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JURY FINDS FORMER CHIEF FINANCIAL OFFICER OF AFFILIATED FOODS SOUTHWEST, INC. GUILTY OF CONSPIRACY AND BANK FRAUD

June 2, 2011

Little Rock - Christopher R. Thyer, United States Attorney for the Eastern District of Arkansas, and Valerie Parlave, Special Agent in Charge of the Little Rock Field Office of the Federal Bureau of Investigation, announced the former Chief Financial Officer of Affiliated Foods Southwest, Inc. (AFS), Alexander "Lex" Martinez, age 48, of Benton, Arkansas was convicted of conspiring to commit bank fraud; aiding and abetting bank fraud by participating in a check kiting scheme; and of aiding and abetting a false statement to a financial institution.

"I thank the jury for giving their time to hear this very complex case," stated Thyer. "Chief Financial Officers such as Martinez are depended upon to conduct and report the financial activities of a company honestly. The fraud committed in this case impacted the lives of many in this state. I am committed to work with our investigative partners to see that these crimes, no matter how complex, are vigorously prosecuted."

After three days of testimony by twenty witnesses including former AFS employees, AFS board members and U.S. Bank employees with over 90 exhibits for the United States, the jury came back with a guilty verdict after an hour and a half of deliberation. John Mills, formerly the President, Chief Executive Officer, and Chairman of the Board for AFS was a witness in the trial. Mills waived Indictment and pled to an Information charging him with aiding and abetting bank fraud on February 18, 2010. Mills was sentenced to 41 months imprisonment, three years supervised release, and restitution in the amount of $3,170,834.20 by Chief United States District Judge J. Leon Holmes on October 26, 2010. Mills began serving his sentence on January 3, 2011. Martinez took the stand as the only witness in his defense. Sentencing for Martinez will be at a date to be set by the court.

In trial, evidence showed Martinez was hired to manage the accounting department at AFS, a privately-held wholesale food distribution company in 2004. He was later promoted to Chief Financial Officer, a position he held until AFS ceased operations in July 2009. Prior to ceasing operations, AFS was headquartered in Little Rock and provided products to hundreds of independently-owned grocery stores in Arkansas, Louisiana, Mississippi, Oklahoma, Tennessee, and Texas. AFS was the parent company over various entities, including Consolidated Warehousing, Convenience Store Supply Inc. (CSSI) and Supermarket Investors, Inc (SII). During the relevant time period, AFS had a $70 million participatory loan with U.S. Bank as the lead lender.

The Indictment handed down March 4, 2010, alleged that Martinez conspired with Mills to commit bank fraud. As part of the conspiracy, Martinez and Mills would cause Comparative Sales and Income reports which did not accurately reflect AFS' trial balance numbers to be created and presented to AFS' Board of Directors; would cause quarterly consolidated financial statements to be presented to U.S. Bank which did not accurately reflect AFS' trial balance numbers; would cause false information to be supplied the Board of Directors and ultimately to U.S. Bank concerning a 2008 transaction purportedly involving the sale of some AFS-owned grocery stores; and would cause non-sufficient checks to be issued from SII and CSSI to AFS on a daily basis. This systematic deposit of non-sufficient checks was a check kiting scheme which formed the basis of the bank fraud charge. The Indictment showed that on an almost daily basis from September 29, 2008 until February 27, 2009, checks were kited from CSSI and SII and deposited into AFS' account. The total amount of checks kited during the scheme exceeded $11.5 million. Martinez was also charged with providing a false consolidated financial statement to U.S. Bank for determination of whether AFS was meeting its loan covenants.

The statutory penalty for each offense is not more than thirty (30) years imprisonment and a fine of up to $1,000,000.

The investigation was conducted by the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Karen Whatley.

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Christopher R. Thyer

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