Grocer pays back taxes

AP News
Posted: Dec 02, 2009 4:43 PM

The Kroger Co. said Wednesday it has paid federal taxes that it initially avoided through what turned out to be fraudulent tax shelter.

Kroger spokeswoman Meghan Glynn said the grocery chain aided investigators, and has paid a settlement with the Internal Revenue Service. Terms weren't disclosed, but prosecutors say Kroger had saved at least $64 million in taxes.

Prosecutors say the case involved sham transactions tied to tax write-offs for improvements companies made to leased buildings. An investments firm executive pleaded guilty Tuesday to a federal fraud conspiracy charge.

Prosecutors said Kroger, based in Cincinnati, and other clients weren't aware of the fraud, revealed through IRS audits in 2002-'04.

Federal authorities said in a statement that Michael Parker, 62, of Baltimore, faces up to five years in prison and a possible $250,000 fine after admitting his role in the scheme. They said he has agreed to cooperate with authorities.

Prosecutors say those involved allegedly concealed some aspects of the tax shelter transactions from Kroger and other clients, and made false and misleading statements to IRS investigators.

Kroger shares fell 19 cents to close at $22.70 Wednesday.