Risk Management

Former Rite Aid CEO, CFO Sentenced

The former finance chief's sentence was 40 percent lighter than that prescribed by federal sentencing guidelines because of ''substantial assistanc...
Stephen TaubJune 1, 2004

Two former top executives of Rite Aid Corp. are heading to prison.

Last week, former chief executive officer Martin Grass was sentenced to eight years for his role in the drug store chain’s $1.6 billion accounting scandal, reported Reuters. Grass was also sentenced to three years of supervised release following his prison term, according to the report, which cited Thomas Marino, U.S. Attorney for the Middle District of Pennsylvania.

Grass pleaded guilty two weeks ago to conspiracy to defraud and conspiracy to obstruct justice — a deal that could have landed him in prison for as long as 10 years. As part of the plea arrangement, he also agreed to pay $500,000 in fines and forfeit $3 million to the United States.

Former chief financial officer Frank Bergonzi received a sentence of 28 months. His sentence was 40 percent lighter than that prescribed by federal sentencing guidelines because he provided “substantial assistance” to prosecutors, said William Fulton, one of his lawyers, according to the wire service. Bergonzi also agreed to be permanently barred from serving as an officer or director of a publicly traded company.

Bergonzi pleaded guilty last June to one count of conspiracy to commit accounting fraud for manipulating the company’s earnings and financial statements, Reuters noted.

Also last week, Philip Markovitz, a former Rite Aid senior vice president for real estate, was sentenced to one month in jail, five months of detention, and a $5,000 fine. He had reportedly pleaded guilty in July to one count of conspiracy to obstruct justice.

And Eric Sorkin, a former Rite Aid vice president for pharmacy purchasing, was sentenced to five months in jail, five months under house arrest, a $5,000 fine, and two years’ probation.