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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of Virginia

Wednesday, May 9, 2012

Penhook Man Pleads Guilty To Tax Charge

Bernard “Buddy” Smith Failed To Disclose Business Operations On His Tax Forms

LYNCHBURG, VIRGINIA -- A former Atlas contractor working for the Kroger Company to manage the warehouse operations at the company’s Salem, Va. warehouse, pleaded guilty yesterday in the United States District Court for the Western District of Virginia in Lynchburg to a charge of filing a false tax return.

Bernard “Buddy” Alman Smith, 58, of Penhook, Va., waived his right to be indicted and pled guilty yesterday to a one count Information charging him with filing a false tax return. At sentencing, the defendant faces a maximum penalty of three yeas in federal prison and/or a fine of up to $250,000.

According to evidence presented by Assistant United States Attorney Charlene Day, Kroger owns a distribution warehouse in Salem Va. The company outsourced warehouse operations to multiple contractors. Smith was the manager of Atlas, one of the contractors hired by Kroger to manage its warehouse distributions.

The previously convicted Thomas Faulkner used his position as a trusted contractor with the Kroger Company to divert tractor trailer loads of old cardboard, without Kroger’s knowledge or consent. After being paid for the diverted cardboard, Faulkner wrote cashier’s checks to Smith for his assistance in diverting the cardboard. In addition, Faulkner directly paid for home improvements to Smith’s home, monthly landscaping bills, bought personal items, paid for service’s for Smith’s family members and paid for Smith’s family vacations.

In FY 2008, Smith failed to report the income he earned from Faulkner from the sale of diverted cardboard.

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. Assistant United States Attorneys Charlene Day and C. Patrick Hogeboom are prosecuting the case for the United States.

Updated April 14, 2015