Independent Retailers Farmer’s Foods, Camellia Shutter Operations

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Two Virginia-based independent retailers that have been in business for a combined 125 years have closed their doors in the past month. Virginia Beach-based Camellia Foods, operators of Fresh Pride supermarkets with locations in the Tidewater region of Virginia and on the Delmarva Peninsula, and Farmer’s Foods, based in Hopewell, have both shuttered their operations due to declining business.

Camellia Foods, which started as a member-owned grocery wholesale co-op in 1938, was once a thriving entity in Hampton Roads, supplying nearly 200 small grocery stores (banners included Bonnie Be-Lo, Earle’s markets and Star Food Markets) in Hampton Roads, Northeastern North Carolina and on the Eastern Shore.

As larger chains and different retailing formats began to invade the Tidewater area, Camellia felt the pressure. In 1995, it exited the wholesale business and in 2001 it filed for Chapter 11 bankruptcy protection. Its largest creditor was Supervalu, which was once  its biggest rival in the wholesale business (when that large Eden Prairie, MN-based organization traded as Richfood).

It emerged from bankruptcy 18 months later as a smaller, leaner company which had changed its trading names from Meatland, FoodCity and Be-Lo to Fresh Pride. However, without a strong financial commitment from its ownership group (led by the Harrell and Saunders families), Fresh Pride continued to close stores and experience declining sales.

During the past two months, Camellia has closed its six remaining stores and liquidated its inventory. Its chief operating officer, Scott Beavers, recently left and its offices on Diamond Springs Road in Virginia Beach closed on July 11.

The closing of Farmer’s Foods is a far more complex issue. Independent retailer Johnny Farmer, who established his own business in 1965, recently sold four of his eight stores to a Baltimore-based group of independent retailers including executives from B. Green & Co., Harvest Fare as and to “Buster” Madison, former COO of Farmer’s.

Those stores, located in Luray, VA, South Boston, VA, Kenbridge, VA and Louisa, VA, will operate as Food Depot Cost Plus units. At the time of that deal in late April, Farmer retained stores in Hopewell, VA, Highland Springs, VA, Dillwyn, VA and Edenton, NC and continued to operate them for a short period of time. All four stores and Farmer’s corporate offices in Chase City, VA have closed in the past six weeks and Johnny Farmer may be facing some potential criminal action related to his business practices.

Earlier this month, John Palmer, former area sales manager for Kellogg’s, pled guilty to participating in a $1.9 million fraudulent scam against his former employer and Supervalu, Farmer’s wholesaler during a four year period (2009-2013).

Palmer, who was convicted of conspiracy to commit wire fraud and cooperated with authorities, faces up to 20 years in prison when he is sentenced October 2 by U.S. District Judge Robert E. Payne.

In the plea agreement, Palmer, from Fredericksburg, VA, admitted that he conspired with a (yet) unindicted unnamed president of a grocery retailing company (identified as “Grocery Retailer A”) which operated stores in the Richmond area and elsewhere in Virginia.

According to the plea agreement, both the unnamed grocery retailer and Palmer submitted fraudulent documents (“false deal sheets”) to Kellogg’s and Supervalu that resulted in “Grocery Retailer A” receiving nearly $1.9 million in reimbursements.

The unnamed retailer would then allegedly give Palmer roughly half of the value of those false deductions in cash payments at meetings held in parking lots of the unnamed grocer’s stores in HenricoCounty (Highland Springs) and Hopewell.

According to a story in the Richmond Times-Dispatch, Palmer ultimately agreed to cooperate with investigators and (with Kellogg’s knowledge) submitted another fraudulent “deal sheet” that resulted in a $59,289 deduction. Last August 5, while being monitored by investigators Palmer met with the unnamed retailer at a store in Henrico County and was given $24,650 in cash.

Several months later on October 23, agents with the Virginia State Police, the FBI and U.S. Postal Service descended on the Farmer’s Foods corporate office and warehouse in Chase City and loaded boxes and files onto a waiting truck. At that time, a Virginia State Police spokesperson commented: “State and federal investigators executed a search warrant at a Chase City place of business. The warrant is part of an ongoing criminal investigation. No charges or arrests were made.”