BOSTON -- A Medfield, Mass., businessman who supplied brokers with gifts used in retailer incentive programs was sentenced here last week for mail fraud.
John H. McGarr, 73, pleaded guilty to the one-count charge. He was given two years' probation and fined $10,000.
McGarr's sentencing was the latest development concerning an investigation into the New England food brokerage industry.
McGarr was given a lighter sentence by U.S. District Judge Edward F. Harrington than sentencing guidelines mandated because of his "substantial assistance" in the investigation and prosecution of the case, federal officials said. According to William P. Stimson, assistant U.S. attorney, McGarr and others -- including employees of food brokerage firms -- participated in a scheme to defraud food manufacturers of incentive funds paid through brokers to retailers for use in in-store
displays, couponing or other promotional activities.
Stimson said that McGarr ran a business out of his home called JM Marketing. McGarr would buy and resell items such as televisions and air conditioners to brokers -- who would then award the premiums to winning retailers of manufacturer-sponsored incentive contests.
McGarr created or helped create invoices and other documents that systematically overstated how many premiums were provided and what manufacturers owed for them; in some cases, the invoices were "entirely fictitious," Stimson said.
The money was split between McGarr and his co-conspirators, whom Stimson would not name because they have not yet been prosecuted. Between 1987 and 1992, Stimson estimated that McGarr and the others diverted more than $900,000 from food manufacturers.
The regional probe, which began in 1993, is being conducted by the Federal Bureau of Investigation and the Economic Crimes Unit of the U.S. Attorney's office here.
Stimson said the New England probe has already resulted in the prosecution of nine individuals in Massachusetts and Connecticut, including six who worked for Roberts & Associates, a Natick, Mass.-based brokerage.
Roberts & Associates is no longer in business.
As reported, four Stop & Shop executives were fired by the chain last February for allegedly accepting gifts or mishandling promotional funds from a local food broker indicted by the U.S. Attorney. Two of those executives were part of the FBI investigation.
And late last month, FBI agents reportedly raided Stop & Shop's headquarters here and computer data center in Braintree, removing more than 200 boxes of documents from the premises.
Stimson would neither confirm nor deny that Stop & Shop was the subject of a search. He did say that the investigation of New England's food brokerage industry is ongoing.
