The Beech-Nut Apple Juice Scandal
by Originally established as a meatpacking company in 1891, the Beech-Nut Corporation family would eventually include Life Savers, Table Talk pies, Tetley tea, Martinson’s coffee, chewing gum, and baby food among its products). In the late 1960s Beech-Nut was acquired by the Squibb Corporation.
Eventually, Beech-Nut agreed to a state recall of the juice when New York State authorities threatened to seize the juice. After being threatened with the possible confiscation of the juice by the FDA, Beech-Nut began a nationwide recall. Subsequent investigations by both federal and state investigations would not only bring out details of the cover-up but would also reveal that Beech-Nut had continued selling the juice in its mixed-juice product for six months after the recall.
New York State sued Beech-Nut for selling the adulterated product and imposed a fine of $250,000 . At the time the said fine was issued, it was the largest penalty ever assessed for consumer violations.
The U.S. Attorney obtained indictments in November of 1986 on Hoyvald, Lavery, Beech-Nut, Zeev Kaplansky (former president of Universal Juice), and Kaplansky’s colleague Raymond H. Wells, the owner of Food Complex. “Beech-Nut eventually settled by agreeing to pay a $2 million fine. Kaplansky and Wells, who had earlier settled the apple-institute suit with a financial agreement and by ceasing production of their concentrate, also pleaded guilty” . In 1988, Hoyvald and Lavery were convicted of violating federal food and drug laws and subsequently sentenced to prison terms of a year and a day, plus fines totaling $100,000 . This sentence was significant in that it was one of the first times that top-level corporate executives actually received prison time for violating federal food and drug laws. It appeared that the time of not holding top-level corporate executives responsible for their actions was coming to and end. However, in March 1989, Hoyvald’s conviction was overturned by a three-judge panel in the U.S. Court of Appeals for the Second Circuit. Then, on September 27, 1989, a federal jury was unable to reach a verdict in the case of Niels L. Hoyvald.
Further repercussions for Beech-Nut included the Pentagon’s decision to implement the harshest sanction it could impose on a contractor. The Beech-Nut Corporation was barred in 1989 from doing any business with the Federal Government through 1991.
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