NEW YORK — Beech-Nut Nutrition Corp., the nation's second-largest baby food producer, pleaded guilty Friday to 215 felony counts of intentionally shipping millions of jars of bogus apple juice for babies.
According to the government, Beech-Nut knew that the jars were filled with a cheaper mix of other juices and sugar syrups.
U.S. District Judge Thomas C. Platt in Brooklyn imposed a $2-million fine, the largest "by at least sixfold" ever paid under the Food, Drug and Cosmetic Act of 1938, said Assistant Atty. Gen. Richard K. Willard.
"We hope that such prosecutions send a strong message that consumer fraud will not be tolerated by the government."
Beech-Nut counsel John S. Martin told Platt that an "extensive investigation" by his law firm had confirmed government charges that tests by the company's own chemists over the years had led some employees "to seriously question the authenticity" of Beech-Nut's claim that it was using pure concentrates of apple juice.
The investigation also confirmed that "Beech-Nut is criminally liable . . . for the collective knowledge of its employees," Martin said.
Beech-Nut, of Fort Washington, Pa., is second only to Gerber Products Co. in the $1.8-billion baby-food industry, and has been wholly owned by Nesfood Inc., a subsidiary of Nestle S. A. of Switzerland, since November, 1979.
In addition to Beech-Nut, the indictment named in all but 20 of its 470 counts Niels L. Hoyvald, Beech-Nut's president and chief executive officer, and John F. Lavery, the company's vice president for manufacturing in Canajoharie, N. Y., where what was sold as "pure apple juice concentrate" was heavily diluted with beet sugar, corn syrup and other ingredients.
Two Face Trial Monday
Hoyvald and Lavery are to go to trial Monday. Martin told reporters the two executives are on paid leaves of absence.
The indictment said that the adulterated products--mostly apple juice, but including apple-cherry and other juices--were shipped during a five-year period, ending in March, 1983.