Joseph Schlitz Brewing Co., the nation's second biggest brewer, has sought to hide illegal payments of "not less than $3 million" that it has made to restaurant chains, hotels and sports complexes to induce them to use its beer and malt liquor the Securities and Exchange Commission charged yesterday.
In a civil lawsuit filed in U.S. District Court here, the SEC also charged that a Schlitz affiliate in Spain has kept multiple books to avoid taxes there.
In Milwaukee, Schlitz issued a press release saying that its management had not yet reviewed the complaint, but declaring nontheless that "the company will deny the material allegations in the complaint and intends to vigorously defend against this action."
Schlitz marketing activities are also being probed by a federal grand jury in Milwaukee.
The SEC suit is the first major action against a beer company in an industry-wide probe by the Commission by the Bureau of Alcohol, Tobacco and Firearms (BATF).
According to the SEC complaint, Schlitz had been warned by the BATF in 1973 to stop the allegedly illegal activities. But Schlitz continued them, the SEC complaint said.
The SEC suit asks U.S. District Court Judge John Sirica to appoint a special agent to investigate Schlitz. Sirica, who took the suit under advisement, also was asked by the commission to grant an injunction barring Schlitz from future violations of the U.S. securities laws.
Earlier, Schlitz had made filings with the SEC disclosing certain questionable marketing activities. The commission apparently was not satisfied with these disclosures, however, and filed yesterday's suit.
The SEC complaint says that the payments "in the form of cash and other things of value" were made to customers, agents and others." Among the alleged recipients of cash named by the SEC:
$50,000 to Joh Radney, the former president of Emersons, Ltd., of Rockville. Emersons is now in reorganization and Radney is under grand jury investigation for various alleged illegalities while he ran the company.
$260,000 to Dobbs Houses, Inc., (now a subsidiary of Squibb Corp. known as Dobbs-Life Savers, Inc.) covered up by a "sham contract for market research."