Sentencing is set this summer for two executives of the defunct Adams Produce Co., and the company’s chief executive officer Scott Grinstead has been granted another month before he has to formally enter his guilty plea.
David Kirkland, who was purchasing director for the Birmingham, Ala., fresh produce company, 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 his plea agreement, Kirkland agreed to testify against other Adams employees and acknowledged that 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.
The conspiracy involved a scheme to create false invoices and purchase orders for produce the U.S. government bought for the military and public schools, court documents state.
Grinstead has agreed to plead guilty to fraud against the company, failure to report a felony to the government — admitting he knew about the conspiracy and did not report it or intervene — and failure to file federal income taxes for 2009 and 2010.
In Grinstead’s plea agreement, filed with the U.S. District Court in Birmingham on Jan. 29, he agreed to pay $450,000 to help pay about 400 former employees who unexpectedly lost their jobs when the company filed for bankruptcy in 2012.
Grinstead, 45, could face a total of 25 years in prison on the four charges and fines totaling $700,000 in addition to the $450,000 he agreed to pay.
The court had scheduled Grinstead to formally enter his guilty pleas on March 21, but granted him a delay until April 17. His plea agreement calls for Grinstead to pay the $450,000 within seven days of pleading guilty. Court documents show he requested the delay “to resolve a number of late-arising logistical issues regarding this payment.”
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 2012 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 his plea agreement, 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 admitted 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.
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.