To: craig crawford who wrote (301342 ) 9/27/2002 2:38:17 PM From: Emile Vidrine Read Replies (3) | Respond to of 769670 Former Rite Aid executives accused of fraud (Grass gave tens of millions of his stolen loot to Israel and now lives in Israel as a full citizen under the Law of Return that allows any Jew in the world to claim citizenship in Israel.) By PETER JACKSON, Associated Press AP Photo/Paul Vathis Former Rite Aid Chairman Martin Grass leaves the federal building in Harrisburg, Pa., on Thursday, July 11, 2002. HARRISBURG, Pa. (July 11, 2002 12:17 p.m. EDT) - Rite Aid Corp.'s former chairman and three other one-time Rite Aid executives pleaded innocent in federal court Thursday to criminal charges stemming from their alleged participation in an accounting fraud intended to make the company more attractive to investors. All four men, flanked by lawyers in a proceeding that lasted less than a half-hour, were released on their own recognizance and were required to turn over their passports. The unraveling of the alleged scheme in 1999 sent Rite Aid's stock, which had peaked at more than $50 earlier that year, plummeting and forced the nation's third-largest drugstore chain in July 2000 to increase its losses for the late 1990s by $1.6 billion - the largest restatement of corporate earnings in U.S. history. Martin L. Grass, Rite Aid's former chairman and chief executive; Franklin Brown, the former chief counsel and vice chairman; and Franklyn Bergonzi, a former executive vice president and chief financial officer, are the main defendants. Charges against the trio include conspiracy to defraud, fraud involving the purchase or sale of securities, and making false statements to the Securities and Exchange Commission. Grass and Brown also are charged with tampering with witnesses and obstructing various investigations. Also arraigned Wednesday was Eric S. Sorkin, 53, of Mechanicsburg, Rite Aid's executive vice president for pharmacy services, who was suspended last month after he was indicted for conspiracy to obstruct justice and making false statements to a grand jury. Grass, 47, of Virginia Beach, Va., the son of Rite Aid founder Alex Grass; Brown, 74, of Harrisburg; and Bergonzi, 57, of Hummelstown are accused of organizing a wide-ranging conspiracy to inflate Rite Aid's profits and understate its losses. For example, prosecutors allege that numerous false entries were made in financial records filed with the SEC, and that Rite Aid defrauded vendors of tens of millions of dollars by claiming bogus credits for damaged and outdated products. In separate, civil lawsuits, the SEC is seeking penalties and the repayment of more than $4 million in annual bonuses by Grass, Bergonzi and Brown, who all left Rite Aid in 1999 and 2000, and an order barring any of them from ever serving as an officer or a director of a publicly owned company. Thursday's arraignments came one day after Timothy K. Noonan, the former Rite Aid Corp. executive who helped federal prosecutors build a securities-fraud case against his one-time colleagues, pleaded guilty to a felony charge of withholding information from the company's internal investigators. U.S. District Judge Yvette Kane released Noonan on his own recognizance. The 60-year-old Mechanicsburg resident, who became the company's president and chief operating officer during his 30-year career at Rite Aid, faces up to three years in prison and a $250,000 fine. No sentencing date was set. Under the plea agreement Noonan signed in November, prosecutors promised to recommend that he be placed on probation if he continues to cooperate, although the judge stressed to Noonan before he entered his plea that she does not have to accept the recommendation. Rite Aid currently operates 3,600 stories in 30 states and the District of Columbia.