Kellogg’s rep pleads guilty to defrauding Supervalu

CORRECTION: An earlier version of this story inaccurately inferred the retailer under investigation. SN regrets the error.

A former Kellogg’s sales manager has pled guilty to a scheme by which he defrauded his employer and supplier Supervalu by filing phony deal sheets on behalf of a conspiring grocery retailer.

The salesman, John Morrell Palmer III, faces up to 20 years in prison for the scam, which resulted in the retailer receiving nearly $1.9 million in reimbursements for transactions that never took place between 2009 and 2013. The grocery retailer, which federal lawmakers did not disclose, operates grocery stores around Richmond and elsewhere in Virginia. Authorities said Palmer’s unindicted co-conspirator was the president of the retailer.

Palmer told investigators that his co-conspirator proposed the scheme to split proceeds from deductions for transactions that did not take place, and afterward arranged meetings in parking lots of the retailer’s stores to pay Palmer in cash. Palmer subsequently agreed to cooperate with authorities investigating the retailer and on Aug. 5 last year arranged an exchange between his co-conspirator at a grocery store parking lot while being monitored by law enforcement officers.

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Palmer, a team sales manager for Kellogg’s based in Virginia, told authorities he had previously participated in a diversion scheme with his co-conspirator that paid him between $100,000 and $200,000 over three years. Palmer said he knew taking the funds was improper but had done it to raise funds to support area youth sports teams and generate goodwill for Kellogg’s.

Palmer pled guilty to a single count of conspiracy to commit wire fraud, and has agreed to cooperate with authorities further investigating the incidents. A Supervalu spokesman said the company was cooperating fully in the investigation.

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