A federal grand jury in Alexandria has indicted a former vice president of Hartz Mountain Corp. for perjury during an investigation into whether company officials procured prostitutes for customers and paid bribes to sell its line of bird seed, dog collars and other pet supplies.
Fern Caron, formerly a sales executive for Hartz, was indicted this week for false testimony in May 1981 before a Richmond grand jury investigating allegations of bribery, antitrust violations, perjury and conspiracy by Hartz Mountain officials.
This indictment is part of a continuing federal investigation of the New Jersey-based pet-supplies and real estate company. It is also the latest round in an ongoing war among pet supplies manufacturers. Hartz has been accused by competitors and the Federal Trade Commission of antitrust violations and of using illegal competitive practices to persuade retailers and distributors to carry the Hartz lines.
In 1979 Hartz paid $42.5 million in an out-of-court settlement to A.H. Robins, the Richmond-based company that manufactures the Sergeant's brand of pet supplies, after Robins accused Hartz of illegal trade practices. The 1981 Richmond grand jury was in part investigating whether Hartz officials committed perjury during the Robins lawsuit.
The Alexandria indictment charges Caron with perjury and obstruction of justice during the Richmond inquiry into Hartz' business practices, including procurement of prostitutes for Hartz trade shows in Chicago. In his testimony during the Richmond investigation, Caron stated that, although Hartz provided and paid prostitutes "to entertain customers and potential customers" at Hartz trade shows each year, he did not know how they got there.
"I know that there were prostitutes at the Chicago show in January of any year," Caron said, according to the indictment. " . . . They were there prior to my being at corporate Hartz, and they were there every January that I went to a show, and how they got there and who arranged for them, I don't know."
Caron went on to testify that payment for prostitutes was handled on executives' expense accounts: "It came in as part of their regular expense account, was approved, forwarded to accounting, and the man was sent his expense check in the normal procedure that was established by the accounting department."
Caron testified that he "assumed" prostitutes fees' were paid out of pocket by regional sales managers, but that he really did not know or understand how the prostitutes were paid, and that he had nothing to do with finding the money for them or arranging for their presence at trade shows.
The indictment charges Caron with having "directed, assisted in, and participated in the procurement of prostitutes for trade shows and hospitality suite" in Chicago.
In addition, the indictment charges Caron with having given false testimony to the Richmond grand jury about bribes allegedly funneled to Hartz customers through Frank Palecko Sr. The grand jury was investigating allegations that Caron and other Hartz officials tried to persuade Palecko to plead guilty to income-tax-evasion charges to conceal bribe money, the indictment says. No further identification of Palecko was available.
In his testimony, Caron denied having spoken with Palecko, who was acquitted of tax charges in 1974, according to Assistant U.S. Attorney Justin Williams. The indictment charges Caron with having had telephone and personal conversations with Palecko about the tax charges, whether Palecko would plead guilty and whether Hartz Mountain Corp. would reimburse Palecko for the costs of the tax prosecution.
Hartz Mountain spokesman Lewis Maggio declined yesterday to comment on the indictment, and would not say when Caron left the company. Caron could not be reached for comment. His lawyer, Barry Friedman, has been quoted as saying that Caron is unaware of any perjury and that the indictment came "as a complete surprise."