Scott Grinstead, former chief executive officer of Adams Produce, on April 17 pleaded guilty to four federal charges in relation to fraud and failure to file personal income tax returns. He faces up to 25 years in prison.
Grinstead has been released on bond, and sentencing is set for Aug. 21. In addition to prison time, he could be fined up to $700,000.
Grinstead negotiated a plea agreement with the U.S. Attorney’s office in Birmingham, Ala., in late January after the government filed charges of wire fraud, failing to report a felony conspiracy scheme carried out by others at the company and two counts of failing to file tax returns.
In that agreement, Grinstead said he would pay $450,000 of his personal money to help offset wages left owing to Adams Produce employees when the Birmingham company filed for bankruptcy and closed in April 2012. The agreement calls for payment within seven days of his court appearance to plead guilty.
U.S. District Court Judge Karon Bowdre delayed Grinstead’s actual guilty plea from March 21 to April 17 at his request. Court documents show he said the delay was necessary “to resolve a number of late-arising logistical issues regarding this payment.”
Grinstead admitted 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 admitted he did not file income tax returns for 2009 and 2010. According to the charges, he had a gross income of about $750,000 for 2009 and almost $1.9 million for 2010.
He also admitted he knew other Adams executives were involved in a conspiracy to cheat the federal government out of money for produce sold to the military and schools. He did not report the conspiracy or intervene to stop it, which resulted in a federal “misprision of a felony” charge.
David Kirkland, Adams’ purchasing director, pleaded guilty to a federal conspiracy charge March 20. Judge Abdul Kallon set sentencing for June 27. Kirkland could face up to five years in prison and/or a fine of up to $250,000.
In a plea agreement, Kirkland agreed to testify against other Adams employees and acknowledged he understands the federal prison system does not offer parole.
Kirkland admitted to conspiring with former Adams Produce purchasing program specialist Christopher Pfahl to defraud the U.S. government of $481,000. Pfahl pleaded guilty in January and is set to be sentenced July 16.
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.
Edwin Adams founded Adams Produce in 1903. The company grew to include distribution centers across the Southeast U.S. The Adams family sold the company to executives and a private equity firm in 2010. The company filed for bankruptcy in 2012, ceasing operations in April.