Former Fredericksburg Kellogg Salesman Sentenced on Wire Fraud Charge

A former Fredericksburg Kellogg Co. salesman was sentenced to a year and a day in prison for his role in a wire fraud conspiracy that resulted in a $1.9 million loss to the Kellogg Co.

John Morrell Palmer III, 55, of Fredericksburg, pleaded guilty July 2 and was ordered to pay restitution to Kellogg during Thursday’s sentencing by U.S. District Judge M. Hannah Lauck.

Palmer worked as a sales manager with Kellogg’s in the Fredericksburg area. From 2009 to 2013, Palmer conspired with John David Farmer, the president of another grocery chain called Farmer’s Foods, to submit fraudulent documents to Kellogg’s and grocery wholesaler SuperValu.

Palmer and Farmer submitted the documents through an incentive program that reduced the overall cost of certain products and encouraged the purchase of its products by retailers, including Farmer’s Foods.

The appearance of greater than actual sales resulted in reduced net costs for Farmer’s Foods. The fraudulent documents resulted in Supervalu awarding Farmer’s Foods more than $1.9 million in unearned deductions. Kellogg then reimbursed Supervalu for the awarded deductions.

Palmer used his position at Kellogg’s to facilitate the fraud, according to court documents. In return, Farmer paid cash kickbacks to Palmer in the total amount of approximately half the value of the fraudulently obtained deductions.

The Virginia State Police, the United States Postal Inspection Service and the Federal Bureau of Investigation investigated the case. Assistant U.S. Attorney Michael C. Moore prosecuted the case on behalf of the United States.

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