional evaluation. The cited grounds for the seizure was "FAILURE TO PROVIDE NONADULTERATED PRODUCT; IMPROPERLY LABELED (MISBRANDED)."
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~

'

33.

On May 17, 2010, ABP-Rosser provided a letter to the Office of the Texas State

Chemist that stated the following:
We wanted to submit the following plan to your office regarding use offeather
meal. We feel that the safest and surest way to eliminate any hydrolyzed feather
meal being in any product being sold from this plant is to discontinue purchasing
hydrolyzed feather meal.
AMERICAN BY-PRODUCTS, INC.
William Haning

34.

On June 2, 2010, the OTSC issued its "Report of Analysis for Commercial Feed"

regarding the sample of ABP-Rosser's LOW ASH CHICKEN MEAL. The OTSC report also
included the results of a microscopic examination. The report stated: "hydrolyzed and
unhydrolyzed feathers found in sample (too many to count)." On the basis of the report, ABP-

Rosser was informed that its "product is considered to be in violation of Qne or more provisions
of the Texas Commercial Fertilizer Control Act, Chapter 63.142(a)."
35.

Notwithstanding the above violation and ABP's representation that it would

discontinue purchasing feather meal, shipping and purchasing records reflect that the Rosser,
Texas facility continued to receive regular shipments of feather meal after May of2010.
··,
C.
Wilbur-Ellis' acquisition of ABP-Rosser
36.

On or about March 4, .2011, ABP and Wilbur-Ellis executed a "Letter of Intent"

regarding the acquisition of ABP-Rosser by Wilbur-Ellis.
37.

Prior to executing the Letter oflntent, Wilbur-Ellis had identified ABP-Rosser's

customer base as follows:
Customers. On the sales side of the business, ABP sells 13 different companies
(all pet food), six ofwhich constitute about 75% of their sales.

38.

Prior to executing the Letter of Intent, Wilbur-Ellis had identified the possible

integration of ABP-Rosser as follows:
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Integration and Management Plan. The Wilbur-Ellis Company logo and
branding would be promptly initiated however the reporting structure at Rosser,
TX will remain unchanged for the most part. The Hanings would continue their
current roles in a post acquisition scenario.

The terms of the acquisition as reflected in the Letter of Intent

39.

The March 4, 2011 Letter of Intent included the following provisions and terms:
a.

Buyer would acquire all assets of the Seller relating to the production,

blending, distribution, and sale ofproteins, fats and oils to the pet food, aquaculture and
livestock industries (the "Business');

b.

The purchase price of the Assets, including working capital, would be (i)

Sixteen Million Dollars ($16, 000, 000), adjusted to reflect the difference between the Business'
average Net Working Capital over the past year, and the Business' Net Working Capital at the
date of closing; plus (ii) up to Nine Million Dollars ($9, 000, 000) in one or more Deferred
-Payments as described below;

c.

$9,000,000 of the purchase price would be paid over the three years

following closing, based on achievement of certain operating performance goals for the business
following closing;
d.

Employment and Noncompetition Agreements., As a condition to Buyer's
'

.

obligation to purchase the Assets and in consideration of the payment of the Purchase Price to
Seller, (i) Seller and its shareholders shall enter into Noncompetition Agr€fements with Buyer
wherein they would agree not to compete in the pet food, aquaculture or livestock industries, or
to solicit customers or employees of the Business, for a period offive (5) years following the
closing, except for the following Employment Agreements.
r

DOUG HANING's employment agreement with Wilbur-Ellis

40.

As part of the acquisition, DOUG HANING entered into an employment
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agreement with Wilbur-Ellis.
41.

The provisions of the EMPLOYMENT AGREEMENT included the following:
a.

THIS AGREEMENT is made as ofApril 3 0, 2011 (the "Effective Date")

by and between Wilbur-Ellis Company, a California corporation (the "Employer"), and William
D. (Doug) Haning (the "Employee'').
b.

The Employee is one of the shareholders ofABP and is experienced in the

c.

Agreement (or Employment. Subject to the closing-of the transactions

Business.

contemplated by the APA and this Agreement's terms and conditions, the Employer engages the
Employee, a.nd the Employee accepts employment as Operations Manager of the Employer's
Rosser, Texas branch.
42.

The asset purchase proceeded under the terms set forth above and included both the

deferred payment incentive and an employment agreement as to DOUG HANING.
43.

Thus, in addition to-a salary and any applicable bonus, DOUG HANING and his

family would be entitled to one or more deferred payments in an amount up to $9,000,000 if
WE-Rosser's profitability remained consistent. with the profitability of ABP-Rosser and met the
yearly earn-out targets projected by Wilbur-Ellis.

D.

The scheme to defraud and conspiracy as carried out after the acquisition of ABP
by Wilbur-Ellis
44.

DOUG HANING, and others, by and through Wilbur-Ellis, Custom AG and/or

Diversified Ingredients, marketed and sold single-ingredient premium pet food ingredients and
products, including chicken meal, chicken meal (low ash), and turkey meal, knowing the product
shipped would be, and in fact was, adulterated arid misrepresented to the recipient.
45.

As part of the conspiracy and scheme to defraud, DOUG HANING, and others,
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used one or more third parties who accepted contracts, purchase orders, invoices and other
written communications from WE-Rosser identifying WE-Rosser products as blends, but
provided WE-Rosser shipping documents, such as BOLs and COAs, that did not identify the
WE-Rosser products as blends. In tun:i'., as part of the scheme to defraud and the conspiracy,
DOUG HANING, and others, would use single-ingredient BOLs and COAs with shipments
known to be blends.
46.

The products and ingredients DOUG HANING, and others, shipped and caused to

be shipped from WE-Rosser were blended and adulterated by:
a.

Adding, using and/or blending feathers and feather meal to the shipped

product and ingredient when it was to be exclusive of feathers;
I

b.

Adding, using and/or blending by-product meal to the shipped product and

ingredient when it was to be exclusive of by-product;
c.

Adding, using and and/or blending chicken protein products to the shipped

product and ingredient when it .Was to be a turkey protein product.
'

47.

The products and ingredients DOUG HANING, and others, shipped and caused to

be shipped from the facility in Rosser, Texas, were mislabeled and misbranded and thus, such
products and 1?gredients were misrepresented to the recipient. Documents associated with the \
shipment, such as a BOL or COA, identified the shipped product as a single ingredient product
when, in fact, it was a blend. Typically, the blend formula for products shipped as chicken meal
and chicken meal (low ash) was a blend of chicken by-product meal and feather meal (but not
chicken meal). T)rpically, the blend formula for products shipped as turkey nieal was a blend
that included by-product meals and feather meal. Based on the cost of goods sold, blend
formulas utilized in furtherance of the fraud and conspiracy ensured that a profit margin would
16

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be realized because the blended product was sold at the premium market price as if it were a
single ingredient product.
48.

The raw ingredients purchased by WE-Rosser and used in the blended product
"'

were generally cheaper than the single-ingredient, premium products identified on shipping
documents.
49.

Generally, the raw ingredients used in the ·blended product were readily available
)

to WE-Rosser from its suppliers in comparison to single-ingredient, premium products such as
chicken meal and turkey meal. Thus, WE-Rosser realized a significant profit on adulterated
shipments. Because WE-Rosser blended cheaper and more readily available raw ingredients,
!

WE-Rosser alsp had the ability to enter into high volume,.long-term agreements and contracts
confident they would have a predictable supply of raw materials. Moreover, the concealment of
its blending practices afford~d WE-Rosser the ability to manipulate blend formulas based upon
market circumstances and profit objectives.
/

50.

In addition, over the course of the scheme and conspiracy, c,ertain pet food

manufacturers, including Pet Food Manufacturer "A" and Pet Food Manufacturer "B," had
emerged in the pet food market and built their business model by marketing their products as free
of certain ingredients.
51.

DOUG HANING, and others, knew that certain pet food manufacturers were not

in the market for products or ingredients typically used in the blended products shipped from WERosser, such as feather meal and poultry by-products.
52.

By avoiding the identification of the product·as a blend in the associated shipping

documents, including BOLs and COAs, DOUG HANING, and others, were able to conceal the
actual ingredients contained in the products shipped, such as feather meal and by-products, and
17

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 18 of 42 PageID #: 672

secure, maintain, and grow business that would otherwise have been unavailable.
53.

Because shipped WE-Rosser products were not identified as a blend and because

the actual ingredients were concealed, the recipients of WE-Rosser products (including Pet Food
Manufacturer "A" and Pet Food Manufacturers "B-1" through "B-6") accepted shipments they
would not have otherwise accepted but for the fraud.
54.

illtimately, pet food manufacturers, including Pet Food Manufacturer "A" and Pet

Food Manufacturer "B," ended up paying the market price for a premium, single-ingredient
product, such as chicken meal, chicken meal (low ash), or turkey meal, when they actually
received a blended product comprised of non-premium ingredients.

E.

The introduction of Custom AG as a straw broker in furtherance of the conspiracy
and scheme to defraud
55.

Prior to April 2011, Custom AG was not in existence as an entity recognized by

the State of Texas. Prior to April 2011, neither Custom AG nor Custom A G's nominal owner,
had contracted with ABP or Diversified Ingredients. Prior to April 2011, neither Custom AG nor
Custom A G's nominal owner, had brokered or otherwise bought or sold animal protein products
for pet food companies.
56.

Custom AG was not identified as a customer of ABP until May 1, 2011, when it

was added to the original custom~r list.
57.

As of April 30, 2011, Custom AG was not in Diversified Ingredients' system as a

58.

On or about July 2011, Custom AG identified only two trade references in support

seller.

of,obtaining a line of credit with Wilbur-Ellis. The identified trade references were ABP and
Diversified Ingredients.
59.

At all times material, the nominal owner of Custom AG was an associate of
18

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 19 of 42 PageID #: 673

DOUG HANING, and DOUG HANING shared in the profits of Custom AG. At all times
material, DOUG HANING, in whole or part, directed the buying and selling decisfons, as well as
the operations of Custom AG. DOUG HANING purposely concealed his interest in Custom AG
from others.
60.

fu furtherance of the scheme to defraud and the conspiracy, and as a result of the

execution of the scheme to defraud, in 2012, 2013, and the first two quarters of 2014, Custom
AG constituted the single largest purchaser of WE-Rosser products by sales and volume. Any
products Custom AG bought from WE-Rosser during this time frame were sold to Diversified
Ingredients. Pet Food Manufacturer "B-1" through "B-6" received adulterated shipments arising
from initial purchases involving Custom AG and Diversified Ingredients. Pet Food
Manufacturer "A" received adulterated shipments arising from initial purchases involving
Custom AG and Diversified Ingredients.
61.

Most, if not all, products from WE-Rosser involving Custom AG were blended

and adulterated when shipped. Most, if not all, products from WE-Rosser involving Custom AG
were shipped from WE-Rosser with BO Ls and/or COAs that misrepresented the product as a
single ingredient, premium product.

F.

The use of Diversified Ingredients' BOLs and COAs in furtherance of the scheme to
defraud and conspiracy
62.

Pet Food Manufacturer "B" was a Diversified Ingredients' customer. On behalf

of Pet Food Manufacturer "B/' Diversified Ingredients contracted with carriers to ship products
and ingredients from WE-Rosser to Pet Food Manufacturers "B-1" through "B-6."
63.

Pet Food Manufacturer-''A" was also a DiveJsified Ingredients' customer. On

behalf of Pet Food Manufacturer "A," Diversified Ingredients contracted with carriers to ship
certain products and ingredients from WE-Rosser to Pet Food Manufacturer "A."
19

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 20 of 42 PageID #: 674

64.

Diversified Ingredients, however~ did not directly purchase from Wilbur-Ellis the

products and ingredients shipped from WE-Rosser to Pet Food Manufacturers "B-1" through "B6." Diversified Ingredients also did not directly purchase from Wilbur-Ellis certain products and
\

ingredients shipped to Pet Food Manufacturer "B-1" through "B-6."
65.

Instead, such products and ingredients involved initial paper transactions and

sales with Custom AG. In the paperwork with Custom AG, Wilbur-Ellis referred to certain
product purchased by Custom AG from WE-Rosser as a blend. The purchase orders and
invoices between Custom AG and Diversified Ingredients also referred to certain WE-Rosser
products as a "blend," such as "chicken meal blend," "chicken meal blend low ash" and "turkey
meal blend."
66.

While certain exchanged papen:Vork identified products as a blend, Diversified

Ingredients provided BOLs and COAs to WE-Rosser that did not identify the product as a blend.
Instead, the shipping doc~ents that traveled with the product, including BOLs and COAs, used
the single-ingredient names, i.e., chicken meal, chicken meal low ash, and turkey meal.
67.

While WE-Rosser created and maintained their own internal documents that

identified the shipped products as blended products, DOUG HANING, and others, used shipping
documents provided by Diversified Ingredients knowing that the use of those documents would
misrepresent what was actually being shipped from WE-Rosser.
68.

DOUG HANING, and others, agreed to use, and did, in fact, use the BOLs and

COAs provided by Diversified Ingredients with shipments of blended products knowing that
WE-Rosser was shipping a blended product and that the ingredients involved in the blend,
specifically by-products and feather meal, were to be e?'-cluded from the product identified and
shipped.

20

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 21 of 42 PageID #: 675

G.

Direct sales of adulterated and mislabeled products and ingredients from WERosser
69.

WILBUR-ELLIS sold products and ingredients for use in pet food products.

Those sales mcluded direct sales by WILBUR-ELLIS to pet food companies and manufacturers.
70.

In addition to the sales and shipments identified above involving Custom AG

and/or Diversified Ingredients, WILBUR-ELLIS directly marketed and sold products and
ingredients to pet food manufactyrers, including Pet Food Manufacturer "A," that were shipped
from WE-Rosser.
71.

As part of the scheme and in furtherance of the scheme and conspiracy, DOUG

HANING, and others, caused WE-Rosser to ship adulterated and mislabeled products and
ingredients, including chicken meal (low ash), that Pet Food Manufacturer "A" purchased
directly from WILBUR-ELLIS.

ID.

USE OF THE MAIL AND COMMERCIAL INTERSTATE CARRIERS IN
FURTHERANCE OF THE SCHEME TO DEFRAUD AND THE CONSPIRACY
72.

On or about the dates listed below, within the Eastern District of Missouri, and

elsewhere, for the, purpose of executing and attempting to execute the scheme to defraud, and in
furtherance of the conspiracy DOUG HANING, and others known and unknown to the Grand
Jury, did mail, caused to be mailed, and caused to be delivered by mail matters and things, to wit,
checks and payments, and did deposit and caused to be deposited matters and things, to wit,
checks, BO Ls, COAs, and products to be sent and delivered by private and commercial interstate
carrier:

Date
February 8, 2013
October 3, 2013
February 20, 2014
March 26, 2014

Check no.
0099873
0108688
0113938
0115207

~~~~~~~~-t--~~~------,-~~~~--+---~~~~~~~~~~~-;

21

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 22 of 42 PageID #: 676

Date

BOL no. for
adulterated shi ment
39277
39372
39586

March 21, 2014
April 4, 2014
April 29, 2014
IV.

Destination

Mishawaka, IN
Mishawaka, IN
Mishawaka, IN

USE OF INTERSTATE WIRES IN FURTHERANCE OF THE SCHEME TO
DEFRAUD AND THE CONSPIRACY

73.

In furtherance of the scheme and the conspiracy, and for the purpose ofexecuting

the- aforementioned scheme and artifice to defraud, and attempting to do so, DOUG HANING,
and others, did knowingly transmit and cause to be transmitte~, by means of wire, radio, and
television communication, writings, signals, pictures, and sounds in interstate and foreign
commerce for the purposes of executing such scheme and art~fice, as set forth below:
a.

Emails to and from the Eastern District of Missouri and elsewhere and to

and from Rosser, Texas, including emails that included and/or pertained to:
1.

contraCts, purchase orders and agreements for WE-Rosser
I

products;
11.

BOLs and COAs for shipments of WE-Rosser products;

m.

shipping schedules for WE-Rosser products; and

iv.

invoices for products shipped from WE-Rosser.

b.

Additional emails sent as part of the scheme and in furtherance of the

scheme included:
i.

on or about February 2009, an email was sent from the Eastern

District of Missouri to a Georgia-based customer of Diversified Ingredients and recipient of a
poultry product from ABP-Rosser. The email included an attachment identified as "Diversified
Statement" consisting of a letter from ABP-Rosser provided to Diversified Ingredients by DOUG
HANING. The email states, in part: This is a letter that [a Diversified Ingredient employee]
22

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 23 of 42 PageID #: 677

requested from American Byproducts in an effort to get something from them that indicates that
they did not adulterate the product or put any feathers into it.
ii.

On or about June 19, 2012, an email was sent from a Wilbur-Ellis

inventory specialist that describes the raw material formula used at WE-Rosser. The email was
subsequently forwarded to WE-Rosser in Texas. The email states: For Regular loads our blend
is 25%Feather Meal, 25%PBM (Hole 1) and 50%PBM (Bin 2); andfor Low Ash loads the
blend is 25% Feather Meal and 75% (Bin 2).
111.

On or about October 16, 2012, an email was sent from a Wilbur-

Ellis employee to another Wilbur-Ellis employee. The email states: Doug asked me to provide
you with the following information: On the turkey meal contract with DI, our margin for bulk
loads is around 20%. On the low ash chicken meal contract, our margin has be~n 18.09%for a
low and 45.14%for a high. The usual margin
is around 30%.
_,
1v.

On or about October 18, 2012, an email was sent from a Wilbur-

Ellis inventory specialist to DOUG HANING, and others. The email states:
Doug, we are trying to use the cost associated with the physical products
that are used. That being said, we have run out ofB grade product and
are forced to use more A grade and less Feather meal in order to make
regular chicken meal loads. This has caused the cost to jump significantly
and thus has affected the margins accordingly.
Previously, we were using a blend for Regular loads of
Feather - 29%
A grade-42%
B grade-29%
Since we have run out ofB Grade the blend had to be changed to:
Feather-14%
A grade-86%
Thus the increase in cost and decrease in Margin.
23

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 24 of 42 PageID #: 678

v.

On or about February 20, 2013, emails were exchanged to and

from Rosser, Texas, and Ballwin, Missouri, regarding products referred to by the WE-Rosser
Quality Assurance Manager as "Turkey Meal Blend," "Chicken Meal Blend," and "Low Ash
Chicken Meal Blend" and the agreed to use of a COA form that did not identify the product as a
\

"blend" and would match the BOL being used for ·shipments.
vi.

On or about March 14, 2014, an email communication from a

Wilbur-Ellis employee in the State of Washington to DOUG HANING in Texas which stated:

Doug, I noticed we are shipping a blend ofPBM and Feather to [Pet food Manufacturer "A"}
against a chicken meal contract?
74.

Adulterated and misrepresented shipments occilrred on a weekly, if not daily,

basis from WE-Rosser. Those adulterated and misrepresented shipment13 included the following:
a.

On or about January 2, 2014, a shipment, with an approximate weight of

48,340 pounds, from Rosser, Texas, of an animal protein product and ingredient for pet food
which was falsely labeled as "Chicken Meal," when in fact the product and ingredient was not
(

the premium pet food product and ingredient chicken meal but an adulterated mix and blend of
hydrolyzed poultry feathers, poultry by-product meal and chicken by-product meal that omitted
chicken meal;
b.

On or about March 21, 2014, a shipment, with an approximate weight of

50,200 pounds, from Rosser, Texas, of an animal protein product and ingredient for pet food
which was falsely labeled as "Turkey Meal," when in fact the product and ingredient was not the
premium pet food product and ingredient turkey meal but an adulterated mix ana blend of
hydrolyzed poultry feathers, chicken bone by-product meal, chicken by-product meal and turkey
by-product meal that omitted turkey meal;
24

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 25 of 42 PageID #: 679

c.

On or about March 21, 2014, a shipment, wi.th an approximate weight of

50,840 pounds, from Rosser, Texas, transported through the Eastern District of Missouri, of an
animal protein product and ingre~ient for pet food which was falsely labeled as "Chicken Meal_
(Low Ash)," when in fact the product and ingredient was not the premium pet food product and
ingredient chicken meal but an adulterated mix and blend of hydrolyzed poultry feathers and
chicken by-product meal that omitted chicken meal; and
d.

On or about April 4, 2014, a shipment, with an approximate weight of

50,080 pounds, from Rosser, Texas, ;transported through the Eastern District of Missouri, of an
animal protein product and ingredient for pet food which was falsely labeled as "Chicken Meal
(Low Ash)," when in fact the product and ingredient was not the premium pet food product and
ingredient chicken meal but an adulterated mix and blend of hydrolyzed poultry feathers and
chicken by-product meal that omitted chicken meal.

V.

DOUG HANING'S GAIN FROM THE SCHEME TO DEFRAUD AND
CONSPIRACY
7 5.

In furtherance of the scheme to defraud and conspiracy in execution of the same,

DOUG HANING realized a financial gain from the practice of blending and adulteration.
76.

As a blending facility, the profit to be gained by buying a raw material, such as

chicken meal, at market price from a raw material supplier/renderer and then selling essentially
the same product at market price would be minimal.
77.

By contrast, the profit margin associated with buying readily available, non-

premium products, such as chicken by-product meal and feather meal, and then blending those
raw materials together and selling the blended product at a price associated with less-readily
available, premium products would be and, in fact, was significant.
78.

Thus, the adulteration and misrepresentations made WE-Rosser profitable over
)

25

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 26 of 42 PageID #: 680

the course of the scheme to defraud and triggered the deferred payment or "earn-out" provisions
agreed to as part of the sale of ABP-Rosser.
79.

The deferred payment "earn-out" targets for WE-Rosser would not have been

satisfied absent the margins and profits fraudulently created and realized through the practice of
adulteration and ·mislabeling/misbranding.
On or about February 28, 2013, as a result o~the scheme and the conspiracy, a

80.

wire transfer in the amount of $4,608,414 was sent reflecting a deferred payment for the benefit
of DOUG HANING, and others, pursuant to the terms of the earn-out agreement.
81.

On or about March 24, 2014, as a result of the scheme and the conspiracy, a wire

transfer in the amount of $4,391,586 was sent reflecting a deferred payment for the benefit of
DOUG HANING, and others, pursuant to the terms of the earn-out agreement.
82.

In addition, between July 2011, and May 2014, DOUG HANING received cash

and other indirect payments from Custom AG derived from the sales of WE-Rosser products that
were adulterated and misi:_epresented when shipped. Those indirect payments included the
following checks payable to a DOUG HANING family member from Custom AG:
J

a.

Custom AG Commodities check dated January 23, 2012 in the amount of

b.

Custom AG Commodities check dated on or about April 11, 2014 in the

$5,050.00; and

amount of $19,200.00.

Use of the Wires
83.

On or about the dates specified as to each count below, in the Eastern District of

Missouri and elsewhere, for the purpose of executing the aforesaid scheme and artifice to
defraud, and attempting to do so,
26

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 27 of 42 PageID #: 681

WILLIAM DOUGLAS HANING,
(

did lmowingly transmit and cause to be transmitted, by means of wii:e, radio, and television
communication, writings, signals, pictures, and sounds in interstate and foreign commerce for the
purposes of executing such scheme and artifice, as set forth below:
Count Approximate Date

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33

February 20, 2013
February 28, 2013
March 6, 2013
March 6, 2013
March 6, 2013
March 6, 2013
March 6, 2013
March 6, 2013
March 7, 2013
March 7, 2013
March 7, 2013
March 7, 2013
May31,2013
June 27, 2013
July 12, 2013
July 24, 2013
August 1, 2013
August 21, 2013 ·
September 12, 2013
December 3, 2013
December 5, 2013
December 13, 2013
January 2, 2014
January 14, 2014
February 2014
March 19, 2014
April 15, 2014
April 23, 2014
April 28, 2014
April 29, 2014
April 29, 2014
May 8, 2014

s:

Type of Wire
Communication
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email
email

Subject of Wire Communication

Diversified Certificate of Analysis.doc
Schedule week of 3114
BOLCAC2155
CAC2162
CAC4046
CAC4047
CAC4045
CAC2153
BOLCAC2157
BOL CA.C2151
Revised schedule for week of3/4/13
CAC3062
Rosser Schedule
FW: questionnaire signed
FW: Schedule we'ek of7-15-13
FW: REVISED SCHEDULE week of 7-22
Schedule for week of 8-6-13
RE: Mishawaka turkey meal
COA 9/11/2013
weights and ETAs
FW: Updated schedule week of 12/9
weights and ETAs
weights and ETAs
FW: Revised SCHEDULE WEEK OF 1/13
INVOICES FROM WILBUR ELLIS
weights and ETAs ·
weights and ETAs
BOLCAC2212
weights and ETAs
BOL CAC2240 ADD ON FOR FRIDAY
NOID
Qs on By Products·

All in violation of Title 18, United States Code, Sections 1343 and 2.
27

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 28 of 42 PageID #: 682

COUNTS 34-42
(Mail Fraud: 18 U.S.C. § 1341)

The Grand Jury further charges:
1.

The allegations of Paragraphs 1-13; 15-72; 73b; 74-82 of Counts 2-33 are

incorporated by reference as if fully set forth herein.
2.

From 2011 through October 2014, DOUG HANING, as a marketer and.manager

for WE-Rosser, agreed to sell WE-Rosser products to Custom AG, a straw broker that DOUG
HANING directed and controlled. As part of the scheme and in furtherance of the scheme,
DOUG HANING concealed his relationship with Custom AG from his employer and others and
misrepresented his involvement with Custom AG and the financial benefit he and others
personally received from Custom AG.
3.

On or about the dates specified as to each count below, in the Eastern District of

Missouri and elsewhere,
WILLIAM DOUGLAS HANING,

the defendant herein, and ~thers persons known and unknown to the Grand Jury, having devised
and intending to devise a scheme and artifice to defraud, and to obtain money and property by
means of materially false and fraudulent pretenses, representations, and promises, and for the
purpose of executing this scheme to defraud and in attempting to do so, did knowingly cause to
be sent and delivered by mail from the Eastern District of Missouri: checks drawn on an account
in the name of Diversified Ingi;edients, account no. xxx7479, with Eagle Bank and Trust, Arnold,
Missouri, payable to Custom AG Commodities, in the,amounts specified as to each count below,
from Missouri to Texas, with such checks representing payments for the purchase of pet food

.28

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 29 of 42 PageID #: 683

ingredients and products shipped from Rosser, Texas, as part of the scheme and artifice to
defraud.
Count

34
35
36
37
38
39
40
41
42

Date Of mailing
(between on or
about)
1/16/14 - 1/23/14
1/23/14 - 1/30/14
2/06/14·- 2/13/14
2/13/14 - 2/20/14
2/27/14 - 3/06/14
4124114 - 5/01/14
5/01/14 - 5/08/14
5/22/14 - 5/30/14
5/29/14 - 6/05/14

Check no.

Amount

Destination

0112650
0112929
0113435
0113716
0114077
0116412
0117109
0118085
0118422

$663,540.75
$630,258.29
$311,354.64
$307,414.94
$613,944.82
$524,163.91
$431,193.59
$508,673.10
$223,106.23

Sulphur Springs, TX
Sulphur Springs, TX
Sulphur Springs, TX
Sulphur Springs, TX
Sulphur Springs, TX
Sulphur Springs, TX
Sulpllur Springs, TX
Sulphur Springs, TX
Sulphur Springs, TX

All in violation of Title 18, United States Code, Sections 1341 and 2.
COUNTS 43-49
(Money Laundering: 18 U.S.C. § 1957)
The Grand Jury further charges:
1.

On or about the dates specified as to each count below, in the Eastern District of

Missouri and elsewhere,
WILLIAM DOUGLAS HANING,
the defendant herein, did knowingly engage and attempt to engage in a monetary transaction, .
affecting interstate commerce, in criminally derived property of a value greater than $10,000,
that is, by causing, directing, inducing, and controlling the deposit of funds from a bank account
of Custphi AG Commodities, account number xxx4277, at Alliance Bank, Sulphur Springs,
Texas, a financial institution, in the amount specified in each count below, into a joint personal
bank account of the defendant, account number xxxx8104, at American National Bank of Texas,
Terrell, Texas, a financial institution, such property having been derived from a specified

29

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 30 of 42 PageID #: 684

unlawful activity, that is, mail fraud, in violation of Title 18, United States Code, Section 1341
and wire fraud, in violation of Title 18, United States Code, Section 1343.
Count

43
44
45
46
47
48
49

Date of transaction
(between on or
.,about)
1/24/14 - 1/28/14
2/01/14 - 2/06/14
2/08/14 - 2/14/14
2114/14 - 2/21/14
3/07/14
5/01114 - 5/14/14
7/24/14 - 7/28/14

Deposit:
Check no.

Amount

Payable to:

1320
1322
1326
1332
1342
1370
1399

$34,050
$21,750
$23,300
$11,440
$14,200
$75,000
$77,000

C.H.
C.H.
C.H.
C.H.
C.H.
C.H.
C.H.

All in violation of Title 118, .United States Code, Sections t 957 and 2.
COUNT SO
(Conspiracy: 18 U.S.C. § 371)

The GrandJury further charges:
The allegations of Paragraphs 1-13; 15-72; 73b; 74-82 ofCounts2-33 are hereby
realleged and incorporated by reference as if fully set forth herein.
From 2008, the exact date being unknown to the Grand Jury, and continuing through on
or about October 2014, in the Eastern District of Missouri, and elsewhere,
WILLIAM DOUGLAS HANING,

did lmowingly and willfully combine, conspire, confederate and agree with others both lmown
and unknown to the Grand Jury, to commit offenses against the United Sta!es, that is, to
introduce and deliver for introduction into interstate commerce, with intent to defraud and
mislead, food that was adulterated and misbranded, in violation of Title 21, United States Code,
Sections 331(a) and 333(a)(2);

-30

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 31 of 42 PageID #: 685

The United States Food and Drug Administration
1.

The United States Food and Drug Administration (FDA) was the agency of the

United States government responsible for enforcing the provisions of the Federal Food, Drug,
and Cosmetic Act (FDCA). The FDA's responsibilities included, among other things, regulatmg
the distribution of food shipped, delivered, and received in interstate commerce, including
articles offered for import into the United States.
2.

Under the FDCA, the term "food" meant articles used for food or drink for man or

other animals and articles used for components of any such article. Title 21, United .States Code,
Section 321(f).
3.

Under the FDCA, the term "interstate commerce" meant commerce between

separate States in the United States and commerce between any State of the United States and
anyplace outside thereof. Title 21, United States Code, Section 32l(b).
4. ·

The FDCA prohibited the introduction or delivery for introduction in interstate

commerce, or the causing of such delivery or introduction, of any food that was adulterated. The
FDCA defined "adulterated food" to include: food in which any valuable constituent has been in
whole or in part omitted, Title 21, United States Code, Section 342(b)(1 ); food in which any
substance has been substituted wholly or in part therefor, Title 21, United States Code, Section
342(b)(2); and food to which any substance has been added or mixed so as to make it appear the
food is better or of greater valut'. than it i~, Title 21, United States Code, Section 342(b)(4). The
FDCA prohibited the introduction or delivery for introduction in interstate commerce, or the
causing of such delivery or introduction, of any food that was misbranded. The FDCA defined
"misbranded food" to include: food whose labeling is false or misleading in any particular, Title
· 21, United States Code, Section 343(a)(l).
31

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 32 of 42 PageID #: 686

THE MANNER AND MEANS OF THE CONSPIRACY

5.

The manner and means of said conspiracy alleged in paragraphs 1-13, 15-72, 73b,

and 74-82 of Counts 2-3 3 above are hereby realleged and incorporated herein by reference as if
fully set forth herein.
6.

Among those who DOUG HANING did knowingly and willfully combine,
'-

conspire, confederate and agree with to adulterate and misbrand pet food ingredients shipped
interstate from Rosser, Texas were former ABP-Rosser employees who continued on as
employees of WE-Rosser. Those employees included a Wilbur-Ellis Feed Division employee
with on-site responsibilities over the animal protein products supplied from the Rosser, Texas
facility and held positions, titles and designations including Quality Assurance Officer, Quality
Control Manager, and Quality Assurance Manager for the Rosser, Texas facility. Specifically,
this officer and manager was in charge of executing various blend formulations utilized at the
Rosser, Texas facility for Wilbur-Ellis animal protein products and ingredients.
7.

. This officer and manager worked as the Quality Assurance Manager at the Rosser

facility when it was owned by ABP .. After the Rosser facility was acquired by Wilbur-Ellis, this
officer ang. manager continued to work at WE-Rosser as the Site Manager. At all relevant times,
this officer and manager (also referenced hereafter as "site manager") reported to, was
"

supervised by, and worked under the management and direction of DOUG HANING and others.
DOUG HANING and others authorized and directed the blending conducted and executed by
this site manager to fulfill sales orders shipped interstate from the Rosser facility and authorized,
directed and agreed to the manner those shipments were identified, branded and labelled.
8.

At all times relevant, DOUG HANING directed and authorized the raw materials

purchased and received by the Rosser facility. At all times relevant, DOUG HANING directed,
32

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 33 of 42 PageID #: 687

set and authorized the pricing of products marketed and sold from the Rosser facility including
products that DOUG HANING marketed and sold directly to his customers as well as products
marketed and sold by other Wilbur-Ellis marketers based in Rosser and elsewhere. At all times
relevant, DOUG HANING was aware and authorized blends executed by this site manager to
satisfy sales orders agreed to by DOUG HANING and others and was aware and authorized the
interstate shipments of ble~ded products shipped from the Rosser facility knowing the contents
of said blended products and agreeing to their adulterations and misbranding.
OBJECT OF THE CONSPIRACY

9.

The object of the conspiracy was to defraud pet food manufacturers, including,

but not limited to, the customers of Wilbur-Ellis, and to defraud others involved in the pet food
supply chain, and to obtain money by means of false and fraudulent pretenses, representations
and promises.
OVERT ACTS

10.

In furtherance of the conspiracy and to effect the objects of the conspiracy, the

conspirators committed the following overt acts, among others:
'

t

Overt acts pertaining to raw materials supplied to WE-Rosser and used in the adulteration
and misbranding of food supplied to pet food manufacturers

a.

On one and more occasions DOUG HANING purchased, and caused to be

purchased by WE-Rosser, and received and caused to be received by' WE-Rosser, hydrolyzed
feather meal from one or more raw material suppliers, including a raw material supplier located
in :Mt. Pleasant, Texas;
b.

On or about April 8, 2014, a WE-Rosser employee supervised by DOUG

HANING received an email regarding the subject: "MP FM next week" from a Sales Specialist
for the Mt. Pleasant supplier. The Sales Specialist wrote: "I am showing 8 loads of Feather Meal
33

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 34 of 42 PageID #: 688

for Next Week@ $757.75. If this is correct please send PO over and I'll get this keyed for you."
The WE-Rosser employee supervised by DOUG HANING wrote in response: "Confirmed with
Doug. We will do these foads for next week." .

e.

On-one and more occasions, DOUG HANING purchased, and caused to

be purchased, by WE-Rosser, and received, and caused to be received by WE-Rosser, AGrade/Pet Food Grade Chicken By-Product Meal from one or more raw material suppliers,
including a raw material supplier located in Mt. Pleasant,
d.

Texas~

On one and more occasions, DOUG HANING purchased, and caused to

be purchased by WE-Rosser, and received, and caused to be received by WE-Rosser BGrade/Feed Grade Chicken By-Product Meal from one or more raw material suppliers, including
a raw material supplier located in Mt. Pleasant, Texas;
e.

On or about September 4, 2013, a WE-Rosser employee supervised by

DOUG HANING received an email from the Mt. Pleasant supplier, who copied DOUG
HANING on the email regarding the subject: "Here's what you're getting from us" noting that
on "Thursday 9/5/13" WE-Rosser would receive "2 A-meal with Naturox" "2 B-meal" "4
Feather meal"; and "Friday 9/6/13" WE:.. Rosser would receive "1 A-meal with Naturox" "2 Bmeal" "2 Feather meal."
f.

On one and more occasions, DOUG HANING purchased, and caused to

be purchased by WE-Rosser, and received, and caused to be received by WE-Rosser, Feed Grade
Chicken Bone By-Product Meal (also referred to as "poultry bone meal") from one or more raw
material suppliers, including a raw material supplier located in Scranton, Arkansas;
g.

On or about April 8, 2014, DOUG HANING emailed a sales

representative for the Scranton supplier regarding the subject: "poultry bone meal" and inquired
34

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 35 of 42 PageID #: 689

about the possibility of adding "2 true.ks a week for the rest of this month." The sales
representative responded: "Doug, You're currently pulling 5 loads per week. If 6 is the new
number or 7 we can accommodate either. Let us know when you want to start with exact volume
number per week and we'll plan accordingly." DOUG HANING emailed in response: "Make it
7 ... ";
h.

On one and more occasions, DOUG HANING purchased, and caused to

be purchased by WE-Rosser, and received, and caused to be received by WE-Rosser, Turkey By. Product Meal from one or more raw material suppliers, including a raw material supplier located
in Southwest City,.Missouri. On one and more occasions, in the Eastern District of Missouri and
elsewhere, WE-Rosser contracted with Diversified Ingredients, and paid Diversified Ingredients,
to transport and cause the transportation of said shipments of Turkey By-Product Meal from
Southwest City, Missouri, to Rosser, Texas;
i.

On April 3, 2014, a WE-Rosser employee supervised by DOUG HANING

emailed a sales representative for the Southwest City supplier regarding the subject
"PURCHASE CONTRACT FROM WILBUR ELLIS" and stated: "Here is the TurkeyByproduct
meal contract. 5 loads per week@ $917.00 per SIT."

J.

On or about April 17, 2014, Wilbur-Ellis ordered and_purchased a

"customer pick-up" shipment of turkey by-product meal, customer purchase order #188037-10,
I

from the Southwest City supplier with a price per unit of $917.00. On or about April 17, 2014,
Diversified Ingredients, in the Eastern District of Missouri, contacted with a carrier to pick up a
load of turkey by-product meal, load #188037-10, from the Southwest City supplier and
transport the load from Southwest City, Missouri, to WE-Rosser in Rosser, Texas. On or about
April 23, 2014, Diversified Ingredients' contract carrier delivt:<.red load # 18 803 7-10 of turkey by-

35

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 36 of 42 PageID #: 690

product meal to WE-Rosser and the shipment was unloaded into a "blending bin" upon arrival
and receipt in Rosser, Texas. On or about May 6, 2014, Diversified Ingredients invoiced
Wilbur- Ellis for the transportation cost of shipping load # 18 803 7-10 of turkey by-product meal
to WE-Rosser.

Overt acts pertaining to pet food manufacturers who received adulterated and misbranded
shipment~from WE-Rosser
k.

On one and more occasions, DOUG HANING, as a marketer and manager

for WE-Rosser, agreed to supply low ash chicken meal to one or more pet food manufacturers
including a pet food manufacturer located in Mishawaka, Indiana (previously identified as Pet
Food Manuf~cturer "A");

I.

Beginning on or about November 1, 2013, DOUG HANING, as a

marketer and manager for WE-Rosser, communicated with another marketer for Wilbur-Ellis
about selling and supplying low ash chicken meal in 2014 to the pet food manufacturer located in
Mishawaka, Indiana;
m.

On one and more occasions, DOUG HANING, as a marketer and manager

for WE-Rosser, agreed to supply a blended product, specifically low ash chicken by-product
chicken meal blend to one or more pet food manufacturers, including a pet food manufacturer
located in Columbus, Wisconsin;
n.

Beginning on or about November 1, 2013, DOUG HANING, as a

marketer and manager for WE-Rpsser, communicated with another marketer for Wilbur-Ellis
about selling and supplying the blended product, low ash chicken by-product chicken meal
blend, to a pet foo4 manufacturer located in Columbus, Wisconsin;
o.

On one and more occasions, DOUG HANING, as a marketer and manager

for WE-Rosser, and others, agreed to the use of Bills of Lading and Certificates of Analysis
36

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 37 of 42 PageID #: 691

provided by Diversified Ingredients that falsely and misleadingly identified WE-Rosser
shipments' to pet food manufacturers, including shipments of blended products falsely.and
'

misleadingly identified as chicken meal, low ash chicken meal, turkey meal as well as chicken
by-product meal;
p.

On one and more occasions, DOUG HANING, as a marketer and manager

for WE-Rosser, agreed to sell WE-Rosser products to Custom AG, a straw broker that DOUG
I

HANING directed and controlled.
q.

On or about January 2, 2014, DOUG HANING entered into a sales contact

with Custom AG for Chicken Meal Blend which identified DOUG HANING as the marketer and
said contract was emailed to the straw owner of Custom AG by a WE-Rosser employee under
the supervision of DOUG HANING.
r.

On or about March 1, 2014, the straw owner of Custom AG forwarded

DOUG HANING an email from a broker with Diversified Ingredients regarding the subject:
"Updated [ ] Chicken meal Forecast for MARCH-DEC OF 2014."

Overt acts pertaining to Bills of Lading and Certificates of Analysis utilized with
adulterated and misbranded shipments from WE-Rosser
(

s.

DOUG HANING, as a marketer and manager for WE-Rosser, and others,

and as part of the conspiracy and in furtherance of the conspiracy, caused the following
documents to be sent to pet food manufacturers that were false and misleading in one or more
respects:.

Document Approximate
date of
type
shipment
BOL
37515

8/9/1)

Represented
protein
product and/or
ingredient(s)
Chicken Meal
Chicken ByProduct Meal

Shipped to
manufacturer
location
Hereford, TX

\

37

Added and/or
substituted
product or ingredient(s)
Feather Meal

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 38 of 42 PageID #: 692

Document Approximate
date of
type
shipment

Shipped to
manufacturer
location

BOL
66055-8
BOL
39049
BOL
CAC2074

2/6/14

Mishawaka, IN

2/10/14

Brownwood,
TX
Hazle
Township, PA

Turkey Meal

Turkey By-Product Meal

Chicken Meal

Hazle
Township, PA

Turkey Meal

Hazle
Township, PA

Turkey Meal

Pet Food Grade Chicken
By-Product Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal
Pet Food Grade Chicken
By-Product Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal
Turkey By-Product Meal
Pet Food Grade Chicken
By-Product Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal
Turkey By-Product Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal
Pet food Grade Chicken
By-Product Meal
Feather Meal

BOL
65121-73

2/21/14

2/26/14

Represented
Added and/or
substituted
protein
product and/or product or ingredient(s)
ingredient(s)
Turkey By-Product Meal
Turkey Meal

\

BOL
65121-74

3/6/14

~

'

BOL
39152

3/31/14

Columbus, WI

Chicken Meal
Chicken ByProduct Meal
Chicken Meal

BOL
39373

4/7/14

Mishawaka, IN

COA
Lot 39371

4/7/14

Mishawaka, IN

Chicken meal
(Source: forest
MS)

BOL
CAC2168

4/7/14

Frontenac, KS

Chicken Meaf

38

Pet Food Grade Chicken
By-Product Meal
F~ed Grade Chicken
Bone By-Product Meal
Feather Meal
(Source Mt. Pleasant)
Pet Food Grade Chicken
By-Product Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 39 of 42 PageID #: 693

Document Approximate
type
date of
shipment

Shipped to
manufacturer
location

Mishawaka, IN

Represented
Added and/or
protein
substituted
product and/or product or ingredient(s)
ingredient(s)
Chicken Meal
Pet Food Grade Chicken
By-Product Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal
Chicken meal
Pet Food Grade Chicken
(Source: Forest By-Product meal
MS)
Feather Meal
(Source Mt. Pleasant)
Turkey Meal
Turkey By-Product Meal

Mishawaka, IN·

Turkey Meal

Turkey By-Product Meal

Owatonna, MN

Turkey Meal

Turkey By-Product and
Chicken By-Product Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal
Turkey By-Product and
Chicken By-Proquc~ Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal
Turkey By-Product and
Chicken By-Product Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal
Pet Food Grade Chicken
By-Product Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal
Pet Food Grade Chicken
By-Product Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal

BOL
CAC2167

417114

Frontenac, KS

COA
Lot39372

4/8/14

Mishawaka, IN

BOL
4/10/14
66055-26
COA
4/10/14
Lot39469
BOL
4/11/14
65121-130

-

COA
Lot 39484

4/11/14

-

Owatonna, MN

Turkey Meal
\

BOL
4/12/14
65121-129

Owatonna, MN

Turkey Meal

BOL
CAC2198

4/23/14

Perham, MN

Chicken Meal

BOL
CAC2199

4/25/14

Perham, MN

Chicken Meal

BOL
39606

4/28/14

Phoenix, AZ,

Chicken Meal
Chicken ByProduct Meal
39

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 40 of 42 PageID #: 694
I

r.

Document Approximate
type
date of
shipment

Shipped to
manufacturer
location

BOL
CAC2210

4/28/14

Hazle
Township, PA

BOL
39324

4/30/14

BOL
CAC2222

5/1/14

Columbus, WI , Chicken Meal
Chicken ByProduct Meal
Owatonna, MN Chicken Meal

5/2/14

Owatonna, MN

1

~

Represented
protein
product and/or
in2redient(s)
Chicken Meal

'

BOL
CAC2223

Chicken Meal

'

Added and/or
substituted
product or ingredient(s)
Pet Food Grade Chicken
By-Product Meal ·
Feed Grade Chicken
Bone By-Product Meal
Feather Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal
Pet Food Grade Chicken
By-Product Meal
Feed Grade Chicken
Bone.By-Product Meal
Feather Meal
Pet Food Grade Chicken
By-Product Meal
Feed Grade Chicken
Bone By-Product Meal
Feather Meal

All in violation of Title 18, United States Code, Section 371.

FORFEITURE ALLEGATION
The Grand Jury further,finds by probable cause that:
1.

Pursuant to Title 18, United States, Code, Section 981(a) and Title 28, United

States Code, Section 2461(c), upon conviction of an offense in violation of Title 18, United
States Code, Sections 1341, 1343 or 1349 as set forth in Counts 1 through 42, the defendant shall
forfeit to the United States of America any property, real or personal, constituting or derived
from any proceeds traceable to such violation(s). Subject to forfeiture is a sum of money equal
to the total value of any property, real or personal, constituting or derived from any proceeds
traceable to such violation(s).

40

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 41 of 42 PageID #: 695

I

· 2.

Pursuant to Title 18, United States Code, Sections 982(a), upon conviction. of an

offense in violation of Title 18, United States Code, Section 1957, as set forth in Counts 43
through 49, the defendant shall forfeit to the United States of America any property, real or
personal, involved in such offense, and any property traceable to such property. Subject to
forfeiture is a sum of money equal to the total value of any property, real or personal, involved in ,
such offense, or any property traceable to such property.
3.

Specific property subject to forfeiture includes, but is not limited to, the

following:
a.

Approximately 2,705.08 acres ofranch land known as "Living the Dream
Ranch" f/k/a "Cactus Ranch," which is comprised of approximately
1,129.93 acres in McMullen County, Texas, and approximately 1,575.15
acres in Live Oak County, Texas, and is situated just north of the southeast
comer of said McMullen County and the southwest comer of said Live
Oak County, together with all appurtenances, improvements, and
attachments thereon, or the proceeds from the sale of such property,
including but not limited to approximately $930,424.79 that was deposited
into the asset forfeiture fund on Nove111ber 27, 2018; and

b.
4.

2014 Mercedes-Benz, ML350, VIN: 4JGDA5JB9EA377726.

If any of the property described above, as a result of any act or omission of the

defendant:
a.

cannot be located upon the exercise of due diligence;

b.

has been transferred or sold to, or deposited with, a third party;

c.

has been placed beyond the jurisdiction of the.court;
41

 Case: 4:18-cr-00139-RWS-NAB Doc. #: 83 Filed: 11/29/18 Page: 42 of 42 PageID #: 696

d.

has been substantially diminished in value; or

e.

,
has been commingled with other property which cannot be divided''--_
without
__

difficulty,
the United States of America will be entitled to the forfeiture of substitute property pursuant to
'

Title 21, United States Code, Section 853(p).
A TRUE BILL.

FOREPERSON

GILBERT C. SISON, #52346MO
Special Attorney to the United States Attorney General
KYLE T. BATEMAN, #996646DC
Special Attorney to the United States Attorney General
CHARLES S. BIRMINGHAM, #47134MO
Specif! Attorney to the United States Attorney General

42