According to the U.S. Department of Justice (DOJ), a contractor hired by the grocery chain Kroger Co., to collect for recycling old corrugated containers from the company’s Salem, Va., warehouse pled guilty in the U.S. District Court for the Western District of Virginia in Lynchburg, Va., to conspiracy charges related to a cardboard diversion scheme he oversaw.
Thomas Faulkner waived his right to be indicted and pled guilty to one count charge of multi-object conspiracy to commit money laundering, hiring illegal aliens and mail fraud.
Glenn Miguel Wagner also waived his right to be indicted and pled guilty to a one count Information charging him with misprision of a felony pertaining to mail fraud.
“These defendants created a scheme that they used to steal millions of dollars from the Kroger Company,” says United States Attorney Timothy Heaphy. “Financial fraud of this magnitude is a persistent problem and motivates substantial investigative activity in the Western District of Virginia. The United States Attorney’s Office is committed to fighting fraud in every form and bringing those who commit fraud to justice.”
According to the DOJ, Assistant United States Attorney Charlene Day presented evidence that Kroger owns a distribution warehouse in Salem Va. The company outsourced warehouse operations to multiple contractors. Starting in 2006, Kroger contracted with Valley Logistic Services (VLS) to conduct salvage operations at its Salem warehouse. Faulkner owned and operated VLS, and Wagner was VLS’ operations manager at the Salem warehouse.
It was the duty of VLS to collect and transport used packing and shipping materials, including wooden pallets and old cardboard, to recycling companies authorized by Kroger. The grocer would receive payments and/or credit offsets based on the amount of salvage the warehouse delivered.
In his plea, Faulkner admitted to setting up a scheme in which some of the cardboard from the Salem warehouse would be diverted from the pre-approved recycling companies and sent instead to other facilities, without Kroger’s knowledge. Instead of the Kroger receiving a credit for the salvage, Faulkner set up a shell company, Valley Warehouse Services (VWS), which was paid for the diverted cardboard.
Wagner assisted in the scheme by instructing employees at the Salem warehouse to divert cardboard to trucks that transported the diverted cardboard to other facilities. At his sentencing, Faulkner faces a maximum possible penalty of five years in federal prison and/or a fine of up to $250,000. He has agreed to pay restitution in the amount of $1.6 million.
Wagner faces a maximum possible penalty of three years in federal prison and/or a fine of up to $250,000.
The investigation of the case was conducted by the United States Postal Inspection Service, the Internal Revenue Service, the Roanoke County Police Department and U.S. Immigrations and Customs Enforcement.