James Marshall and Flavor Fresh

A. Marshall and the Home Juice formula.

James Marshall received a B.S. and then a M.S. in Food Technology in 1949 and 1951, respectively, from the University of Massachusetts.  He worked at Home Juice as Vice President of Research and Development from 1962-74.

In 1962 Marshall created a formula that for making adulterated orange juice that could ne misbranded and marketed as 100% pure orange juice from concentrate. Marshall created the formula for Home Juice and shared it with Home Juice’s affiliates and franchisees, including Ever Fresh[1] and Holiday Juice used to See §H, below.

B. Marshall, Benton, and Flavor Fresh.

Marshall left Home Juice in 1974 and formed Mr. Juicey of Illinois. In 1980 he formed Flavor Fresh Juices Corp. as a wholly-owned subsidiary of Mr. Juicey. In 1988 the two entities merged, with the surviving entity named Flavor Fresh Foods Corp.

In 1976 or 1977, Marshall invited another Home Juice alumnus, James Benton, to join the firm as a shareholder, officer, and director.  Benton had worked at Home Juice from about 1960 until about 1972, first as a driver, then as a sales manager. Originally, Marshall and Benton were 50-50 partners.  In the early 1980s Benton, an African-American, became a 51% shareholder, which qualified the firm for City of Chicago set-aside programs for minorities.

Flavor Fresh was a secondary processor—in industry vernacular, a blender.  The firm would take COJM from several sources and blend their differing characteristics (degree of sweetness, acidity, color and flavor) into a uniform product for resale to tertiary processors. 

C. Flavor Fresh’s co-packers.

Flavor Fresh also distributed single-serve juices and drinks for re-sale to consumers. Some of these products were hot-packed in glass bottles; others were cold-packed in plastic containers. Flavor Fresh lacked the equipment to pack any single-serve products itself, so it relied on the following co-packers to make those products for it during the years indicated:

Holiday Juice and Boden Products were the only co-packers who hot-packed Flavor Fresh’s beverages in bottles.  The other three companies cold-packed Flavor Fresh’s beverages in plastic containers. 

D. The Marshall/Kotwicki costing system.

Daniel Kotwicki was a certified public accountant who worked in the Home Juice organization from 1969 to 1979. In the early 1970s he collaborated with Marshall to create a costing system that tracked the costs of, and profits from, the manufacture of adulterated orange juice.  The costing system was tied to the formulas that Marshall created.

The costing system, including Marshall’s formulas, was uploaded to Home Juice’s main-frame computer. Ever Fresh and Holiday Juice had access to these formulas through a remote terminal that communicated with Home Juice via a dedicated telephone line.

(The evidence of these arrangements is described in Grove Fresh’s Reply Memorandum In Support of Motion to Overrule Objections to Time Period, pp. 2-5.)

E. Marshall’s roles in various sub-conspiracies.

1. The Flavor Fresh/Holiday Juice COJM sub-conspiracy.

Kotwicki left the Home Juice organization in 1979, when Holiday Juice was spun off into an independent entity 100% owned by management, including Kotwicki, who continued as its president.

In 1979 Kotwicki and Marshall entered into an arrangement whereby Holiday Juice supplied Flavor Fresh with a blend of COJM and invert sugar. Marshall then blended his own special ingredients into this adulterated COJM. He referred to this blended product as a “base.”

Flavor Fresh re-sold Marshall’s “base” to tertiary processors who used it to make single-serve beverages that were falsely labeled as 100% pure orange juice from concentrate.   Marshall Proffer, pp. 3, 4, 11-12.

2. The Flavor Fresh/Peninsular Products sub-conspiracy.

Peninsular Products was a tertiary juice processor in Lansing, Michigan.  Edward Crouse owned the firm; Wayne Wagoner was its president.

In the late 1970s Peninsular retained Marshall as a consultant, seeking his advice on how to resolve “market pressure problems.”  Marshall’s advice: cut costs by using his “base” to make adulterated juice falsely labeled as 100% pure. For the next 11 years Peninsular followed Marshall’s advice. Marshall Proffer, p. 11.

In 1983 the firms entered into a co-packing arrangement whereby Peninsular Products manufactured chilled orange juice products under the Flavor Fresh name brand, using Marshall’s “base.” Marshall Proffer, p. 11. 

4. The Oleum 320/IDEA sub-conspiracy.

In 1983 Wagoner sought Marshall’s advice on how Peninsular might extend the shelf life of its adulterated products. Marshall introduced Wagoner to Friedrich Kohlbach, a German food consultant who was marketing an illict but undetectable preservative known as Oleum 320/IDEA.

Marshall agreed to import Kohlbach’s preservative into the United States and re-sell it to Peninsular.Marshall Proffer, pp. 9, 11. This arrangement continued through early 1991. 

F. The indictment of Marshall, Benton, and Flavor Fresh, and their guilty pleas.

In February 1993 Marshall, Benton, Flavor Fresh, Peninsular Products, and several of Peninsular Products’ officers and managers were indicted for scheming to sell consumers adulterated orange juice. United States v. Peninsular Products Co., et al., 93 CR 21 (W.D. Mich.). See Other Litigation §K.

Marshall pleaded guilty to two counts—(1) that, with the intent to defraud or mislead, he caused adulterated orange juice to be introduced into interstate commerce; and (2) that he conspired to violate the food purity laws. He was sentenced to 37 months in prison and fined $125,000. Benton pleaded guilty to one count and was sentenced to 30 months in prison and fined $25,000.

Flavor Fresh pleaded guilty to 32 counts and was fined $320,000.

G. Marshall’s admissions regarding Kohlbach and Oleum 320/IDEA.

In an affidavit dated October 13, 1993, and filed in the criminal case, Marshall testified as follows:

H. Marshall’s admissions regarding the Home Juice formula.

In December 1992 Marshall made a proffer, submitting to more than 15 hours of interviews by FDA agents and Department of Justice lawyers. The government summarized the proffer in an 18-page, single-spaced memorandum. Ten months later the government filed a copy of that memorandum in support of its positions on sentencing in the criminal case.

In his proffer Marshall told prosecutors that when he worked at Home Juice, “Albert Allen was his contact at [Ever Fresh] and Mr. Marshall provided him with a formula on how to adulterate orange juice at the Detroit area plant.” ((Marshall Proffer, p. 2.)  With respect to Holiday Juice, then known as JZ Juice and a “branch” of Ever Fresh, “the information on how to adulterate flowed to them, primarily through Mr. Marshall, but also through the Allens.” (Id.)

When Marshall left Home Juice to form Flavor Fresh, he used “the same formula as Mr. Marshall was using at Home Juice” to make adulterated orange juice. (Marshall Proffer, p. 3.)  He also used the Home Juice formula when he blended concentrate for Peninsular. (Marshall Proffer, p. 11.)

I. Marshall’s knowledge of evidence incriminating Labatt’s subsidiaries and those subsidiaries’ officers and employees.

Marshall had knowledge of facts that would subject Labatt and its orange juice subsidiaries and some of its current and former employees to civil and criminal liability:

J. Marshall’s knowledge of evidence incriminating American Citrus and its officers and employees.

Marshall had knowledge of facts that would subject American Citrus and some of its employees to the following civil and criminal problems:

[1] “Ever Fresh” is the format used in these essays when referring to that firm’s operations prior to December 1986, when Labatt acquired the firm and changed the format of the name to “Everfresh.”