Rancho Feeding Corp., the Petaluma slaughterhouse that recently recalled 8.7 million pounds of beef, is under criminal investigation by the federal government for killing and selling meat from dairy cows with cancer, according to sources who would only speak on the condition of anonymity.

Stacy Finz and Carolyn Lochhead of the San Francisco Chronicle cite sources as saying Rancho allegedly bought up cows with eye cancer, chopping off their heads so inspectors couldn’t detect the disease and illegally selling the meat.

Although it’s against federal law, experts say eating the meat isn’t likely to make people sick. So far, no one has reported becoming ill from eating the meat.

The criminal investigation hasn’t just affected Rancho. Private cattle producers, who use the company for custom slaughtering, have also been swept up in the recall, leaving the shelves with a dearth of local, natural and high-end beef on the shelves.

Bill Niman, arguably one of the most respected cattlemen in the gourmet meat business and former owner of Niman Ranch company, said he used Rancho to slaughter 427 head of cattle and is complying with the recall. He said it’s causing him to hold back about 100,000 pounds of beef from the market and that he stands to lose as much as $400,000. He said his beef has nothing to do with the alleged tainted meat.

But in an abundance of caution, the U.S. Department of Agriculture wants to make sure none of the cancerous meat co-mingled with healthful beef.

Rancho officials could not be reached for comment; the plant has voluntarily shut down and is in escrow with new buyers.

“Rancho, we’re told, was slaughtering them, somehow after hours or in other ways where the inspector didn’t know about it,” the source said. “Because the carcass looked good, (Rancho) mixed it back in with other beef that it sold under its label.”

James Cullor, professor of population health and reproduction at the School of Veterinary Medicine at UC Davis, said cows suffering from eye cancer aren’t necessarily dangerous to eat, but he doesn’t recommend it. It would be possible that the cancer had spread to other parts of the animal’s body, Cullor said.

“If I’m out on top of Mount Everest and have a cow (with eye cancer) and I’m hungry, I’m going to cook her well and deal with getting down the mountain,” he said. “But if I’m here in this country, I will choose to not consume the animal. I wouldn’t feed the animal to my grandchildren.”