BIRMINGHAM – A federal judge late Tuesday sentenced the former CEO of Adams Produce Company to 16 months in prison for fraud against the company, failure to report a felony against the government and failure to file federal income tax returns, announced U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Richard D. Schwein Jr. and IRS Criminal Investigation Special Agent in Charge Veronica Hyman-Pillot.
Scott David Grinstead, 45, chief executive officer of the now-defunct Adams Produce company, pleaded guilty to the charges in April. Grinstead agreed, as part of his plea agreement with the government, to pay $450,000 in restitution to the bankruptcy estate of Adams Produce to benefit the company’s employees who lost pay when Adams closed abruptly and filed for bankruptcy in 2012. As part of Grinstead’s sentence, U.S. District Judge Karon O. Bowdre ordered him to perform 20 hours of community service.
“This defendant, while CEO of Adams Produce, allowed officers and employees to continue cheating the government on contracts involving military bases and schools while, at the same time, he continued to steal from the company,” Vance said. “Prison is deserved punishment for his criminal acts, which harmed the government and his company, but we also are pleased that resolution of this case will bring some compensation to the employees who lost their jobs and did not receive their final paychecks from Adams Produce,” she said.
“Financial fraud at this company harmed employees, customers and U.S. taxpayers,” Schwein said. “The FBI remains committed to investigating corporate fraud and seeing its perpetrators brought to justice.”
“Individuals who earn income should accurately report their income to the IRS,” Hyman-Pillot said. “The sentence today should reassure Americans that those individuals who willfully and intentionally violate their known legal duty of filing and paying their fair share of taxes will be prosecuted.”
Three other officials of Adams Produce – David Andrew Kirkland, Christopher Alan Pfahl and Stanley Joel Butler II – have been charged and pleaded guilty, and another employee, Michael John O’Brian, was indicted in August in connection with fraud at the Birmingham-based company that had been a leading distributor of fresh fruits and vegetables across the Southeast for decades. Adams Produce was founded as a family-owned business more than 100 years ago. The family sold the company to executives and a private equity firm in 2010.
The federal government, through the Defense Supply Center Philadelphia, was one of Adams’ customers. The supply center contracted with Adams Produce to provide fresh fruits and vegetables to military bases, public schools systems, junior colleges and universities. Adams Produce entered into contracts with the government worth millions of dollars, according to court records.
Kirkland, O’Brien, Butler and Pfahl conspired to create false records that reflected a higher purchasing cost for fruits and vegetables from a national distributor than Adams Produce actually paid. The inflated costs were presented to the government, which had agreed to pay a certain amount over Adams’ cost for produce.
Between Aug. 4, 2011, and Dec. 7, 2011, the Adams’ employees and officers conspired to conduct at least 82 transactions with the national distributor that were designed to create false invoices and purchase orders. Through those false invoices submitted to the Defense Supply Center, Adams Produce fraudulently received about $481,000 from the government.
One of the charges Grinstead pleaded guilty to is misprision of a felony for knowing of the fraud that other officers were engaged in and allowing it to continue and end slowly, so as to avoid raising red flags with the government, rather than stopping it immediately and reporting it to authorities.
Grinstead pleaded guilty to wire fraud for wiring hundreds of thousands of dollars from an Adams Produce account to American Express to pay for clothing, jewelry, personal travel for himself and his family, lawn care at his home, and items for a house on Lake Martin.
He pleaded guilty to two counts of failure to file a federal tax return, one for 2009 and one for 2010. According to court records, Grinstead had a gross income of about $748,801 for the 2009 calendar year and willfully failed to file an income tax return with the Internal Revenue Service. In 2010, he received about $1,878,700 in gross income and willfully did not file a return with the IRS.
The FBI and the IRS investigated the case, and Assistant U.S. Attorney George A. Martin Jr. is prosecuting it.
Federal Grand Jury Indicts Lee County Man for Five North Alabama Robberies
BIRMINGHAM – A federal grand jury has indicted a Lee County man for a string of bank robberies in North Alabama in January, announced U.S. Attorney Joyce White Vance and FBI Special Agent in Charge Richard D. Schwein Jr.
A five-count indictment filed in U.S. District Court charges Jimmy Dawson Cunningham Jr., 38, of Salem, Ala., with five bank robberies between Jan. 3 and Jan. 14. He is charged with the following robberies: National Bank of Commerce, Shades Creek Parkway, Birmingham, Jan. 3; PNC Bank, Euclid Avenue, Mountain Brook, Jan. 8; First Community Bank, Marktplatz Center, Cullman, Jan. 10; Regions Bank, Culver Road, Mountain Brook, Jan. 10; and Union State Bank, Pelham Parkway, Pelham, Jan. 14.
Cunningham could face a maximum penalty of 20 years in prison and a $250,000 fine for each count.
The FBI, in conjunction with the Jefferson County Sheriff’s Office and the Mountain Brook, Cullman and Pelham police departments, investigated the case. Assistant U.S. Attorney Joseph P. Montminy is prosecuting the case.
The public is reminded that an indictment contains only charges. It will be the government’s responsibility to prove the defendant’s guilt at trial.
Federal Charges Brought against 11th Person in Scheme to Defraud BP Oil Spill Claims Fund
BIRMINGHAM – A federal grand jury has indicted a Birmingham woman as part of a conspiracy to fraudulently take money from funds established to pay claims from individuals and businesses harmed by the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, announced U.S. Attorney Joyce White Vance and FBI Special Agent in Charge Richard D. Schwein Jr.
The indictment of Felicia Youngblood, 25, brings to 11 the number of people in North Alabama to face federal charges for conspiring to participate in a scheme to defraud the oil spill claims funds. Youngblood is the second person indicted by a federal grand jury. The U.S. Attorney’s Office has charged nine others this year and those nine have pleaded guilty to taking part in the conspiracy.
British Petroleum, which owned the Macondo oil well where the Deepwater Horizon drilling rig exploded, established the Gulf Coast Claims Facility in June 2010 for the purpose of administering and settling claims resulting from the oil spill disaster. A subsidiary of BP established the Deepwater Horizon Oil Spill Trust Fund in August 2010 to pay certain types of claims and expenses from the oil spill, including claims settled through the GCCF.
The four-count indictment of Youngblood charges her with the conspiracy to submit false claims to the GCCF in the summer of 2011 that resulted in her receiving payments of $39,293 and $28,332. The indictment also charges Youngblood with mail fraud, prohibited monetary transactions and wire fraud.
According to the indictment, Youngblood carried out the fraud as follows:
Youngblood provided personal information to co-conspirators that was used to prepare and submit false claims of lost earnings to the GCCF. The false claims caused the GCCF to mail a $39,293 check to Youngblood and to wire a separate payment of $28,332 to Youngbloods’ bank account. At the direction of co-conspirators, Youngblood used the $39,293 check on July 25, 2011, to obtain two cashier’s checks of $17,146 each and $5,000 cash. She endorsed the cashier’s checks and gave them to a co-conspirator. On Aug. 4, 2011, Youngblood, at the direction of a co-conspirator, withdrew $10,000 of the $28,332 that had been electronically deposited into her account and gave the money to the co-conspirator.
The FBI is investigating these cases. Assistant U.S. Attorney Henry Cornelius is prosecuting the cases.
The public is reminded than an indictment contains only charges. It will be the government’s responsibility to prove the defendant’s guilt at trial.
