Lab fined $500,000 in virus case

This story was published on Aug. 06, 2005 on Page C1 in all editions of the Bangor Daily News

BANGOR – A federal judge on Friday ordered the Maine Biological Laboratory of Winslow to pay a $500,000 fine for illegally smuggling a chicken virus into the United States so it could create a vaccine.

U.S. District Judge John Woodcock accepted the prosecutors’ recommendation that the lab could afford to pay the fine, which includes the more than $319,000 in profits the firm made on the illegal vaccine.

The judge gave the lab five years to pay the fine and placed it on probation during that time.

“I can only consider the $319,000 as a starting point,” Woodcock said. “Ordering MBL to pay only the amount it made in illegal profits is equivalent to requiring a bank robber only to return the loot.”

Last month, Woodcock sentenced former company executives to prison terms for their part in the smuggling scheme and their attempts to hide it from federal regulators. The company pleaded guilty last month in U.S. District Court in Bangor to similar charges.

Travis Dunton, 37, of Pittsfield, who has worked at the lab for 14 years, urged Woodcock to consider the lab’s 135 employees and their families in making his decision. He said that recent closings at mills and other companies in central Maine had MBL employees worried that they, too, would become another statistic in the struggling Maine economy.

“I’ve watched this company grow and struggle financially over the years,” he told the judge. “I ask that you carefully take all the innocent people into consideration who are examples of the hard-working people of Maine.”

The case dates back to 1998, when an MBL customer in Saudi Arabia discovered one of its chicken flocks had an avian influenza, according to court documents. To produce a vaccine, the lab required a sample of the virus, which then was smuggled into the U.S.

It is illegal to import avian influenza into the U.S. even for research purposes.

After producing a vaccine, company officials falsified production records and shipping documents to send it back to the Saudi producers. The Winslow firm was paid nearly $900,000 for 8,000 bottles of the vaccine.

A whistle-blower among the lab’s workers told federal authorities about the scheme.

Woodcock fined the company late Friday after a six-hour sentencing hearing in which he heard testimony about MBL’s ability to pay a fine that would not prevent it from continuing to operate.

The federal sentencing guidelines, used to calculate fines in cases of corporate wrongdoing, called for the fine to be between $560,000 and $1.1 million in addition to the illegal profits made from the sale of the avian virus vaccine.

Assistant U.S. Attorney George “Toby” Dilworth, who prosecuted the case, said after the hearing that the $500,000 fine he recommended was based on MBL’s ability to pay and remain in business.

“We asked for the most significant penalty our expert said the company could pay,” Dilworth said.

The lab’s attorney, Michael Cunniff of Portland, argued that the company could afford to pay only a “modest” fine in addition to the $319,000 it was required to pay. He said that the German investors who have backed the firm might not continue to support the Winslow company, which has operated at a loss for several years.

Before imposing sentence, the judge chastised the company for fighting the fine recommended by prosecutors.

“The thing that troubles the court the most,” Woodcock said, “is the message I’m getting from MBL – if you punish us, we’ll punish [the workers]. … If MBL wanted to be a good corporate citizen, people would have stepped forward and said, ‘We’ll pay the fine.’”

Woodcock also said that the fine, minus the illegal profits, would be less than the legal fees – which totaled more than $350,000 – that the company has paid in the wake of the investigation.

After the hearing, the company’s chief executive officer, David Zacek, called the fine “fair.”

“The fine is a fair amount and the judge allowing us to pay over time will allow us to continue operations,” he said. “It will be difficult but not impossible.”

Dunton was not as upbeat.

“I just didn’t dream it was going to be that high,” he said. “It’s difficult for the people who work there to see why we have to suffer for it.”

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