UPDATE: John Mills Sentenced to 41 Months in Federal Prison

by Mark Friedman  on Tuesday, Oct. 26, 2010 4:41 pm  

A U.S. District Court judge on Tuesday sentenced John Mills, the former CEO of Affiliated Foods Southwest, to 41 months in a federal prison after the executive pleaded guilty in February to a single count of aiding and abetting bank fraud by participating in a check kiting scheme.

"I'm very sorry to have gotten caught up in this and I regret that what I did was illegal and I don't have any excuses," the 60-year-old Mills said before U.S. District Judge Leon Holmes sentenced him. "Of course I'll abide by any sentence you think is appropriate."

Mills also was ordered to pay $3.2 million in restitution and serve 3 years' probation.

Mills' sentence could be reduced for continuing to cooperate with federal prosecutors in their case against the former CFO of Affiliated, Alexander "Lex" Martinez, who is scheduled to go to trial May 16. Mills has agreed to testify against Martinez, who has pleaded not guilty.

Prosecutors said Mills and Martinez orchestrated a scheme from September 2008 to February 2009 to kite checks from two of the grocery wholesaler's subsidiaries and deposit them in Affiliated's account at U.S. Bank. The total value of the kited checks was about $11.5 million, although the actual loss to U.S. Bank was about $4 million.

Mills' restitution could be lowered if U.S. Bank receives money from the sale of Affiliated's assets or from judgments from lawsuits.

At sentencing Tuesday, Holmes called Mills' crime "very serious."

"I know that Mr. Mills had a position of trust with respect to Affiliated Foods Southwest," Holmes said. "He had a fiduciary duty to that company, to the board of directors and to the shareholders. I'm aware he abused that trust."

But Holmes said that abuse of trust didn't rise to the level that would require more time in prison, as Whatley had pushed for.

The relationship between U.S. Bank and Mills was "simply that of a bank customers and it's an arm's length commercial transaction."

But he said that because Mills didn't have a criminal history, was unlikely to commit the crime again and took responsibility for his action, Mills was sentenced at the low end of the guidelines, which could have been between 41 and 51 months.

Mills is scheduled to report to prison on Jan. 3. 

 

 

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