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Fredericksburg Man Pleads Guilty to Defrauding Kellogg

John Morrell Palmer, III, 55, of Fredericksburg pleaded guilty in U.S. District Court July 2 to conspiring to commit wire fraud.

In a statement of facts filed with a plea agreement, Palmer admitted that from 2009 through 2013 he conspired with the president of an unnamed grocery retail chain to submit fraudulent incentive program documents to The Kellogg Company and SuperValu, a grocery wholesaler through which Kellogg sold product to retailers. The incentive program documents reduced the cost of certain products.

SuperValu awarded the grocery retail chain approximately $1.8 million in deductions against its running account with SuperValu as a result of the fraudulent submissions.  Kellogg reimbursed SuperValu for the awarded deductions. The unindicted co-conspirator paid cash to Palmer in the total amount of approximately half the value of the fraudulently obtained deductions.

Palmer faces a maximum penalty of 20 years in prison when he is sentenced on October 2,

This case was investigated by the Virginia State Police, the United States Postal Inspection Service and Federal Bureau of Investigation.  Assistant U.S. Attorney Michael C. Moore is prosecuting the case on behalf of the United States.

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