Risk Management

Rite Aid Exec, 76, Gets 10 Years in Prison

Franklin Brown -- ''the hub of the conspiratorial wheel,'' according to the prosecutor -- had faced a jury at trial rather than cooperate with inve...
Stephen TaubOctober 18, 2004

Franklin Brown, former vice chairman and chief counsel of Rite Aid Corp., was sentenced last week to 10 years in federal prison for his role in the massive accounting fraud at the company. He was convicted in a jury trial last October of crimes including making false statements to the Securities and Exchange Commission, obstructing justice, and witness tampering, according to Reuters, and was acquitted of wire fraud.

His 10-year stretch is in line with many other sentences handed down recently for similar crimes. But for Brown, who is 76 years old, “incarceration for any significant length of time is a de facto life sentence,” said defense attorney Ellen C. Brotman, according to Reuters.

Brotman argued that he should serve his sentence at home due to his age, his heart condition — a week earlier, Brown received a pacemaker — and the risk that he would be abused in an environment where he would be much older than most other inmates, according to the Associated Press. She pointed out that only about 600 of the 150,000 inmates in the federal prison system are 70 or older and that their average age is 38, the AP added.

“A term of incarceration for any significant length of time is a de facto life sentence,” she reportedly told the court.

Assistant U.S. Attorney Kim Daniel argued that there is no certainty Brown would be assaulted in jail and added that actuarial tables give the average white man of Brown’s age another decade to live, according to the AP. Daniel said Brown had contributed to $23 million in losses for the victims of the Rite Aid fraud, had planned and organized the fraud, and had abused his position of trust as a Rite Aid board member and its top legal official. In Daniel’s words, reported the AP, Brown was “the hub of the conspiratorial wheel.”

Brown had faced a maximum of 65 years imprisonment and $2.5 million in fines on the 10 counts, according to a Reuters report at the time of his conviction; the witness-tampering count alone carries a sentence of up to 10 years. Although U.S. District Judge Sylvia Rambo did not sentence Brown to the maximum, she rejected the defense arguments, as well.

According to the Associated Press, Rambo recommended that Brown be placed in a federal medical facility, that he serve two years on probation after his release, and pay a fine of $21,000. A prosecution request that Brown pay restitution of $10.5 million to shareholders or the company was not addressed.

“The sentence is clearly excessive,” said Peter D. Goldberger, another attorney for Brown, according to the AP. “It’s longer than the sentence Martin Grass got, significantly longer.” Reuters reported that Goldberger intends to appeal both the conviction and the sentence.

Daniel, the prosecutor, said that the sentence was appropriate and noted that while Brown decided to face a jury at trial, Grass pleaded guilty and cooperated with investigators.