How Farm Fresh went bankrupt Financial woes: Trouble at the supermarket chain can be blamed in large measure on the clash between its gruff founder and its unhappy junior partner.

January 21, 1996|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

On a November day in 1994, Jack Millman, a hulking figure with a shock of white hair and an imperious bearing, strode into the office of Jesse K. Swartz for a meeting that neither man relished.

Ignoring their simmering feud, they exchanged pleasantries and moved into an adjoining conference room. Mr. Millman, the founder of Farm Fresh Supermarkets of Maryland Inc., appeared ill at ease. Mr. Swartz never enjoyed these rare encounters either. But as chief financial officer of wholesaler B. Green & Co., a partner in Farm Fresh, he had insisted on this meeting to find out how the Baltimore grocery chain was doing.

"Everything's fine," Mr. Millman said without hesitation during what is believed to be his last visit to his Farm Fresh partners.

Mr. Swartz was relieved. It was just what he had hoped to hear.

A catastrophe, however, was only beginning to unfold.

What would emerge is a tale of distrust, clashing egos, allegations of mismanagement, brown bags containing thousands of dollars in $10 and $20 bills and a check-kiting scheme involving more than $1 million.

Mr. Millman and other Farm Fresh executives declined to be interviewed for this article, but court documents, depositions and interviews with 45 principals, store employees and attorneys portray a company in collapse: There would be nasty letters, lawsuits and a wrestle for control between company executives that would jeopardize the livelihood of more than 600 employees and spark an FBI probe.

In the end, Farm Fresh, a once-thriving 10-store chain that grossed $100 million a year, would crumble under forced bankruptcy.

A street fighter

This wasn't the way Jack Millman had planned things.

The 70-year-old founder and majority owner of Farm Fresh came up the hard way, a Philadelphia street fighter who toiled for some of the toughest characters in the grocery business.

Mr. Millman plied his trade at Food Fair Inc. from the 1940s until shortly before the giant supermarket company filed for bankruptcy in October 1978, an experience that molded him into a rough-hewn businessman with a short-fuse and an implacable drive.

"One day he can chew you out in a very profane manner, and the next day he could apologize and make you feel fuzzy and warm," said Jeff Metzger, publisher of the trade newspaper Food World.

Mr. Millman's wrath and obsession with detail were legendary. He ranted at employees if a store sign was crooked. He demanded an immediate answer when something -- perhaps mushrooms -- was missing from the shelves. He set the price of crab meat and Thanksgiving turkeys, then screamed at his supervisors for not making more profit.

Yet it was Mr. Millman's in-your-face demeanor that drove Farm Fresh. It was a quality that inspired loyalty as much as hatred in a rough-and-tumble business where the margin between profit and loss is notoriously thin -- about 1 percent.

Genteel manners and an advanced college degree didn't do it for Jack Millman. Being a ferocious negotiator with vendors did. But when necessary, associates recalled, he was a charmer with a ready smile, dapper, even brilliant.

Mr. Millman created his own grocery chain -- Farm Fresh -- from the ashes of his former employer. In a 1981 bankruptcy auction, he bid successfully on three Food Fair stores in the Baltimore area, where he had supervised the supermarket chain's operations, according to Food World.

That was his launching pad -- but it required financing. So, on Oct. 21, 1981, Mr. Millman took on as a minority partner local food wholesaler B. Green & Co., then one of the nation's largest private companies.

Farm Fresh, incorporated in February 1982, flourished throughout the decade. And so did Mr. Millman's relationship with his partners.

It was a success story.

Egos, however, would get in the way.

Working retirement

Age was catching up with Mr. Millman, and he knew it. So in July 1992, against all his instincts, he retired in his late 60s. But even as he began to golf more in Florida, Mr. Millman couldn't bare to relinquish control of Farm Fresh, company managers recalled, instructing employees to continue clearing everything through him.

For Mr. Millman, it was business as usual.

But for Benjamin L. "Benjy" Green, B. Green's executive vice president, a mild-mannered foil to Mr. Millman, it was an affront. Mr. Green became president of Farm Fresh in March 1993, but Mr. Millman -- owner of 50 percent of the company stock -- ran the show.

The situation, Mr. Green said, "was horrific."

Tensions mounted as Mr. Millman continued to override Mr. Green's decisions. Yet Mr. Green, quietly tenacious, wasn't prepared to abdicate, even when Farm Fresh executives ignored his directives, or claimed ignorance about company dealings. On his own, Mr. Green conducted research about the chain and gleaned what others at headquarters already knew: Farm Fresh was in trouble.

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