Vending Machine Company Executive Admits Tax Fraud Conspiracy, Agrees to Pay Pepsi $1 Million in Restitution

NEWARK, NJ—The former principal of a New Jersey vending company today admitted his role in a scheme that defrauded Pepsi Bottling Group of $2.9 million and agreed to pay restitution of $1 million to the company, the U.S. Attorney Paul J. Fishman announced.

Joseph Belasco, 62, of Cedar Grove, New Jersey, pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to a superseding information charging him with conspiring with two others to provide a false 2008 IRS 1099 form for consulting services that were never performed. One of the conspirators, Edwin Glasspool, 53, of Caldwell, previously pleaded guilty to defrauding Pepsi of $2.9 million and having his wife receive his annual share of the defrauded money through checks issued by the vending company.

According to documents filed in the case and statements made in court:

In the spring of 1998, Belasco, along with a business associate, created Impact Cause Related Marketing (Impact Marketing), a subsidiary of Culinary Ventures Vending, a company that placed and stocked vending machines in private and commercial facilities, such as state colleges and entertainment venues. The purpose of Impact Marketing was allegedly to provide Pepsi Bottling Co. with leads for acquiring new customers to purchase its cans, bottles, and fountain products. Impact Marketing and Belasco would receive commissions for as long as the client remained a Pepsi customer. According to its contract, Impact Marketing would also receive quarterly rebates, depending upon the amount of Pepsi product a customer purchased on an annual basis.

Glasspool, a Pepsi employee who developed new customers, assigned those customers to Impact Marketing. He also reassigned existing Pepsi customers to the list of new customers allegedly referred by Impact Marketing, generating additional commissions for leads for Belasco that Belasco had not actually generated himself. Between 1998 and 2008, Impact Marketing received from Pepsi $2.9 million in commissions and rebates as a result of the fraudulent scheme.

Glasspool and his wife, who filed joint tax returns, received as much as $200,000 in unlawful annual income from Belasco and Impact Marketing.

The conspiracy charge to which Belasco pleaded guilty is punishable by a maximum potential penalty of five years in prison and a $250,000 fine. In addition to the plea of guilty, Belasco agreed to make a restitution payment of $1 million dollars to PepsiCo. Sentencing is scheduled for February 25, 2014.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; and special agents of the IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, with the investigation leading to today’s guilty plea.

The government is represented by V. Grady O’Malley, Senior Litigation Counsel of the U.S. Attorney's Office Organized Crime/Gangs Unit in Newark.