Former Grocery Co-op CEO Admits Fraud Plot

TRENTON, N.J. - An ex-CEO and chairman of a New Jersey grocery cooperative pleaded guilty Thursday to plotting to cheat it and the Internal Revenue Service by disguising embezzled funds as business expenses, The Associated Press reports.

Martin Vitale, the former head of Twin County Grocers Inc. and owner of many Foodtown supermarkets in northern New Jersey, also pleaded guilty to conspiring to make illegal payments to a union leader.

Vitale, 60, of Alpine, N.J., faces up to 10 years in prison and $500,000 in fines.

A co-conspirator, advertising executive Marvin Reichenstein, was sentenced to two years probation for his part in the scheme.

The labor leader, Joseph P. Rizzo, pleaded guilty to a conspiracy charge in April 2001 and was sentenced that October to the maximum 18 months in prison. Rizzo was also fined $30,000 and barred from holding union office for 13 years.

He had been president of the United Food and Commercial Workers Union Local 1262, one of the largest in the state, representing about 30,000 grocery store workers.

Problems with Twin County emerged in April 1997 when Vitale was fired. He was sued by Foodtown in January 1998, accused of embezzling $12 million over a four-year period. The suit also charged Reichenstein, alleging that fake invoices from his agency, which was used by Twin County and Foodtown, brought $2.5 million in kickbacks to Vitale. A confidential settlement was reached in 2001.

Twin County, created in 1944, filed for bankruptcy and closed its doors in December 1998. It was founded as a retailer-owned cooperative. At its peak in the mid-1990s, the company had $1.2 billion in revenue and served nearly 150 stores across the Northeast and Puerto Rico.
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