Lab beagle breeder Envigo cops $35 million plea. Shareholder suits ahead.

Envigo is also permanently enjoined from further f–––ing the dogs

CHARLOTTESVILLE,  Virginia––Envigo RMS,  formerly one of the leading U.S. suppliers of dogs to laboratories,  on June 3,  2024 agreed in U.S. Federal Court for the Western District of Virginia to a plea bargain settlement of alleged Animal Welfare Act and Clean Water Act violations,  requiring the company is to pay $35 million in penalties.

Envigo RMS is also permanently enjoined from either breeding or brokering dogs for sale.

Formal sentencing was deferred to October 7,  2024,  allowing Envigo time to demonstrate good faith by paying the penalties.

Violations consolidated into single counts

Details of the plea bargain include matching fines of $11 million each for the Animal Welfare Act and Clean Water Act violations,  which were each consolidated into single counts.

In addition,  Inotiv,  the corporate owner of Envigo,  is to spend $7 million over the next three years to bring all Inotiv-owned animal care facilities up to Animal Welfare Act requirements.

The plea bargain also includes an allocation of $3.5 million to rectify environmental damage done by Envigo to public resources in Cumberland County,  Virginia,  chiefly by discharging dog feces directly into a creek.

Humane Society of the U.S. gets $1.9 million for rehoming 3,775 beagles

$1.9 million is to be reimbursed to the Humane Society of the U.S. for expenses incurred in rehoming 3,775 beagles from the former Envigo kennels in Cumberland County,  with help from 17 local and regional humane societies and rescue organizations around the country.

The rehoming campaign reaped a publicity bonanza when Prince Harry of the United Kingdom and his wife Megan Markle adopted one of the beagles.

Inotiv is further required to hire an independent compliance monitor for the three to five years the company is expected to be on probation.

Tangled corporate history

Founded in 1974 as Bioanalytical Systems Inc. in West Lafayette,  Indiana,  the company now called Inotiv began selling public shares in 1997.

It changed names to Inotiv in March 2021.

Inotiv on September 21,  2021 announced the purchase of Envigo,  headquartered in Indianapolis,  Indiana.

Envigo already had a tangled corporate history,  involving several of the most controversial companies in the laboratory animal supply field.

Pedigree of bastards

The Envigo beagle breeding facility in Cumberland,  Virginia was apparently built in 1961 and operated by Hazelton Laboratories until 1987,  when it was sold to Covance.

The beagle kennels were still owned by Covance as of 2019,  but Covance was by then a subsidiary of LabCorp,  having been sold to LabCorp in 2014.

Envigo was formed in 2015 through a merger with Harlan Laboratories and Huntingdon Life Sciences.  Envigo bought LabCorp,  including the Cumberland facilities,  in June 2019.

All five companies involved in the Envigo corporate history before the Inotiv purchase had their own histories of repeated Animal Welfare Act violations.

SHARK & PETA

Violations were documented by,  among others,  Showing Animals Respect & Kindness [SHARK] drone video,  collected in 2017,  2019,  and 2021,  and a 2021 People for the Ethical Treatment of Animals [PETA] undercover investigation.

The Showing Animals Respect & Kindness and PETA investigations led to an investigation by federal agencies.  Federal authorities in May 2022 conducted a search of the Envigo breeding facility in Cumberland County, Virginia,  finding nearly 450 animals in acute distress.

Responding to the federal findings,  U.S. District Judge Norman Moon on July 1,  2022 ordered that all of the beagles still at Envigo be released to the Humane Society of the United States within 60 days,  and signed off on a beagle evacuation plan on July 5,  2022.

Judge Moon prohibited Envigo from relocating 2,100 beagles to another facility operated by a related company,  Envigo Global Inc.

(See 4,500+ beagles freed from laboratory use by judge’s order.)

“Prioritized profits & convenience”

Christopher Kavanaugh,  U.S. Attorney for the Western District of Virginia and lead prosecutor in the case,  alleged that Envigo and Inotiv “prioritized profits and convenience over following the law,”  including by hiring only 40 workers to run the facility.

Kavanaugh said Envigo sold 15,000 beagles between 2019 and the May 2022 federal raid,  taking in $16 million in revenue.

“But he said the company refused to make the investments necessary to provide for the animals’ basic care,”  paraphrased Matthew Barakat of U.S. News.

“Cages were cleaned twice a month rather than every day as required.  Animals were euthanized,  including by direct injections to their heart,  without sedation,  Kavanaugh said.  Dogs were routinely injured by getting their paws caught in flooring composed of metal grates that left space for paws to easily fall through.  Food and water were lacking and unclean.

Incompetent vet

“Court records show that 300 puppies died over a seven-month stretch around 2021 from what was described as ‘unknown causes,’”  Barakat added.

Of particular note was the work of a staff veterinarian identified only by the initials AV.

AV allegedly botched at least five surgeries on Envigo dogs.  Despite staff complaints about AV,  Envigo did not replace AV,  purportedly because of the difficulty of finding another veterinarian to work there.

According to the charging documents,  “Staff rejection of AV’s authority paired with AV’s inadequate veterinary skills led to multiple additional improper and inadequate veterinary practices at the Cumberland Facility.”

The veterinarian AV resigned in April 2022.

Investigation ongoing

Mentioned the Reuters news service,  “Prosecutors also said their investigation is ongoing and that criminal cases against individual employees remain possible,”  adding that,  “The guilty plea over the Clean Water Act violation could lead the Environmental Protection Agency to strip away Envigo’s status as a federal contractor.”

Ironically,  the Envigo kennels,  when built,  were state-of-the-art for humane society animal shelters,  and when closed supposedly for the last time on January 24,  2024,  were still not significantly worse than about half of the humane society animal shelters and public pounds in use today.

Except for being about 100 times bigger than the average animal shelter built to the same basic plan,  the now closed Envigo kennels followed a design scheme still common to some shelters built within recent years.

Humane community should take a lesson

Features shared with many shelters included a worn concrete floor,  rusty reverberating steel roof,  chain link cage fronts and dividing panels,  swinging flaps or “guillotine” doors separating indoor from outdoor areas,  service access provided from a long passageway behind the kennels with concrete block walls,  ventilation furnished by nature in the “outdoor” portion of each cage,  and by fans sucking air the length of the passageway on the indoor side.

Rows of cages directly faced each other.  Cleaning with high-pressure hoses exchanged the stench of dog poop for the stench of wet dog hair at least once a day.

Use of bleach ensured the frequent release of aromatic hydrocarbons to amplify the odors almost as much as the vibrating metal roof amplified the noise of barking.

            ANIMALS 24-7 pointed out in writing as early as August 1,  2006 to several anti-vivisection organizations seeking closure of the then-Covance kennels that they were no worse and perhaps even better than some of the “rescue” shelters to which the anti-vivisection organizations hoped the resident beagles could be moved.

(See The Envigo beagle case: loose ends & lessons for animal advocates.)

 Shareholder lawsuits pending

The plea bargain settlement reached on June 3,  2024 scarcely resolves all of the legal issues surrounded Envigo.

The stockholder rights law firm Bragar Eagel & Squire, P.C. on June 23,  2022 announced that it had filed a class action lawsuit against Inotiv, Inc. in the U.S. District Court for the Northern District of Indiana “on behalf of all persons and entities who purchased or otherwise acquired Inotiv securities between September 21, 2021 and June 13, 2022.”

“The litigation challenges Inotiv’s claims regarding its Envigo business,  which the company acquired in September 2021,  including that Envigo maintained ‘high standards of animal welfare’ at its Cumberland, Virginia facility and other animal testing sites,”  Bragar Eagel & Squire, P.C. elaborated in a December 26,  2023 media release.

Alleged “pump & dump”

A second law firm,  Wolf Haldenstein Adler Freeman & Herz LLP,  alleged in a smilar lawsuit filed on June 23,  2022 in Indianapolis that Inotiv,  the owner of Envigo,  in effect pulled a “pump-and-dump“ scheme that inflated its stock value,  leaving stock buyers holding the bag when the stock value crashed.

The “pump-and-dump” scheme allegedly occurred when the announcement of Inotiv acquisition of Envigo caused the Inotiv share price to approximately doubled from the announcement of the Inotiv purchase until November 19,  2021.

“The stock hit an all-time high of $60.66,  just two weeks after its previously announced acquisition of Envigo was finalized,”  observed Susan Orr for the International Business Journal.

Stock fell

            The lawsuits argue that Inotiv failed to disclose to share purchasers the seriousness of the Animal Welfare Act and Clean Water Act violations at the newly purchased Envigo properties,  and then allowed the already bad situation to deteriorate.

“On June 13,  2022,”  Orr continued,  “Inotiv announced it would close the dog breeding facility,  plus a separate rodent-breeding facility elsewhere in Virginia.  The company’s stock price dropped 2% the following day,  to close at $12.78 per share.”

And is still falling

“On May 13,  2024,  Inotiv disclosed that it is unable to timely file its Quarterly Report on Form 10-Q for the quarter ended March 31,  2024,”  Bragar Eagel & Squire, P.C., announced via U.S. Newswire.

“The company stated it “anticipates reporting significant changes in, among other things, its consolidated revenue, operating costs and expenses and net loss for the six months ended March 31, 2024.

“On this news,”  Bragar Eagel & Squire, P.C., said,  “the price of the company’s stock dropped.”

Again.

(See Beagle breeder Envigo shortchanged shareholders too, lawsuit alleges.)

“The devil went down to Georgia”

Meanwhile,  former Envigo executives Jim Harkness and Kurt Derfler are two of the three principals in the Safer Human Medicine project,  a scheme to build a monkey farm in Bainbridge,  Georgia,  housing 30,000 macaques captive-bred for biomedical research.

(See The devil went down to Georgia,  looking to breed macaques for labs and Monkey business invades Brazoria, Texas, & Bainbridge, Georgia.)

“Harkness,”  according to a PETA rap sheet on the Safer Human Medicine scheme,  “was chief operating officer at Envigo.  He was in charge of animal research models when the company’s beagle-breeding facility in Virginia was raided by the U.S. Department of Justice (DOJ),  which found and seized hundreds of dogs in acute distress.

Kurt Derfler

“Harkness tried to persuade Virginia state lawmakers not to pass a bill that would protect dogs after PETA exposed Envigo and its dozens of violations of the federal Animal Welfare Act.

“He failed.  The bill passed with unanimous votes in the state house and senate,”  PETA recalls.

Safer Human Medicine chief operating officer Derfler,  the PETA rap sheet continues,  “retired as executive director of nonhuman primate operations at Charles River Laboratories in May 2023.  He was previously vice president of North American operations at Envigo and executive director of operations at Covance before Envigo took it over.”

(See Covance beagle breeding kennels: they are not Snoopy’s doghouse.)

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