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Fredericksburg man pleads guilty to defrauding cereal giant

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A Fredericksburg man faces up to 20 years in prison after pleading guilty to fraud charges in federal court Wednesday.

John Morrell Palmer III, 55, of Fredericksburg, admitted to conspiring to commit wire fraud against cereal giant Kellogg Co. and grocery chain SuperValu.

Palmer admitted that from 2009 through 2013, he conspired with an unindicted co-conspirator, who, according to court records, is the president of a grocery retail chain with locations primarily in Richmond but also throughout Virginia, to submit fraudulent documents to Kellogg and SuperValu, a grocery wholesaler.

The documents were related to an incentive program which reduced the overall cost of certain products.

At the time, Palmer was employed as a sales team manager with Kellogg and worked with the unnamed grocery retail chain.

The fraudulent documents resulted in SuperValu slashing about $1.8 million from the grocery chain’s running account with them.

Kellogg reimbursed SuperValu for the deductions.

The unindicted co-conspirator paid about half of the value of the deductions in cash to Palmer.

Palmer faces a maximum penalty of 20 years in prison when he is sentenced on Oct. 2. This case was investigated by the Virginia State Police, the United States Postal Inspection Service and the Federal Bureau of Investigation. Assistant U.S. Attorney Michael C. Moore is prosecuting the case on behalf of the United States.

Dana J. Boente, United States attorney for the Eastern District of Virginia; Colonel W. Steven Flaherty, Virginia State Police superintendent; Gary Barksdale, inspector in charge of the Washington Division of the United States Postal Inspection Service; and Adam S. Lee, special agent in charge of the FBI’s Richmond Field Office, made the announcement after the plea was accepted by United States District Judge M. Hannah Lauck.

Lindley Estes: 540/735-1976


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