(CORRECTED Feb. 1) Scott Grinstead, chief executive officer of the defunct Adams Produce LLC, faces four federal charges and has negotiated a plea agreement in the case.
In the plea agreement he states he will pay $450,000 of his own money to help pay about 400 former employees who lost their jobs when the company filed for bankruptcy in 2012.
The U.S. Attorney’s office in Birmingham, Ala., where Adams Produce was located, anticipates a February arraignment and formalization of the plea agreement at that time.
Grinstead, 45, is not in custody. He could face a total of 25 years in prison on the four charges and fines totaling $700,000.
When Adams Produce filed for bankruptcy more than 60 produce companies initially claimed they were owed more than $12 million under the Perishable Agricultural Commodities Act.
In October the bankruptcy judge handling the case cleared the way for 48 of those companies to be paid up to $8 million through a claims procedure.
In the plea agreement announced Jan. 29, Grinstead admits he used hundreds of thousands of dollars of the company’s money 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 in Alabama.
Grinstead also admits he failed to file income tax returns for 2009 and 2010. According to the U.S. Attorney’s charges, he had a gross income of about $750,000 for 2009 and almost $1.9 million for 2010.
“This case involves the chief executive officer of a company who 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,” U.S. Attorney Joyce White Vance said in a news release.
Another Adams Produce executive was charged in connection with the case.
Christopher Pfahl, 41, pleaded guilty to federal conspiracy charges in late January and is scheduled for sentencing July 16. Pfahl, the former purchasing program specialist for Adams, is released on bond pending sentencing.
Pfahl admitted to developing and executing a scheme to defraud the government by creating false invoices and purchase orders reflecting higher prices for produce than Adams Produce actually paid.
Those inflated prices were billed to the Defense Supply Center Philadelphia, which purchases produce for military bases and public schools.
Note on correction: Scott Grinstead's charges, including misprision of a felony, concern failing to report the fraud immediately. He was not involved in Pfahl's scheme.