U.S. Attorney Charges Adams Produce Employee with Conspiracy

BIRMINGHAM—Federal prosecutors today charged an employee of the Birmingham-based Adams Produce Company with conspiracy to defraud the federal government of several hundred thousand dollars through a scheme to create false invoices and purchase orders, announced Joyce White Vance and FBI Special Agent in Charge Richard D. Schwein Jr.

The U.S. Attorney’s Office charged Christopher Alan Pfahl, 41, of Birmingham, in a one-count information filed in U.S. District Court. Adams Produce was a leading distributer of fresh fruits and vegetables throughout the Southeast. Pfahl worked as a purchasing program specialist for the company, buying produce for Adams to resell to its customers.

Pfhal has agreed to plead guilty to the charge, according to a plea agreement also filed today.

Adams Produce employed about 400 people until the company closed and filed for bankruptcy in April.

“In an attempt to address Adams Produce’s deteriorating financial situation, certain officers and employees of the company resorted to fraud, including cheating the government on contracts involving military bases and schools,” Vance said. “This plea is a good first step toward holding the perpetrators accountable for the crimes that were committed. The investigation of wrongdoing by former officers and employees continues, and any who have committed crimes will be held accountable.”

“Financial fraud at this company has harmed employees, customers, and U.S. taxpayers,” Schwein said. “The FBI remains committed to investigating corporate fraud and seeing its perpetrators brought to justice.”

According to the information charging Pfahl and his plea agreement with the government, the fraud was carried out as follows:

The United States 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 school systems, junior colleges, and universities. The company entered into contracts with the government worth millions of dollars. In the contracts, the government agreed to pay a certain amount over Adams’ cost for the produce.

Adams Produce, through Pfahl and others, bought fruits and vegetables from TLC, one of the nation’s largest fresh produce distributors, serving the retail, wholesale, and food service markets.

Between August 2011 and December 2011, Pfahl and other officers and employees of Adams Produce, who are not named in the information, conspired to defraud the government by conducting transactions with TLC “designed to create invoices and purchase orders reflecting a higher cost to Adams Produce” than the company actually paid. Adams Produce then submitted false invoices to DSCP.

Creating and submitting the false invoices also was “intended to increase Adams Produce’s profit margins and inflate the income reported on Adams Produce’s financial statements.”

Adams Produce conducted at least 82 transactions with TLC between August 4, 2011, and December 7, 2011, designed to create false invoices and purchase orders. Adams Produced submitted false invoices to DSCP and received hundreds of thousands of dollars from the government that it should not have received.

The FBI investigated the case, which Assistant U.S. Attorney George A. Martin, Jr. is prosecuting.