October 20, 2007 in Business

Supervalu loses $10 million in scam

Rebecca Boone Associated Press

BOISE – Supervalu, one of the nation’s largest grocers, has fallen prey to an e-mail scam, losing about $10 million after wiring money to fraudulent bank accounts, according to federal court filings.

The scam is detailed in a pair of forfeiture cases filed under seal earlier this year in U.S. District Court for the District of Idaho.

The fraud began after the supermarket chain received two e-mails – one from someone purporting to be an American Greetings Corp. employee and another claiming to be with Frito-Lay, according to court documents. Both e-mails claimed the companies wanted payments sent to new bank account numbers.

Supervalu sent more than $6.5 million to the phony American Greetings account and nearly $3.6 million to the phony Frito-Lay account before realizing it was all a scam. The FBI was able to capture the money before it was whisked away by the scammers, but now American Greetings, Frito-Lay and Supervalu have all laid claim to the money and U.S. District Judge B. Lynn Winmill will decide where it should go.

“Supervalu was the target of attempted financial fraud,” company spokeswoman Haley Meyer wrote in a prepared statement. “We were able to quickly discover and report this to the FBI. As a result of the quick work of the Boise FBI office and the U.S. attorney, any funds lost are minimal.”

Supervalu, which bought most of the Boise-headquartered Albertsons grocery store chain last year, declined any immediate further comment.

Megan Ferington, a spokeswoman for American Greetings, couldn’t comment on the case because it’s currently under litigation. Officials with Frito-Lay and the FBI did not immediately return phone calls from the Associated Press.

American Greetings produces some gift wrap, greeting cards and other party goods sold in Supervalu stores, and Frito-Lay makes several foods sold by the Minnesota-based grocery chain.

According to documents filed in the two forfeiture cases, Supervalu first began wiring payments due to American Greetings into the wrong account Feb. 28, making a total of nine payments before catching the error March 6. During that time, more than $6.5 million was wired to HSBC Bank in Miami Beach, Fla., to accounts opened under the names Society Nights Productions, doing business as Perini.

Meanwhile, another $500,000 was wired into the same account by another victim listed only as “ROHM” in the court documents, as well as money from some foreign bank accounts.

After apparently receiving another e-mail purporting to be from Frito-Lay, the grocer sent nearly $3.6 million in payments that were supposed to go to Frito-Lay to a phony account in Arkansas, according to the court documents.

In an affidavit, Supervalu’s vice president for legal services, Stephen Kilgriff, said the company received that e-mail on Feb. 28, saying that future wire transfers to the company should be sent to a First Security Bank account in Rogers, Ark. That fraud was also discovered March 6, when the company called police, Kilgriff said.

Criminal charges have not yet been filed in the case.

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