Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (2797)	10/17/2003 9:00:51 PM
From: Glenn Petersen	Read Replies (1) \| Respond to of 3602

Jury Convicts Ex-Rite Aid Vice Chairman story.news.yahoo.com By David Morgan HARRISBURG, Pa. (Reuters) - Former Rite Aid Corp. (NYSE:RAD - news) Vice Chairman Franklin Brown was convicted on 10 federal criminal counts including conspiracy, fraud and obstruction of justice on Friday in one of the biggest corporate scandals in recent U.S. history. A U.S. District Court jury of eight women and four men delivered unanimous verdicts against the 75-year-old former executive as part of a three-year federal investigation that has also netted guilty pleas from five other former Rite Aid executives including ex-Chief Executive Martin Grass. Brown, who also served as the Camp Hill, Pennsylvania-based drugstore chain's chief counsel, was convicted on crimes including making false statements to the Securities and Exchange Commission (news - web sites), obstructing justice and witness tampering. He was acquitted of wire fraud, one of 11 counts he had been tried on. Brown faces a maximum of 65 years imprisonment and $2.5 million in fines on the 10 counts. The witness tampering count alone carries up to 10 years. But prosecutors said maximum penalties would have little to do with the sentence that U.S. District Judge Sylvia Rambo is expected to impose on Brown within the next three months. "We think it's a great verdict, a just verdict based on the evidence. The jury made deliberate, conscientious decisions on each count," said assistant U.S. Attorney Kim Daniel, who described Brown as "the hub of the conspiracy wheel" at Rite Aid. The prosecutor declined to speculate on what punishment Brown might actually face, but said that the former Rite Aid executive last summer walked away from a more favorable plea agreement that would have required him to admit to one criminal count. Brown, a balding bespectacled man who had sat placidly through two weeks of testimony, showed little emotion as he left the courtroom with his wife, Karen. "We are obviously sad. We are obviously disappointed. We are not shocked," his lawyer Reid Weingarten later told reporters. Prosecutors accused Brown of joining a conspiracy to inflate Rite Aid's profits and reap rich rewards through executive compensation schemes during the late 1990s, activities which authorities say led the company into a $1.6 billion restatement of profits. All told, the jurors found that Brown was a party to 24 overt acts connected with fraud and 19 overt acts involving obstruction of justice. The panel concluded that he had lied to the SEC in official filings including a company annual report by failing to disclose details of his own executive compensation package, Rite Aid's $2.6 million purchase of real estate from a company partly owned by Grass and a bogus severance letter from Grass. Jurors also said he helped pressure Grass' brother-in-law and real estate partner to lie about the Rite Aid property purchase, and sought to obstruct a federal grand jury investigation by telling other co-conspirators to lie to a federal grand jury about bogus severance letters they received from Grass after the CEO had left the company. Four of the five other former Rite Aid executives who have pleaded guilty to wrongdoing testified against Brown at the trial that began Sept. 29, including former Chief Financial Officer Franklyn Bergonzi. Grass did not take the witness stand and prosecutors declined to say why not. Daniel predicted that Friday's conviction would kick off a lengthy federal sentencing assessment process that would help determine appropriate sentences for each ex-executive over the coming months. No sentencing dates have yet been scheduled.