Fourth Adams Produce Official Charged in Scheme to Defraud U.S. Government

BIRMINGHAM—The U.S. Attorney’s Office has charged a fourth official of Adams Produce Company in a scheme to defraud the federal government of $481,000, announced U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Richard D. Schwein, Jr., and IRS-Criminal Investigation Division Special Agent in Charge Veronica Hyman-Pillot.

Prosecutors this week filed an information in U.S. District Court charging Stanley Joel Butler, II, a former purchasing agent for Adams, with conspiracy to defraud the United States. In an agreement with the government, also filed this week, Butler agrees to plead guilty to the conspiracy charge and, along with co-conspirators in the case, to pay $481,000 in restitution to the government.

“In an attempt to address Adams Produce’s deteriorating financial situation, officers and employees of the company resorted to fraud. That fraud harmed Adams employees, customers, and U.S. taxpayers,” Vance said. “We are holding the perpetrators accountable for the crimes that were committed.”

Three other officials of Adams Produce—Scott David Grinstead, David Andrew Kirkland, and Christopher Alan Pfahl—have been charged and pleaded guilty in connection with fraud at the Birmingham-based company that had been a leading distributor of fresh fruits and vegetables across the Southeast for many years. Adams Produce was founded as a family-owned business more than 100 years ago. The family sold the company to executives and a private equity firm in 2010. The company shut down and filed for bankruptcy in 2012.

Butler, 42, of Trussville, worked at the corporate office in Birmingham and reported to Kirkland, the company’s director of purchasing. Butler’s duties included gathering produce pricing information from other Adams employees, including Kirkland, Phafl, and the general manager of the company’s Pensacola, Florida distribution center, according to Butler’s plea agreement. Butler also prepared a weekly pricing catalog that was submitted to the government.

The federal 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 schools systems, junior colleges, and universities. Adams Produce entered into contracts with the government worth millions of dollars, according to court records.

Butler, along with Pfahl and Kirkland, engaged in a scheme to create false records that reflected a higher purchasing cost for fruits and vegetables from a national distributor than Adams Produce actually paid. The inflated costs were then presented to the government, which had agreed to pay a certain amount over Adams cost for produce.

According to Butler’s and other plea agreements in the case, Adams bought from TLC, one of the largest distributors of fresh produce in the United States, with offices located across the country. Beginning in about August 2011, Adams employees arranged and conduced transactions with TLC in Marietta, Georgia, designed to create purchase orders and invoices that reflected inflated costs to Adams Produce.

Butler received the false purchase orders and invoices and, knowing they were created to represent Adams paid more than it actually did for the produce, used them to create the weekly pricing catalogs that he presented to the government Defense Supply Center, according to his plea agreement.

Between August 4, 2011 and December 7, 2011, Adams employees and officers conspired to conduct at least 82 transactions with TLC designed to create false invoices and purchase orders, according to the plea agreement. Through those false invoices submitted to the Defense Supply Center, Adams Produce fraudulently received about $481,000 from the government.

The conspiracy charge Butler faces carries a maximum penalty of five years in prison and a $250,000 fine.

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