MAIL ROOM SECURITY / BIO ATTACKS / A SOLUTION IS HERE

BIO-CHEMICAL BUSINESS ATTACKS

$12.1 million TO OPEN NEW OFFICES –
.41 cent STAMP TO SHUT THEM DOWN

Corporate offices, schools, industry, manufacturing plants, governmental offices, the offices of former President William Jefferson Clinton and even Presidential Candidate John Edwards have all fallen victim to “WHITE POWDER” mail threats, hoaxes and attacks. These are not random acts of violence, but rather a selected controlled attack on the institution, corporation or person.

www.CrimeTalkAmerica.com reports our investigation to enlighten the reader, educate the corporate executive and explore our F3IR newest product to protect your business and life. While I try to make sure that Crime Talk America is independent of our consulting business, I find it EXTREMELY IMPORTANT that you the business reader, the crime talk reader and corporations within America and others from around the world that visit our site consider prevention and protection mode which is essential and NOW available.

Just after the 9/11/2001 attack on America, several news agencies, politicians, businesses and governmental agencies fell victim to an onslaught of U.S. Mail envelopes delivered that contained white powder substances. Most were false or hoax mailings. Some were not. We will never know how many of these attacks were real, but it really doesn’t matter, its VERY DISRUPTIVE to business and the individuals involved.

Let’s consider the American Media offices in Boca Raton, Florida. This world famous news agency fell victim to an anthrax attack that took the life of Robert Stevens, a photo editor with the Sun. He took ill after approximately five days. Examination by doctors at John F. Kennedy Hospital determined that he had contracted ANTHRAX. The CDC confirmed that it was anthrax. Mr,. Steven died on October 5, 2001, just a few days after becoming ill.

Upon specific tests of American Media employees, it was determined that two others tested positive. All employees of American Media were tested. The results were positive for five other employees. Those identified as having contracted anthrax exposure were hospitalized and treated and recovered.

The Florida Department of Health announces that it had discovered minuscule amounts of Anthrax spores were found in the Boca Raton Post Office. During the same period, Anthrax was sent to NBC television in New York. It was determined that this was the same as the Boca Raton anthrax.

The American Media building was closed, sealed off and guarded from any public visitors or employees. CDC members and FBI investigators explored the building wearing protective hazardous material suits.

Three years after the closing of the American Media building, the building received approval for cleaning. It took several more years to declare the building as a safe environment. It was just a .37 cent U.S. Postal Stamp that shut down a billion dollar empire.

In 2006, five years after the 9/11 attack and the Anthrax attack on American Media, NBC, Congressmen and governmental buildings, former President William Jefferson Clinton’s offices located in the heart of Harlem, New York received an envelope filled with white powder. This caused two floors of the building to be shut down. Most of the building was evacuated by New York Police but eleven people were quarantined as the police, FBI, Secret Service, Fire Department and Homeland Security responded to the building. It turned out that the white powder was not toxic, and was harmless but another disruption to businesses and people.

Anthrax hoaxes and attacks are worldwide. More than 750 such incidents have been reported around the world in 2001 and continue today. ABC News offices were victimized, Senate offices were attacked, and abortion clinics also receive these letters. More than 17 people came down with symptoms of anthrax attack around the world.

These attacks whether a Hoax or Real are ongoing today and are used to terrorize business and individuals more than ever.

While some would argue that many of the envelopes were a HOAX, its still extremely disruptive to business and law enforcement. It takes time away from business operations, creates fear by employees and can shut down a billion dollar business in a matter of seconds.

We at www.CrimeTalkAmerica.com have discovered the only actual solution to cleaning incoming mail to businesses and governmental agencies. F3International Resources, our Consulting Group, has reached an agreement to represent the Bio Chemical Cleaner to our corporate and government clients.

I decided after receiving several inquiries from our readers on how to help protect their businesses, to offer this information. It is extremely important so I decided to present this great new protective counter chemical attack measure to protect your business, offices and government agencies from that .43 cent postal stamp attack,.

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IOS Coupon Fraud Federal Case / POSSIBLE ADDITIONAL INDICTMENTS TO COME!!!

BREAKING NEWS

IOS FEDERAL CASE
POSSIBLE ADDITIONAL INDICTMENTS TO COME!!!

On June 14, 2007 the U.S. Justice Department summarized their case in the matter of United States v. Balsiger, et al, Case # 07-Cr-57, which details the ongoing follow-up investigation and the volume of documents being examined by FBI agents and U.S. Attorney’s Office.

The summary letter details the granting of the governments motion to dismiss the indictment against International Outsourcing Services. They report that the agreement, “as part of an Agreement for full cooperation by the corporation, including full government access to all IOS files.”

As part of the agreement, IOS secured promises from its attorneys including law firms of Scott Hulse, Matrshall, Feuille Finger & Thurmond,P.C., of El Paso, ?Greenberg Trauig LLP of Chicago and Mallor Clendening Grodner & Bohrer, LLP of Bloomington, In. to make their case and coupon related files available to the government for review.
A question on “Privileged Communication” and probable privileged litigation may exist.

The U.S. Attorney asserts that “the ongoing investigation has shown that at least some attorneys for IOS were used, perhaps unwittingly in most of all cases, to pass along false information to the government in an attempt to obstruct justice.” The U.S. Attorney further suggests that “some attorneys were also deployed to harass one or more government witnesses for the same purpose.”

The U. S Attorney also suggests that “still other witnesses were subject to coaching before they were interviewed in the government’s investigation.”

An ongoing investigation seeks to determine precisely which individuals were responsible for this apparent additional criminal conduct. The U.S, Attorney went on to suggest that “when that is determined, we expect to seek superseding indictments.”

The documents of the law firms are “highly relevant” to the inquiry into possible obstruction. The need for the U.S, Attorney’s office to seek further information will; require a court approval that the information they seek is not privileged attorney client documents. A future hearing will settle this question,

SEE the U.S. attorney case summary letter to Magistrate Judge Patricia J. Gorence, dated June 14, 2007.

( CLICK HERE TO SEE LETTER )

Comments????

NIFONG UPDATE! - DISBARED FOR FRAUDULENT BEHAVIOR

NIFONG UPDATE

DISBARED – FOR FRAUDULENT BEHAVIOR

WHO ELSE WAS PARTY TO THIS SCHAM


June 16, 2007 the North Carolina Bar Association after hearing found against Raleigh, North Carolina District Attorney Mike Nifong for committing amongst other technical legal infractions, fraudulent behavior in the Prosecution of the Duke University Lacrosse Players.

As we reported on April 12, 2007, (* “Prosecutor Gone Wild”) has now been answered by the North Carolina Bar Association.

The way we see this, it’s not an isolated incident. Prosecutorial overzealous behavior has often been the case in criminal matters. Misrepresentations, fabrication of information, withholding crucial information, falsely accusing individuals and other incidents are often seen in many jurisdictions. However, in the Nifong matter, it was more than just bad prosecutorial behavior. Some would argue that this behavior was the result of his desire to be politically correct. A decision was made by Nifong to withhold certain information from the defendant’s attorneys and the court, while presenting to the court that such information did not exist. In the DNA matter, the dramatic turning point of the case, Nifong withheld the results from the defendants and their attorneys knowing that the DNA was not a match against the accused. It took forensic DNA evaluation to find that the rogue District Attorney was playing with the lives of three innocent Duke Students. It was an injustice to the entire University, the legal profession that a District Attorney and the people of Raleigh, North Carolina, that the Peoples Attorney would do anything possible to convict the innocent to favor himself with a selected community. It wasn’t a matter of black against white; it was a Nifong matter to ingratiate himself to the Black community that he serves with an upcoming election knocking at his backdoor.

The remaining question that CrimeTalkAmerica asks is; Who Else in the Raleigh, North Carolina District Attorney’s Office participated in the cover-up? Who knew what? Who DIDN”T STEP UP to bring the truth forward? They had a legal responsibility to tell the court and report the facts to the States Attorney General before it went as far as it did, to trial for the three students.

Nifong’s behavior was callus, indifferent and elitist. He apparently misunderstood his role in his service to the people. As an elected official, he represents all the people. The investigators in this matter were suspect of the claimant’s complaint, but followed the path of Nifong and his assistants.

This calls for a CLEAN SWEEP of the Raleigh, North Carolina’s Prosecutor’s Office, and those law enforcement official’s that participated, committed malfeasance and obstruction of justice. It calls for a sweeping Grand Jury Investigation into the behavior of not only Nifong, but the Assistant Prosecutor’s, Police Investigator’s and others in official capacity that ignored their sworn responsibility.

Not to say that the Duke students didn’t set themselves up for their own plight. Something that the university will have to deal with, however, the allegations from the beginning were suspect. The changing story of the claimant, the testimony of the fellow stripper, who denied that a rape had been committed, she had not seen a rape she claimed, and the lack of physical evidence, namely the DNA of any of the accused was the signal that the claimant was a questionable victim. While I would agree that the District Attorney’s office is required to investigate these serious allegations, the element of political expediency, racial complications and a naive District Attorney, all added up to a disaster, and a national disgrace of the legal prosecution profession in the State of North Carolina.

As the evidence mounted that questioned the claimant’s complaint, it was the responsibility of the prosecutor to examine all the facts, not turn his back on exculpatory evidence so that he could meet his political agenda.

Shame on the justice system that allow political expediency to be the decider in the prosecution of cases. Shame on the political animals that find it more important to withhold crucial data, evidence that would clear any individual.

Some years ago, I developed information about an individual that had been found guilty and was serving a 15 year sentence for Burglary and Arson. He was in his eighth year of his sentence, when I discovered that the Prosecuting Attorney in Brooklyn New York had withheld physical evidence, detailed statements from witnesses and physical crime scene evidence. This information was never presented to the defense attorney or the court. The information held by the prosecutor’s office CLEARED the defendant and presented information that would have proven that the original target of the investigation was the actual offender. It took eight years and a court hearing on the newly discovered evidence, (that the prosecutor had all along) before State of New York Court, to exonerate the defendant and have him released from prison. He lost eight years of his life, his family moved on, his children moved on and his employment was gone. All beacons of an overzealous prosecutorial and a prosecutor that ignored his legal responsibility to present all the facts known at the time.

To the State of North Carolina, I ask the Attorney General to conduct an independent Grand Jury to evaluate and prosecute any others in Nifong’s office that had knowledge but failed to STEP-UP for the integrity of the office and the law.

www.CrimeTalkAmerica.com recognizes that the majority of prosecutors are hard working, sometimes overworked, defenders of our legal system, citizen’s rights and a criminal’s worst enemy. We recognize also that there are some people who become prosecutors for political reasons, indifference to the rules of evidence, rules of procedures and rule of law for the benefit of their career. To this I say, step aside!

PRODUCT DIVERSION .. MAUFACTURERS BIGGEST HURDLE EXPLAINED

PRODUCT DIVERSION

As requested by our readers!


At the request of many of our readers in the Johnson vs. Supervalu litigation report, they requested more information about DIVERSION and how it effects business operations. The following details a variety of methods which impacts all industries and a “Case of Diversion”.

“DIVERSION” of manufactured products, whether pharmaceutical, grocery goods or even sneakers finds corporate entities struggling within their own organizations to deal with the penetration of the production grid. Product diversion not only impacts the corporate bottom line, but seriously damages the credibility of the product identity, leaving the corporation with the potential for liability exposure, alteration and adulteration of products and its impact on the reputation of the manufacturer.

Diverted products are guided through a maze of planned manipulations, alteration of business records, and conversion of transportation from its original destination to another recipient or illicit market distribution network.

Product diversion simply starts from within the manufacturers facilities. Depending on the point line in the system, the products at any given point, from manufacturer, on the product assembly line, shipping and packaging, trucking and transport or even labeling, packaging and or the creation of false shipping label documents are all points of weakness within the corporate system. Distribution weakness points in the system chain, affords the diverters an opportunity to short the manufacturer of product, financial benefit and reputation.

What are the causes of Diversion?
Often companies maintain an internal policy that creates diverse geographical pricing and compensation programs. This contributes and triggers a diversion plan from a network of organized marketers, within or external from the corporation.

Protecting the company to reduce the level of diversion requires a need to mark the product. It also requires the company to track the product, integrate information including; production. packaging, shipping, transportation and receipt, of the products identity, computerized audit code, and even now RFD (Radio Frequency Device) marking the product from the start of the production to the finished authorized destination, protects the product in the distribution network.

With the creation of GPS tracking of containers, even individual products, creates an added expense, but will reduce diversion, or trigger information that the product has not reached its destination. Depending on the value and impact to the business, GPS tracking must be accompanied with internal controls and system wide audits.

Diversion’s impact on the business often leads to erosion of brand name, inadequate inventory levels in targeted market area, and lower revenues from high paid discounts, and higher cost of distribution due to slow sales. This has a greater impact on the financial growth of a company than counterfeited products. Supply chain partners and distributors exclusive territory rights are diluted, costs increase, brand value is eroded and profitability of all channel partners are affected.

Product diverter’s, third party marketers undercuts the company’s price of goods while reaping high profits. Diversion often referred to as “Grey Market Goods” or “parallel distributors” greatly disrupts the distribution channel of the legitimate business operations. Products that are diverted are often the result of deception and fraud. Discount, and warehouse retailer, supermarket chains, independent grocery stores and at times drug stores become the retailing marketplace for the diverted product. This impacts the legitimate distribution network, manufacturers, distributors, retailers and the consumer.

The international distribution network based on tax incentives, different pricing and new market distribution outside the United States aids in creating the diversion network. Because of these tax incentives, variable product pricing affords the diverters the opportunity to move products from its international destination and convert the product into the American marketplace at what appears to be a greatly discounted pricing from the legitimate distribution chain in America.

Hence, DIVERSION of goods from the directed international marketplace to the American retailer impacts the costs and value of the manufacturer.

In the Cigarette industry, product destined for the international market often finds their way into communities that are considered border communities. While the pack of cigarettes is marked for international sales only, they can be purchased in such cities as Miami, Arizona and Texas border towns. While legitimate business partners of the companies complain about the product availability, the goods are being diverted from the legitimate shipments to the American market.
They were sent with certain discount prices, have limited state tax restrictions and are sold on the open market through a chain of retailers with little disruption.

In the Medical Supply industry, price and volume incentives cause a dramatically lower price in the volume purchasing from distributors in different regions of the world. Thus allowing the distributors to take orders from “local trading companies”, which are then transferred to a shipping company with the manufacturer thinking the local industry is growing. However the shipping company is now sending the product to destinations where distribution prices are much higher. The Diversion of such goods creates a massive “Gray Market” for the parallel distribution line who can provide these products to stores or even manufacturers distributors at a lower price than the manufacturer would offer in that territory
Today, the pharmaceutical industry is exposed to “Parallel Importing” often seen as grey market importing is unauthorized, but not necessarily criminal, importation of patented drugs for resale via conventional distribution channels. Sourcing drugs for a free market economy from the United States to a country of price point fixed products below that found in the United States has legitimate incentives. In parallel importing cases, it robs the patent holders of legitimate profits and thus limits the incentive for pharmaceutical companies to invest in developing new drug solutions.

It is well known that pharmaceutical products purchased for third world nations at a tax free discount from United States to aid foreign markets, is purchased at discounted pricing, then converted into parallel goods for redistribution in foreign countries that were not scheduled to receive the reduced pricing of the drugs. The middle-men are receiving discounts, increase product levels at no cost, sample products and off-market goods for specific countries. In turn, the middle-men of the distribution network, sell off the reduced priced goods at an inflated price, yet under the cost prices of the United States marketplace.

Supervalu/ Johnson Diversion Program:

In the Johnson v. Supervalu litigation, in which Johnson won a $16 million dollar judgment against Supervalu, it was disclosed and alleged that Supervalu and Johnson participated in product diversion from manufacturers, causing Johnson’s grocery stores to be shorted of products, and not benefiting from the product rebates offered by the manufacturers.

In the complaint by Johnson in this matter Section 3. “Fraudulent Diverting Transactions, is detailed in the following;
“62. Diverting in its purest form is a process by which a person who can obtain a product at a discounted price resells that product to another who is not able to obtain a discounted price.”
“65. Nerveless, Johnson alleges that Richford has an entire department dedicated to diverting. Johnson also alleges that Richfood has a warehouse used for unpacking cases, removing stingers, and repacking products for resale.”

As a result of the diversion scheme, Johnson alleges that it cost his corporation more than 102,000 in billbacks that he could not claim with the manufacturers, since the products were diverted and never received by Johnson’s stores. Johnson admits that his company “participated fully”, but was unaware there was no product movement in the illegal Richfood scheme. Johnson’s company MPH’s diverting losses resulted from 35 product deals for which it was not able to obtain product movement data from Richfood to support billback invoices to manufacturers.

The world of diversion has become computer based, on-line and extremely sophisticated. Trails of today’s diversion may be very well hidden in the depth of computer generated information systems.


Supply chain professionals need to be in the front lines in the battle against diversion of manufactured goods. Manufacturers need to take charge of there supply chain to insure the integrity of the production line, the transportation and the end distributor or retailer has received the products that they sell to keep the market going. Any hiccup, hesitation, disruption or pattern of diversion should be immediately addressed, not just as a misstep, but rather as a scheme to defraud the manufacturer, its shareholders and the consumer public.

CASE STUDY WITH A POSITIVE END:

Some time ago a manufacturer of a “NEW” hygiene product, a depilatory hand-held shaver, made in Israel, was being manufactured in China and distributed around the world. The corporate owners wanted to enter the U.S. market and had been planning a major introductory advertising campaign. It was discovered, a surprise to the manufacturer that their product was already in the United States and being advertised in circulars of two of the largest retail chains in America. How did this happen?

Our investigation (Ben Jacobson) identified the marketing agent within the United States, his business name, a legitimate authorized business enterprise. He was sitting on two containers of the product that had been DIVERTED from a European shipment to a Trans-Atlantic cargo shipment into the U.S. The marketer had a distribution chain of major retailers whom he had done business with for years. He was not the originator of the diversion, just a cog in the wheel of the diversion chain, the recipient and distributor. His associates were associated with the manufacturer in Israel and China had developed access from the manufacturing plant. They knew that the product was not yet available in the United States, but the company had a marketing plan, and an advertising explosion about to be put into place. The manufacturers had spent millions in development and creating the American market buzz, but had been beaten to the distribution point by diverters. This was a very sophisticated diversion operation. The product did not have government restrictions, or was required to pass other than normal customs inspections. Like many shipping containers entering into the United States, less than 3 of ten containers are inspected. In this case, the containers would have not raised any issues.

The result of our investigation found the manufacturers with a dilemma, a decision of litigation or distribution. They had a product that was receiving tremendous positive reaction from the consuming public. The retailers had been marketing the product nationally with an advertising campaign and introductory offers.

A meeting with the marketing diverter distributor was held. An agreement with the marketer was struck. The decision was to join with the diverters that already had a distribution network in place within the United States. It didn’t make business sense to engage the distributor in litigation, when the business decision decided to join forces with the distributor and reached a distribution agreement after reaching a settlement for the cost of the diverted goods previously sold.

What did this mean to the corporation? As a result of the agreement, the American distributor provided the contacts and resource names of businesses that were part of the diversion. The manufacturer closed the loop-holes by reaching this agreement with its Chinese partner on the accountability of manufacturing, quality control and stopping over-run productions. The business decision brought an end of the diversion of the product and created a product that reached into every retail community within the United States. The loss of millions from the diversion was converted to a profitable distribution point.

This is not to say that rewarding diverters is suggested, but in this case, the corporation made a sound business decision to enter the American marketplace, with an already built distribution network. They got into bed with the diverters. It saved time and money to reach their distribution and sales objectives.

What happens when diversion occurs? All manufacturers suffer from diversion of products. The real question is what percentage of diversion impacts the manufacturers business. Often, diversion has a greater impact on the company than counterfeit products.

Controlling diversion is not a simple task, but rather the constant diligence of the entire process. From beginning of the manufacturing to the destination of the product, audited movement is required. However, in the real world, the human factor impacts the method of diversion and its destination.

You Have the Questions, We Report!!!

We look forward to you comments.

Supervalu, Bad Business, Questionable Diversions, $16 Million Judgment

SUPERVALU

THE JURY SPEAKS
$16 MILLION AGAINST SUPERVALU IN THE JONNY JOHNSON, RICHMOND, VIRGINIA CIVIL SUIT

As we reported last week, Jonathan Johnson, an African American businessman from Richmond Virginia, took on the behemoth Supervalu in a Civil Action seeking damages for breach of contract.

For approximately 12 years Johnson’s grocery business had entered into a business relationship with Richfood, Inc and Supervalu. Supervalu and Richfood extended credit, provided warehousing services, accounting and other services typical in the grocery business.

The agreements between the parties fell apart when it was discovered by Johnson that after reaching a contract “obligation to provide assistance.. With opportunities to grow” the business.

Johnson discovered that his companies were being subject to questionable business practices, such as being shorted on product deliveries, failing to receive timely credits and rebates and improper charges. Johnson also discovered that Supervalu, without his knowledge, was in discussions with his store landlord to secure sites for Supervalu’s “Save-A-Lot” chain of retail stores, a competitor to Johnson’s business.

Johnson had also discovered through inquiries with manufacturers, that without his knowledge his companies unknowingly had been involved in a series of transactions by which Supervalu/Richfood allegedly collected manufacturers rebates on products, but not actually purchased by Supervalu/Richfood through Johnson’s company stores.

These fraudulent DIVERTING transactions benefited Supervalu/Richfood financially, while siphoning substantial revenues from Johnson’s companies.

The four man - three woman jury awarded Johnson a $16 million judgment, a decision upholding the numerous allegations that the nation’s third largest grocery chain, Supervalu, forced him out of business.

Lawyers for Supervalu immediately told Judge Margaret P. Spencer that they will appeal the decision and renew motions to throw out Johnson’s evidence in the case.

Johnson and his legal team argued that Supervalu defrauded Johnson by singling him out as a troublemaker, while it had extended high-interest loans and supplied contracts worth millions.

Johnson stores went out of business in April 2004 ending a 15 year business operation in an inner-city community in the State of Virginia.

As we had reported earlier, Johnson witness Susan Rhyberg, a former technical employee for Supervalu had testified for Johnson. Supervalu Senior executives took the witness stand claiming that Rhydberg was not in meetings or even known. As rebuttal, Rhyberg returned to the witness stand this past week and provided testimony, e-mails and other information showing her employ and participation in the Supervalu business meetings disputed.

Was this a typical “BUST-OUT” takeover of a business by Supervalu, or was Johnson just a victim of aggressive business practices by the behemoth food giant.

Like the scene in the movie “Goodfellas”, the bar owner goes to the boss and asks for him to take the goons off his back. He agrees, and then takes over the business, keeping it afloat, using the bars contacts and credit with suppliers, then upon delivery moving the products out the back door, selling to other stores for cash. No payments made by the bar to the suppliers, then the bar is closed. No credit, no suppliers, no business. The next scene is the torching of the bar.

In this scenario, Johnson’s business was forced to close as the result of Supervalu’s business practices, high interest loans, rebate diversions and product diversion. So after 15 years of business Johnson lost it all. Supervalu entered into the community and began new grocery markets in the region.

What a take over!!!

Congratulations to Jonny Johnson for his taking on the goliath Supervalu. Like “David” beating the giant by the small guy is not only a win for Johnson, but a win for the community he served for so many years.

What do you think? Is a Pattern Developing in the Coupon and Rebate Industries?

Are our nations Manufacturers bearing the brunt of a deceptive industry?

Have a Comment, send it in...

We Report, You Report...

IOS UPDATE! A Question of Value , Supervalu Litigation , Sounds Familiar

IOS UPDATE

A QUESTION OF VALU

SUPERVALU LITIGATION

Research of the International Outsourcing Services indictments found that Supervalu, one of the nations leading food services company, a publicly traded corporation, rated 153 in the Fortune 500 listings, is a 25% shareholder of IOS.
IOS recently separated from the Criminal Indictment, is not relieved of it’s responsibility of cooperating with the U.S. Attorney’s prosecution of the principles of IOS, namely Thomas Chris Balsiger et al.

A look into Supervalu and its affiliation with IOS finds more than just a shareholder, but a business partner. Supervalu has built a business on development of gobbling-up small community grocery chains over the past several years. Good business, expansion of the bottom line sometimes at the expense of the local community. Lets Take A Look at the case of Jonathan F. Johnson, Richmond, Virginia.

In this matter, Johnson v. Supervalu, Inc. and Richfood, Inc., Circuit Court, Richmond. Virginia, file # L5785-4. Mr. Johnson has filed a $25 Million Dollar claim for compensatory damages and $350,000 in punitive damage claim. This is an ongoing trial.

Mr. Johnson, a 40 something African American businessman is President and CEO of Marketplace Holdings, Inc., The Market, LLC, Community Pride, Inc. and R&S Stores, Inc. in the State of Virginia. All of these businesses are grocery stores operated by Mr. Johnson. He has been in the grocery business for more than 23 years, and has been recognized as a leader and authority in the grocery industry. Particularly to the establishment and operation of retail grocery stores in urban markets and the marketing of consumer products to minority consumers. In 1999 Johnson was considered the owner of the nation’s largest African American owned grocery chain.

For 12 years, it’s claimed in the law suit, that Johnson and his companies purchased grocery products from Richfood and/or Supervalu based on specific agreements between the parties. At times both Richfood and Supervalu extended credit to the “Companies”, as well as warehousing, accounting and other services to the Companies, a common practice in the grocery business.

In 2001 a dispute between the parties arose at which time an agreement was reached between the Companies, Supervalu and Richfood. A settlement agreement was reached and specific obligations were created by the Settlement Agreement. One specific form of the agreement was that the Companies were subject to Supervalu’s “standard screening approval process and standard lending practices” As a result of the multi-year supply agreement, the defendants, Supervalu and Richfood are the “EXCLUSIVE” supplier for the Plaintiff’s retail stores.

Johnson discovered in 2000 that his Companies were being subjected to a variety of questionable business practices, such as being “SHORTED” on product deliveries, failing to receive timely credits and rebates and other improper charges.

Johnson alleges that after inquiries from manufacturers, without his knowledge, the “Companies” had allegedly been involved in a series of transactions by which the defendants, Supervalu and Richfood collected manufacturer’s rebates on products but not actually purchased by the defendants through the “Companies” stores.

Sound familiar! International Outsourcing Services (IOS) business operators have been indicted in a widespread consumer coupon scam that involved manufacturer’s consumer coupons and rebate items. The relationship between IOS and Supervalu is a shareholder relationship, whereas Supervalu owns approximately 25% of the shares of IOS.

A common practice identified that the Johnson matter is a scheme to defraud by a means of diverting product. Johnson’s confirms that his companies joined Richfood in a scheme with a value identified as $1.5 million worth of diverting sales. In most of the cases the Market Place Holdings, Inc. (MPH) would secure a discounted product price in the form of rebates or a reduced price from a vendor or broker purchase extra cases of the discounted products, then sell those cases to another retailer who would pick up the products at MPH stores or the Richfood warehouse.

It’s alleged that Richfood implemented the scheme in a manner that did not involve product movement and left MPH liable for uncollected bill backs. Analysis by MPH through January 2003 its reported in the complaint filed by Mr. Johnson, that a total of $102,946.03 in billback debited from MPH from Richfood and that MPH was not able to collect from manufacturers. MPH’s inability to collect these billbacks arises from Richfood’s inability or unwillingness to provide product movement data showing the products were actually purchased and sold.

MPH admitted that it participated fully, but was unaware there was no product movement in the illegal Richfood scheme. In May 2003, Supervalu became concerned about the decrease in the level of sales at “The Market” and wanted to increase sales in the grocery department. Johnson informed Supervalu that better pricing from Supervalu would improve sales. One month later, its alleged, that Supervalu began giving MPH what was represented as the “GreatValu” pricing on orders for all of his stores.

GreatValu store orders and purchases its groceries independently and the products are delivered to each store by SuperValu. The complaint further reports that SuperValu reports the quality of GreatValu sales “movement” for purposes of obtaining “billback” rebates from manufacturers.

Its alleged that while SuperValu represented that MPH was then receiving GreatrValu pricing, MPH did not. Johnson, MPH’s owner operator, learned from several manufacturers that SuperValu reports MPH “movement” as part of the total GreatValu movements for purposes of obtaining billbacks. SuperValu failed to inform Johnson and MPH of this “movement” reporting practice.

Other similar issues suggested by owner’s of “Shop N Save” grocery stores in Pennsylvania alleges that after agreements with SuperValu, they pulled out of a project that he had committed $4.4. Million dollars in construction. Mark Scozio of Penn Township Pennsylvania filed a federal civil action against SuperValu alleging a “Breach of Contract” and “Negligent Misrepresentation”. He accused SupervValu of misuse of advertising money contributed by the Scozio franchise and damaged the franchise sales with its Greenpoints program, a customer incentive venture that SuperValu started the previous year, 2002. Scozio family and Mark Scozio owned six grocery stores, of which were franchises of SuperValu, under three different Supervalu grocery store names, Shop N Save and Save A Lot.

It’s alleged, SuperValu mingled $1.4 million of Scozio advertising money for the benefits of Foodland retailers, a competitor of Scozio. The tension between Scozio’s and SuperValu heightened when SuperValu added 19 new corporate “Shop N Save” stores in the Pittsburgh area, closing in on Scozio’s limited territory and limiting growth.
The Scozio Group realigned themselves with other markets and left SuperValu that want to control most of their business operations.

It seems that the practice of control by SuperValu is more than an investment into local small grocery chains. Control of the product shipments, financing assistance, partnering between SuperValu and the local or regional grocery stores in the expectation of expansion of the local grocery chain, the shipping of products to the local stores, the rebates that would go to the store operations becomes part of SuperValu financial position, Manufacturers rebates alleged being diverted to other business enterprises of SuperValu, while the small grocery store partner awaits rebate funding and special pricing for selected special products offered as an incentive discount by manufacturers to have grocery stores push their products.

What’s going on here?
Today, June 4, 2007, in Richmond Virginia, Circuit Court the civil suit brought by Mr. Johnson, a local African American businessman who had partnered with SuperValu, heard the testimony of a Senior SuperValu executive. The executive was to counter one of Johnson’s primary witnesses, a former employee of SuperValu, as having no credibility. At the end of the day, Circuit Judge Margaret P. Spencer refused a renewed effort by SuperValu to strike Johnson’s evidence in the case.

Susan Rydberg, the former SuperValu employee who worked in the technology related department, returned to court today for the second time during the trial. Today she presented a letter of commendation from SuperValu Chairmen Jeffrey Noodle for her work. She also presented numerous e-mails that suggested she attended meetings with high-level company executives. The Supervalu executive testified last week that Rydberg was unknown to them and was not part of top-level discussions of the company’s business plans.

It’s apparent that Judge Spencer agreed with Johnson’s attorney and the credibility of Rydberg, by refusing to strike Johnson’s evidence in the case.

What’s going on here? Is this business practices gone wrong, or is it something more that may be corrupt business practices. Only time, documents and witnesses will tell. Perhaps we’ll see a cooperating witness in the IOS Federal Prosecution step up to the plate and bat for the bleachers to free himself of the criminal liability they face in the IOS fraud accusations. Maybe then the schemes will open up to expose those involved in the diverting and rebate programs. This all has an effect on the pricing of groceries on the shelves in every marketplace. Or, is the practice of diverting inventory a legitimate business practice and the manufacturers accept then practice of the rebates so that brand managers reach their goals and those bonuses are given based on productivity.
Who’s looking out for you the consumer?
SuperValu we’re watching this one!
We’ll report on the results when a decision is returned.

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