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May 25, 1990 - Image 3

Resource type:
Text
Publication:
The Detroit Jewish News, 1990-05-25

Disclaimer: Computer generated plain text may have errors. Read more about this.

NEWS

Manischewitz's Plea
Rejected By Judge

RON OSTROFF

Editorial Coordinator

A

federal judge on
Wednesday rejected
the application of B.
Manischewitz Co. to plead
no contest to charges that it
conspired to set the
wholesale prices of Passover
matzah products.
After a hearing in
Newark, N.J., U.S. District
Judge Harold Ackerman
ruled against the plea ap-
plication which had been
opposed by federal pros-
ecutors. The judge said ac-
cepting a no contest plea by
the company would not be in
the public interest.
Government lawyers had
argued that such a plea —
even with a fine of twice
what the company gained
from the alleged conspiracy
or up to $1 million — could
signal to other companies
that price-fixing is just a cost
of doing business. Attorneys
for Manischewitz, which
claims to be the largest mat-
zah maker in the world,
argued that because of the
massive adverse publicity
following the one-count in-
dictment and the expected
fine, the company had suf-
fered enough. The company
has denied the charges.
Unless Manischewitz asks
a federal appeals court to re-
view Ackerman's ruling or
the kosher food producer
pleads guilty, the criminal
case will go to trial. Lawyers
for Jersey City, N.J.-based
Manischewitz expect that a
trial would last about a mon-
th.
In addition to the indict-
ment, Manischewitz also
faces five class action
lawsuits — four by retailers
and one by a California con-
sumer and caterer — asking
for triple their damages
caused by the alleged price-
fixing. The suits claim that
matzah prices were higher
because of the price-fixing.
A no contest plea in a
criminal case is equivalent
to an admission of guilt in
that case only. The defen-
dant can still deny the same
alleged facts in any other
proceedings such as class ac-
tion suits.
Neither attorneys for
Manischewitz, who have re-
peatedly refused to return
phone calls, nor government
lawyers could be reached for
comment Wednesday after-
noon.

In written arguments,
lawyers for Manischewitz
contended that allowing a no
contest plea would be in the
public interest because it
"would end the case and
permit the court, with little
expenditure of time or
resources, to impose an ap-
propriate corporate fine . . . "
The fine, the "humiliating
and damaging publicity"
from the indictment which
may have irreparably
damaged the Manischewitz
name, the legal costs, and
the proposed sale of the com-
pany that was abandoned
last year because of the fed-
eral investigation, will deter
repetition of the alleged il-
legal conduct, company
lawyers argued.
"For a company of
Manischewitz's size and
earnings, any substantial
fine will represent a signifi-
cant and punitive sanction,"
company lawyers wrote.
For the year ended July
31, 1989, Manischewitz had
net income of $286,861 on
revenue of $32.9 million
compared to net income of
$2.9 million and revenue of
$30.5 million the year
before. The company, which
was founded in 1888, said
the costs associated with the
failed $44.6 million sale —
including a $1.5 million set-
tlement — were primarily
responsible for the drop in
income.
Government lawyers con-
tended in written arguments
that acceptance of a no con-
test would be in the best in-
terest of only Manischewitz.
Prosecutors said the com-
p any ' s conduct was a
"knowing and intentional"
part of "a hard core" nation-
al price-fixing conspiracy.
"Its [Manischewitz's] pur-
pose was clear — the elim-
ination of competition," the
prosecutors said.
"If Manischewitz is allow-
ed to plead [no contest], the
company will be free to deny
any wrongdoing and to
argue that its plea was
entered solely to avoid
litigation and business ex-
pense," the prosecutors
wrote. "As a result, any de-
terrent value gained by the
company's indictment would
be lost."
The federal grand jury in-
dictment against
Manischewitz was brought
March 19, just three weeks
before Passover — the sea-
son that accounts for half of
the company's annual sales.

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(

THE DETROIT JEWISH NEWS

3

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