Grocery fraud results in heavy fine, jail time

Grocery owner, 75, netted millions from coupon scheme

May 06, 2000|By Gail Gibson | Gail Gibson,SUN STAFF

Onetime grocery giant Jack I. Millman, now 75 and wracked by years of legal and financial troubles, was sentenced yesterday to two years in prison and ordered to pay $750,000 in fines and restitution for masterminding an extensive coupon-clipping fraud that brought him and his family millions.

Millman, charged in 1998, pleaded guilty in December to one count of mail fraud. His attorneys argued that the former co-owner of the now-defunct Farm Fresh supermarket chain should serve any sentence under home incarceration because of his age and various health problems.

But U.S. District Judge William M. Nickerson said that the seriousness of the crime called for jail time. Nickerson's fine underscored that assessment by far surpassing the regular maximum of $250,000.

Millman briefly and wearily addressed Nickerson in court, saying the coupon scam began as a way to prop up some of his struggling stores but eventually grew out of control.

"I can assure you that if I had it to do again, this problem never would have occurred. Never," Millman said, reading from a prepared statement. "Sir, I doubt I could survive a jail sentence. But I thank you, your honor, for the chance to explain."

In a sentencing hearing that stretched over two days, witnesses painted a picture of Millman as the mastermind behind a scheme under which he paid people to clip coupons from the Sunday papers. He then mixed the coupons with those brought to his 10 stores by legitimate customers and sent in the whole batch for reimbursement.

Assistant U.S. Attorney Kathleen O. Gavin said the scheme stretched over 14 years, beginning in the early 1980s, and brought Millman and his family millions of dollars. Federal investigators documented that, from 1992 to 1995 alone, it netted $2.4 million, with $1.1 million of that going directly to Millman.

Millman's three sons-in-law, also charged in the case, all testified against him during the sentencing hearing. Two of them have left their wives in recent years. They said that Millman called the shots in the coupon scheme.

Kenneth J. Goldscher, a former son-in-law, said Millman once opened his car trunk in the parking lot of one of the grocery stores and pulled out a bag of cash that came from the coupon-clipping operation.

"This is how independents make money," Goldscher described Millman as saying.

Steven Cohen, another former son-in-law, testified that in the mid-1990s Millman sued two companies -- Quaker Oats and Ralston Purina -- for not reimbursing him fully for coupons, even though Millman knew at the time that the coupons were fraudulent.

Goldscher, Cohen and William Carter, the third son-in-law, all have pleaded guilty in the case. They will be sentenced later this year.

Of the $750,000 penalty ordered by Nickerson, Millman must pay $260,886 in restitution to Quaker and Ralston. The remaining $489,114 is imposed as a government fine. Federal investigators argued that hundreds of companies were defrauded, but Nickerson ruled that it was too difficult to determine exactly how much money was owed to each manufacturer.

Explaining his decision to impose such a high fine, Nickerson said he was certain that the Millmans had the means to make the payments.

"An awful lot of money was realized over the years from this scheme that is who knows where," Nickerson said from the bench. "The likelihood that none of it is within the grasp of Mr. Millman is difficult to comprehend."

For years, Millman was a towering figure in Baltimore's supermarket community. A big man with a brusque manner, he built the Farm Fresh chain only to see it crumble in the 1990s, under forced bankruptcy and allegations of check-kiting and mismanagement.

His legal troubles continue. A former partner, Benjy Green, is suing Millman in Baltimore Circuit Court, alleging that Millman withheld financial information about the company.

Green and other former employees were in court yesterday. So were some of Millman's business friends, his wife, Elaine, and his daughters. All of the onlookers seemed surprised by the prison term, but Green said it was warranted.

"He did the crime. He got caught," Green said. "It doesn't matter whether you're 50 or 75 or 25, that's not what the book says."

Defense attorney Aron U. Raskas argued that Millman's downfall already has been a harsh sentence. "Not only has his life's work been ruined, but his life's reputation has been ruined," Raskas said in court.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.