MIAMI -- Two supermarket retailers accused of documenting fictitious transactions with a Florida diverter have reached out-of-court settlements in a civil lawsuit filed here by the receiver/trustee representing the diverter's investors.
Vons Cos., Arcadia, Calif., has agreed to pay $10 million, and Pueblo International, Carolina, Puerto Rico, has agreed to pay $3 million to Kozyak Tropin & Throckmorton here, the trustee for Premium Sales Corp., Aventura, Calif., a trustee representative told SN.
These settlements mean that all defendants in the civil case have now settled. The case has now recovered $165 million from a variety of sources.
The trustee representative said the settlements were worked out shortly after jury selection had been completed but before the civil trial began in October in U.S. District Court here.
Still pending is a criminal lawsuit against Premium Sales, which is accused of bilking investors out of $265 million between 1989 and 1993. Also named in the criminal case are employees of some of the retailers with whom Premium did business.
The criminal trial is set for 1998.
In the civil suit -- aimed at recouping investor losses -- Vons and Pueblo, or individuals working on their behalf, were accused of confirming diverting transactions that never took place.
Three other retail defendants had settled claims prior to the start of the civil trial: Fleming Cos., Oklahoma City, for $20 million; Longs Drug Stores, Walnut Creek, Calif., for $13 million, and Fry's Food Stores, the Phoenix-based division of Kroger Co., Cincinnati, for $5.1 million. The trustee representative told SN last week his company has recovered $165 million from all entities named in the civil suit, including $51.1 million from the five retailers, plus additional funds from a Dallas diverter, a Florida bank, two law firms, 40 to 50 promoters who raised funds for Premium, bankruptcy lawsuits and liquidation of Premium's assets. The three earlier retailer settlements have already been approved by the U.S. District Court, while the Vons and Pueblo settlements are expected to come before the court in two or three months, the trustee representative told SN.
Vons officials confirmed last week that a settlement had been reached but declined to specify the amount, noting that the settlement "had no material effect on the results of operations or financial position of the company." They said they opted to settle "to avoid the cost of prolonged litigation."
Jeffrey P. Freimark, executive vice president of finance for Pueblo, said his company settled "because, while we are completely convinced of our lack of culpability, we felt strongly that to go forward with the case would consume too much time for the company and its executives and the legal fees would have equated with the settlement, which was the lowest amount that any of the retailers settled for."