A federal jury on Friday acquitted W.R. Grace & Co. and three of its former officials of charges that they knowingly exposed residents of Libby, Mont., to asbestos poisoning associated with a mining operation and conspired to hide it.

The verdict brings to an ignominious end one of the most significant criminal prosecutions the government had ever filed against a corporate polluter. The acquittals raise new questions about prosecutorial failings in the Justice Department, which already was reeling from the dismissal of its corruption case against former Sen. Ted Stevens (R-Alaska).

In Libby, where an estimated 1,200 residents have died or developed cancer or lung disease, the judgment dashed hopes that someone would be held accountable for decades of suffering.

“We never expected restitution on this,” said Libby resident Gayla Benefield, who has seen dozens of family members become sick from asbestos exposure. “How can you give someone restitution when you’ve taken their life? This was about closure, to finally say, ‘Yes, this company did this to us, and we can finally get on with our lives.’ But that didn’t happen, did it?”


W.R. Grace still faces civil cases in which residents are seeking compensation for health claims.

For nearly three decades, the Columbia, Md.-based company operated a vermiculite mine in Libby, producing the puffy granules used to insulate attics and aerate gardens. The vermiculite contained cancer-causing asbestos fibers that could lodge in the lungs. The material posed a risk for not just the mine workers and their families, but the entire town: The high school running track and community ice-skating rink both were built with asbestos-laden mine tailings.

And prosecutors said that Grace executives should be held accountable for continuing to expose residents to a substance the company knew could kill them in order to keep making money.

It took the jury little more than a day to reach its verdict, after an 11-week trial during which U.S. District Judge Donald Molloy told the prosecution that he found one of its star witnesses to be not believable. The government, he suggested, had brought a case whose scope was far larger than what prosecutors were prepared to pursue and prove at trial.


“Poor planning and incompetence are common threads throughout the government’s [conduct] . . . dating back to the beginning of the case,” the judge wrote in an order last month. Though failing to find prosecutorial misconduct, Molloy said that Justice Department lawyers had withheld key information that would have undermined the credibility of former Grace executive Robert H. Locke’s testimony.

At least one juror was in tears as the verdict was read.

The defense had argued that after W.R. Grace bought the vermiculite processing plant in 1963, it worked for years to clean up a facility with a bad record of asbestos contamination.

“There’s a lot of people up in Montana, Libby in particular, who certainly had their lives adversely affected by the whole chain of events. But those [problems] . . . go back, and I’m not exaggerating, 50, 60 years,” said Jack Wolter, a former vice president of Grace’s construction products division who was among those acquitted Friday.


“They and their families were exposed at levels that were well over a thousand times higher than what is required by regulations today . . . and there’s no question they suffered immensely. . . . But that’s not what the trial was about,” he said.

Henry Eschenbach, Grace’s former director of health, safety and toxicology, and Robert Bettacchi, who helped oversee the dismantling and sale of Grace’s processing plant and vermiculite mine, also were acquitted. Charges against two other former executives were dismissed during the trial at the request of prosecutors. A sixth defendant, O. Mario Favorito, who was Grace’s in-house counsel, is scheduled to be tried on a conspiracy charge later this year.

Justice Department officials issued a brief statement Friday, saying that “the jury has spoken, and we thank them for their service.”

From the start, government prosecutors faced a difficult hurdle: With statutes of limitations preventing criminal charges for any negligence that may have occurred in the mine’s early years, they had to prove that Grace officials knowingly allowed Libby residents to be exposed decades later to the lingering effects of the hazardous material and kept adverse health studies a secret.


“This case is about a company that mined and manufactured a hazardous product, and individual executives that chose profits at the expense of people’s health, and chose avoiding liability over disclosing the health hazard to the government,” Assistant U.S. Atty. Kris McLean told the jury.

Kevin Holewinsky, a former Justice Department environmental prosecutor, said the government should have dismissed the case once it became apparent that it wasn’t holding together.

“The proof that the government relied on was this former employee, Robert Locke, who left the company on not very favorable terms and -- based on evidence that was disclosed during trial -- had a very close relationship with government agents and had a seeming interest [in the outcome of] the case,” Holewinsky said. “Locke went down in flames, and so did the government’s case.”

Though Locke had been presented as an independent witness, he had worked closely with federal investigators and been offered immunity. During the trial, Molloy said that Locke “came as close as I would ever want to see to perjury.”


The judge also scoffed at prosecutors’ claim that they had “a thousand balls in the air” and had failed to turn over exculpatory e-mails to the defense out of oversight, not ill intent. But by then neither side wanted a mistrial. The issue of Locke’s credibility was left for the jury to decide.

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kim.murphy@latimes.com