Affiliated Trustee Sues Board Over $11.5M Check Fraud

Law360, New York (July 11, 2011, 3:28 PM EDT) -- The bankruptcy trustee for Affiliated Foods Southwest Inc. sued the defunct supermarket supplier's former board of directors in Arkansas on Thursday for failing to spot an $11.5 million check-kiting scheme that defrauded U.S. Bank NA and other lenders.

In his complaint, trustee Richard L. Cox said the board members breached their fiduciary duties of care and loyalty and were negligent in missing the company's dire financial condition and its former executives' bank fraud.

"The members of the board failed to act with diligence in the management...
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