2003-09-25 -- Vitale, Martin -- Guilty Plea -- News Release

Former CEO of Twin County Grocers Pleads Guilty to Embezzlement and Labor Payment Conspiracies

TRENTON - Martin Vitale, the former CEO and chairman of the board of Twin County Grocers, Inc., a wholesale supermarket cooperative, pleaded guilty today to conspiring to defraud both Twin County and the IRS by disguising money embezzled from the cooperative as business expenses, U.S. Attorney Christopher J. Christie announced.

Vitale, formerly the owner of numerous Foodtown supermarkets in northern New Jersey, also pleaded guilty to conspiring to make unlawful labor payments to Joseph Rizzo, the former President of Clifton-based Local 1262 of the United Food and Commercial Workers Union, U.S. Attorney Christopher J. Christie announced.

Also today, Marvin Reichenstein, 77, former president of Reichenstein Advertising Agency, was sentenced to two years of probation for his part in the embezzlement and tax fraud scheme.

Vitale, 60, of Alpine, entered his plea in U.S. District Court in Trenton before Judge Stanley R. Chesler, who also sentenced Reichenstein.

According to the Information to which he pleaded guilty, Vitale conspired with Reichenstein and others to embezzle money from Twin County, formerly based in Edison, through mail fraud and wire fraud, for Vitale's use and benefit. Among other things, Vitale and others directed Reichenstein, whose agency provided advertising services for Twin County and a related cooperative, Foodtown, to create and mail false advertising invoices to Twin County. Once Reichenstein received payment on the false invoices, he transferred the funds by check to Vitale, who deposited the checks into bank accounts maintained by his supermarket companies. Through this false invoice scheme, approximately $2.5 million was fraudulently transferred from Twin County to Vitale and his companies; some of these funds were used by Vitale to make unlawful labor payments to Rizzo of Local 1262.

Reichenstein, formerly of Watchung, pleaded guilty before Judge Chesler on April 29, to charges that he had conspired with Vitale and others to defraud the IRS in connection with the false advertising invoice scheme.

By using false advertising invoices to disguise this embezzlement, the Information further states, Vitale, Reichenstein and others caused Twin County to falsely record payment on the invoices as legitimate business expenses on its books and records, which in turn caused Twin County to file materially false corporate income tax returns with the Internal Revenue Service.

In addition, as set forth in the Information, Vitale and Reichenstein caused approximately $853,000 in rebates due to Twin County from Sullivan Graphics, a company which printed advertising circulars, to be diverted from Twin County and paid instead to Vitale's companies.

As set forth in the Information, Vitale also caused Twin County to pay approximately $398,000 on his behalf to Coastal General Construction, Inc., a company to which Vitale and his companies were indebted, by directing others to submit to Twin County false construction invoices, purportedly from Coastal Construction, for services that were never actually performed for Twin County. Vitale and others also caused approximately $485,000 to be fraudulently transferred by wire from Twin County to Vitale and his companies, according to the Information.

According to the Information, Vitale also conspired with Rizzo and others to make unlawful labor payments to Rizzo while he was an officer of Local 1262, which represented retail clerks at Foodtown supermarkets in New Jersey.

Vitale faces a maximum prison sentence of 10 years, and a fine of up to $500,000, according to Assistant U.S. Attorney Amy Winkelman.

Under U.S. Sentencing Guidelines, Judge Chesler will determine Vitale's actual sentence based upon a formula that takes into account the severity and characteristics of the offenses and the defendant's criminal history, if any.

Parole has been abolished under the federal system. Under the Sentencing Guidelines, defendants who are given custodial terms must serve nearly all that time.

In the filing of a felony Information, a defendant waives the right to have his or her case presented to a federal Grand Jury and, instead, pleads guilty to charges presented by the Government.

Christie credited Special Agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Louie F.Allen; the Department of Labor, Office of the Inspector General, and the Internal Revenue Service, Criminal Investigative Division, under the direction of Special Agent in Charge Patricia J. Haynes, with developing the case.

The Government is represented by Assistant U.S. Attorney Winkelman, Deputy Chief of the Criminal Division of the U.S. Attorney's Office in Newark.

-end-

Defense Counsel:

Vitale: Alfred C. DeCotiis, Esq., William R. Lundsten, Esq. and Jeffrey D. Smith, Esq.

Reichenstein: Lawrence S. Lustberg, Esq.