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Guilty Plea for Ex-CFO of Rite Aid

June 06, 2003|From Associated Press

HARRISBURG, Pa. — A former Rite Aid executive pleaded guilty Thursday to one count of conspiracy, just four days before he was to go on trial with two other former executives in what prosecutors say was an attempt to defraud shareholders.

Franklyn Bergonzi, 57, the drugstore chain's former executive vice president and chief financial officer, could face as much as five years in jail. Under terms of his deal, 26 other counts against him will be dismissed if he continues to cooperate.

Prosecutors say Bergonzi and other top company executives falsified Rite Aid's books to inflate the stock price, which eventually resulted in the company's $1.6-billion earnings restatement in July 2000.

Bergonzi, who entered the guilty plea before U.S. District Judge Sylvia Rambo in Harrisburg, agreed to tell the government everything he knows about company operations.

Bergonzi could be fined $250,000 and forced to pay restitution as well as being placed on probation for three years, under terms of the plea bargain.

Prosecutor Martin Carlson said Bergonzi will be sentenced after the conclusion of the upcoming trial, which begins Monday.

Bergonzi had been scheduled to stand trial with Martin L. Grass, son of the company founder and its former chief executive, and Franklin Brown, Rite Aid's former chief counsel and vice chairman.

The three men were named in a 37-count indictment in June 2002, along with a current executive, Eric S. Sorkin, who is to be tried separately. Sorkin is on unpaid administrative leave from Rite Aid.

When they were charged last summer, Brown and Grass both issued written statements denying any criminal wrongdoing.

Bergonzi's plea bargain requires him to be available to testify against Grass and Brown if needed, said William J. Fulton, one of his attorneys.

Prosecutors say most of the charges are related to the accounting irregularities that led Rite Aid, the nation's third-largest drugstore chain, to restate its 1998 and 1999 earnings.

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