MIAMI -- Thirty-six people have been named in a 169-count indictment here in a case involving Premium Sales Corp., Aventura, Fla., a grocery and nonfood diverter accused of defrauding investors out of hundreds of millions of dollars.
Besides Premium's officers, the indictments name several former employees at a variety of retail chains, wholesale distributors and manufacturing companies.
The indictments -- handed up by a federal grand jury in Miami after three years of investigation by the Justice Department and Federal Bureau of Investigation -- charge the defendants with wire fraud, tax fraud, money laundering and conspiracy.
A trial date for Premium's co-owners -- Kenneth C. Thenen and Daniel R. Morris -- and other defendants is likely to be set for late this year or early in 1997, according to officials from the Justice Department.
The case is being prosecuted by the Justice Department's Economic Crimes Unit here.
If convicted, Thenen and Morris would face a maximum sentence of life imprisonment and fines of twice the amount of the loss; the other defendants face conspiracy charges, which carry a maximum sentence of five years for each charge.
According to investigators, Premium operated from late 1987 until June 1993, when it was forced into involuntary bankruptcy. The company solicited private investors to finance individual diverting transactions, it was noted.
The U.S. Department of Justice said investors financed "billions of dollars of grocery transactions which did not exist, causing an ultimate loss in the hundreds of millions of dollars."
Investors, also known as "funding entities," were promised high rates of return, the Justice Department said; they were also encouraged to recruit other potential investors to provide large pools of capital to fund specific diverting transactions.
By June 1993, the government said, Premium owed investors approximately $500 million, at a time that its assets were less than $90 million. With the investors up in arms, Premium was placed in involuntary bankruptcy under the control of a court-appointed receiver, according to the Justice Department.
Among those indicted are officers and employees of Premium Sales, along with several food industry figures identified as "confirmers" -- people who falsely confirmed Premium's fabricated sales transactions. The confirmers named in the indictment and their former affiliations include the following:
From the northern California division of Fleming Cos., Oklahoma City, Guy Benamati, transportation division superintendent, and Henry Geringer, inbound traffic coordinator; plus John M. Flynn, a diverter buyer for the Miami division of Fleming's Malone & Hyde division, Memphis, Tenn., and Kelly Thomas, who held various positions with Fleming's Malone & Hyde division.
From Associated Grocers, Seattle, Gilbert Harding, vice president of grocery and general merchandise, before joining Premium full-time, and Maurice Durbin, an AG buyer.
From Certified Grocers of California, Los Angeles, Lang Lewis, an employee until 1993 in the cooperative's traffic department.
From Lucky Stores, Buena Park, Calif., Patricia Dennis, a traffic supervisor who subsequently joined S.E. Rykoff, a Los Angeles-based restaurant and grocery supply company, as traffic manager.
From Fry's Food Stores, Phoenix, Dean Henrichs, a buyer.
From Vons Cos., Arcadia, Calif., Eugene Shirley, an employee of Stanford Trading, a Dallas-based diverter, who was assigned to Vons as an in-house diverter before joining Premium full-time.
From Xtra Supermarkets here, a division of Pueblo International Corp., Pompano Beach, Fla., Charles Valvo, a grocery buyer.
From the Best Foods division of CPC International, John Grifo, key account sales manager, and Nicholas Paun, district services manager, in Pleasanton, Calif.
From Dole Packaged Foods, Michael McClendon, general manager of distribution centers.
From Sun Diamond Growers, based in Pleasanton, Calif., Harold Schumacher, traffic manager.
From Flora Foods, Pompano Beach, Fla., a private-label grocery distribution company, Rolando Viadero, a buyer and salesman.
From Long's Drug Stores, Walnut Creek, Calif., Melvin Brink, corporate traffic manager, who ultimately became a full-time Premium employee.
From Gatco and Caribbean Sales & Cargo, two Puerto Rico-based companies that supplied merchandise to Premium, owner Gabriel Aboy. Efforts by SN to reach the alleged confirmers by phone were unavailing.
According to the indictment, investors were fraudulently induced to wire over $1 billion into accounts in Puerto Rico from 1989 through 1993 and another $500 million into accounts in California beginning in 1992. While the money was purportedly for merchandise in diverting deals arranged by Premium, the money was actually being transferred out of those accounts on a daily basis into various privately controlled bank accounts, the indictments charge.
Because most transactions were not taking place, Premium was unable to pay the funding entities with returns from company earnings but instead repaid them with newly invested money from other funding entities, the indictments noted.