Posted 10/14/2011 04:20 pm
Updated 11 months ago
After a four-hour hearing in which defense and prosecution argued over the size of the loss suffered by U.S. Bank, U.S. District Judge Brian Miller said he still couldn't determine the dollar amount. In addition to prison time, he sentenced the 48-year-old former grocery cooperative CFO to three years of probation and fined him $10,000.
Martinez is scheduled to report to federal prison on Dec. 5. Martinez requested to serve his sentence at the Federal Correctional Institution in Texarkana, Texas.
Just before Miller imposed the sentence, Martinez said it was "never my intent to harm anybody. ... I'm ruined because of this."
He said his career and finances have been destroyed because he followed the orders of his boss, former Affiliated Foods CEO John Mills, and didn't speak up sooner when he knew what he was doing was wrong.
Mills took a plea deal and turned state's witness against Martinez, who rolled the dice with a jury trial that began in May in U.S. District Court in Little Rock.
It took the jury only 45 minutes to convict Martinez of conspiring to commit bank fraud, aiding and abetting bank fraud by participating in a check-kiting scheme and of aiding and abetting a false statement to a financial institution.
Assistant U.S. Attorney Karen Whatley argued Friday that Martinez should be sentenced to between 70 months and 87 month because the loss to U.S. Bank of Minneapolis, Affiliated's primary bank, was $11.6 million at the time the check-kiting ended in February 2009. U.S. Bank has since recovered most of the money, but $2.8 million is outstanding.
Whatley argued that because Mills and Martinez hid the true financial picture of Affiliated Food, its board members didn't have time to react and attempt to improve the company's financial health.
Affiliated was once one of Arkansas' largest private companies, with reported annual revenue of $730 million in the fiscal year that ended June 30, 2008, its last full year of operation before filing for bankruptcy protection in May 2009.
At the time of the bankruptcy, Affiliated had $47.6 million in assets and $101.5 million in debt, of which $62.5 million was to unsecured creditors.
In testimony Friday, Martinez criticized U.S. Bank for not collecting enough money from creditors.
He argued that the bank could have made its money back from the loans to Affiliated - and have a few million dollars extra for other creditors of Affiliated Foods - if U.S. Bank enforced all the security agreements that were used for collateral for the loans.
U.S. Bank Senior Vice President Sue Geiger testified Friday that the bank has tried to collect all the money it is owed, but some creditors don't have the money to pay or don't owe the debt.
Much of Friday's sentencing hearing was spent trying to determine exactly how much U.S. Bank lost.
"I can't make heads or tails what exactly the loss was," Miller said at one point.
Ultimately, Miller said Martinez conducted the check-kiting to keep the company on life support.
"The company was going out of business anyway," Miller said.
After the hearing, Miller said he still wasn't sure exactly how much U.S. Bank lost as a result of the Martinez's crime. And Martinez didn't benefit directly from the check-kiting scheme, although he did hold onto his job for another five months, giving him an extra $48,000 in salary.
Miller told Whatley and Banks they could take their arguments to the 8th Circuit Court of Appeals.