The former chairman of the Emerson's restaurant chain pleaded guilty in a federal court here yesterday to charges of filing false statements with the Securities and Exchange Commission about the company's financial status and filing false personal income tax returns.
John P. Radnay, who now lives in Florida, could be sentenced to a maximum of eight years in prison and fined a total of $15,000 for the two charges to which he pleaded before U.S. Distric Court Chief Judge William B. Bryant. He will be sentenced later.
Radnay's possible criminal involvement first surfaced two years ago when the SEC reported it had uncovered a variety of illegalities within the Rockville-based corporation, ranging from demanding and accepting payoffs from beer, liquor and wine companies to lying to government investigators and falsifying company profits.
Assitant U.S. Attorney William S. Block of the fraud division said the criminal investigation into the past operation of Emerson's continuing. A new management has taken over the operation of the restaurant chain since the SEC report.
Although the SEC report had described Radnay as the dominant figure in the operation of Emerson's who was corruptly involved in many phases of its operations, yesterday's criminal charges were much narrower in scope and reflected a plea-bargaining agreement between the government and Seymour Glanzer, Radnay's attorney. The government kept its right to ask for a prison term for Radnay at sentencing, however.
Radnay pleaded guilty to inflating Emerson inventory in a report of the SEC for fiscal year 1975 by mislabeling "ball tip" steaks as higher-priced filet mignon - a move that inflated the company's inventory by $200,000.
In addition, he pleaded guilty to understanding his income for the calendar year 1974 by at least $10,000 when he filed his individnal income tax return - apparently by neglecting to mention on that return that he had been regularly receiving cash kickbacks from beer companies for using their products.
Both incidents were recounted in detail in the massive SEC report concerning the Emerson's operation that was filed publicly last year.
That report, which said Radnay "rationalized" his actions while running the company, said he had used the company's coffers to do alleged "corporate" work around his house at 9700 Clydesdale St., Potomac.
The projects - which included a swimming pool deck and driveway, mirrors, and services of an interior decorator for the nursery and library - "were not corporate expenses by any stretch of the imagination," the SEC report said.
While on the one hand Radnay tried to explain the work at his Potomac home as corporate work, he also would falsify records concerning that work, the report added. For example, he billed his swimming pool deck to the Alexandria restaurant, and his plumbing work to the Bethesda restaurant, the report said.
Radnay also used corporate funds for personal travel and expenses, said the report, which concluded that "it is clear . . . that Radnay violated the most elemental duties owed a corporation by its chief executive officer."
Radnay, 37, is a lawyer and was formerly with the antitrust division of the Justice Department. He was practicing law with the Washington firm of Arent Fox Kitner Plotkin and Kahn when he quit to take over the Emerson's operation in 1969.
More than 1,2000 persons had invested in Emerson's at the time of Radnay's financial abuses. The restaurant chain became well-known from its start because of its original plan of offering all the beer one could drink and meals and an unlimited salad offering.