Store chief pleads guilty Former manager at Farm Fresh admits role in coupon scheme

$185,890 misredeemed

Three others awaiting trial on federal charges

December 01, 1998|By Michael James | Michael James,SUN STAFF

A former manager in the now-defunct Farm Fresh supermarket chain pleaded guilty yesterday for his part in a scheme that defrauded national food companies of $2.4 million by submitting tens of thousands of "misredeemed" price-chopping coupons.

Kenneth Goldscher, 47, of Owings Mills pleaded guilty in U.S. District Court in Baltimore to tax evasion and interstate transportation of stolen property. He admitted in a statement of facts presented in court to receiving $185,890 in cash from the misredeemed coupons.

Goldscher, when contacted at his home last night, refused to comment on the guilty plea. It was not clear last night what sentence he might face.

Goldscher is a former son-in-law of Farm Fresh's president, Jack Millman, who is alleged by prosecutors to have been the scheme's mastermind. Millman and two others who were his sons-in-law, William Carter and Steven Cohen, are also charged and are awaiting trial.

The case is one of Maryland's largest coupon fraud schemes. According to court papers, the men were "reimbursed" for coupons they falsely claimed customers had turned in.

Millman was buying the coupons -- which offered 50 cents or $1 off items such as detergent or cat food -- from people he paid as coupon clippers, court papers alleged.

"Millman arranged for the purchase of massive amounts of manufacturer's coupons from individuals who clipped them from newspapers and advertising circulars," according to the statement of facts presented in Goldscher's guilty plea.

"Known as 'mass-cut' or misredeemed coupons, these coupons were never submitted to a grocery store or retailer in exchange for the purchase of a product," the statement said.

Cohen, Carter and Goldscher are accused of mixing the misredeemed coupons with coupons that had been redeemed legitimately at one of Millman's 10 stores, court papers said. The men then shipped boxes of the coupons to clearinghouses, which in turn paid the men the amounts of the discounts printed on the coupons.

The clearinghouses, which received a handling fee from manufacturers, are blameless and paid the amounts because they believed the coupons had been legitimately redeemed, officials said.

Once they got the cashier's checks from the clearinghouses, the four men would divide the fraudulently obtained money, court papers alleged.

Millman's lawyer has indicated his client will plead innocent.

The scheme began in 1981, according to FBI and IRS agents. Goldscher went from receiving about $100 to $200 a week in the scheme's early days to about $2,000 a week by 1993, court papers said.

Goldscher admitted that during 1992, 1993 and 1994, he did not report the income he earned from the coupons and illegally under-reported his income, court papers said.

Pub Date: 12/01/98

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