The Adams Produce Saga – Food for Thought

How a Century-Old Produce Company Went Down in a Climate of Fraud

             When the Adams Produce, the family-owned leading distributor of fresh fruits and vegetables across the Southeast, was bought out by a private equity firm in 2010, it appeared the sky was the limit for the company. So how could such a strong company that had been around for 100 years suddenly collapse? Just ask Scott Grinstead, the 45-year-old former CEO of Adams Produce, who pleaded guilty to charges of fraud, misprision, and tax evasion in April. Grinstead was sentenced this week to 16 months in federal prison, and ordered to pay $450,000 in restitution. The U.S. District Judge also ordered him to serve 20 hours of community service. The story begins in 2011, when four company officials made a decision that would ultimately destroy the company.

Adams Produce had a contract with the Defense Supply Center Philadelphia, and federal entity in charge of distributing produce to military bases, public school systems, junior colleges and universities. Adams would purchase the produce from a national distributor, and the Defense Supply Center agreed to pay a certain amount over Adams’ cost for their services. The trouble began when four executives within the company began to create false invoices and purchase orders, which reflected that the produce from the national distributor was priced higher than it actually was. By submitting these invoices to the Defense Supply Center, Adams Produce fraudulently received over $480,000 from the government.

CEO Scott Grinstead pleaded guilty to knowing what these four executives were up to and doing nothing about it. He also pleaded guilty to wire fraud, another count based on investigators’ discovery that he had wired hundreds of thousands of dollars to his personal bank account in order to pay for jewelry, clothing, travel expenses and even a lake house on Lake Martin. Finally, he pleaded guilty to two counts of failure to file a tax return, in 2009 and 2010 on well over $200,000 worth of income.

Charges such as fraud, misprision of a felony, and failure to file federal tax returns are serious offenses that can carry even harsher penalties than those Mr. Grinstead received. If you have been indicted or received a target letter from a federal investigative agency, it is paramount that you contact an attorney who is experienced in white-collar defense. The attorneys at Parkman White, LLP have decades of experience in pre-indictment representation, federal trial representation, and sentencing matters. Visit our website today for a consultation, and let us put our experience to work for you.

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