Affiliated Foods' CFO Martinez Charged With Bank Fraud

by Arkansas Business Staff  on Friday, Mar. 5, 2010 11:34 am  

The former chief financial officer of Affiliated Foods Southwest Inc. of Little Rock was indicted Thursday by a federal grand jury on three counts related to the check-kiting scheme that defrauded U.S. Bank.

The indictment of Alexander "Lex" Martinez was not a surprise, as federal prosecutors had named him as a co-conspirator last month when Affiliated's former CEO, John R. Mills, waived indictment and pleaded guilty to a single count of check-kiting.

At that time, 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 - Convenience Store Supply Inc. and Supermarket Investors Inc. - 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 is expected to be less than $7 million.

In addition to conspiracy to commit bank fraud and check-kiting, Martinez is also charged with aiding and abetting a false statement to a financial institution by providing phony financial statements to U.S. Bank.

Affiliated Foods was one of the state's largest private companies with annual revenue in excess of $700 million until it filed for bankruptcy last May.

“When one holds the position of Chief Financial Officer, he is entrusted with the duty [to] make sound financial decisions for the company,” U.S. Attorney Jane Duke said in a press release issued jointly with Thomas Browne, special agent in charge of the FBI's Little Rock field office. “The allegations set forth in this Indictment show that the defendant breached that responsibility. His actions had far-reaching implications not only for U.S. Bank, but also for AFS.”

 

 

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