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Rite Aid Executive Pleads Guilty, Other Waits

Jun 27, 2003 | The Patriot-News

As expected, former Rite Aid Corp. executive Eric S. Sorkin pleaded guilty yesterday in federal court to conspiracy to obstruct justice.

But in a surprise development, Franklin C. Brown, Rite Aid's former general counsel and vice chairman, was not in court to change his earlier plea of not guilty on a similar conspiracy charge.

Brown's local attorney, Joseph U. Metz, would not comment on why Brown's court appearance was canceled. Brown's Washington attorney, Reid H. Weingarten, did not return calls for comment.

Contacted at his Susquehanna Twp. home yesterday afternoon, Brown, 75, said he could not comment.

U.S. Middle District Senior Judge Sylvia H. Rambo gave Brown until noon July 14 to decide whether to enter a plea or have a jury trial on the 35 counts against him.

Rambo discharged the jury that had been selected to hear Brown's case, and she postponed his trial, which had been scheduled to begin Monday. Brown must waive his right to a speedy trial as a result.

Assistant U.S. Attorney Kim Douglas Daniel said he could not comment on Brown's decision not to enter a plea yesterday.

Court officials said Tuesday that Brown was expected to plead guilty to conspiracy to obstruct justice based on his alleged efforts to thwart government investigations into Rite Aid's accounting practices in the late 1990s.

Sorkin, 54, of Hampden Twp., pleaded guilty to the obstruction charge in a 10-minute hearing before Rambo.

"I'm so sorry for what I did," a tearful Sorkin told the judge.

He apologized to the court, the government, his family and friends and to Rite Aid.

The conspiracy charge carries a maximum sentence of five years in prison and a $250,000 fine. Sentencing guidelines may end up stipulating a lesser sentence.

Sorkin has no agreement with the government concerning the length of any prison term. The only stipulation in his plea agreement is that the government will recommend a sentence within the guidelines, and it could recommend the maximum sentence.

A pre-sentence report will determine the recommended range of Sorkin's sentence.

Sorkin was fired yesterday as Rite Aid's executive vice president for pharmacy services.

At the beginning of the year, Sorkin's case was separated from the other three defendants Brown and Martin L. Grass, former chairman and CEO, and Frank Bergonzi, former chief financial officer.

Grass, Brown and Bergonzi were indicted on multiple charges stemming from Rite Aid's accounting practices in the late 1990s that led to the restatement of $1.6 billion in earnings.

Two counts against Sorkin focused on a severance letter to him signed by Grass. Sorkin had told a grand jury he received the letter in April 1999, but the government argued that he got the letter after Grass was ousted from Rite Aid on Oct. 18, 1999.

The letter specified that Sorkin would receive more than $1.2 million in benefits. The government said Sorkin received the letter after he talked with Rite Aid's internal investigators in November 1999 about some pharmaceutical rebates that had been posted in a quarterly statement earlier that year.

The government said the rebates, totaling $76 million, were recorded prematurely because the agreements had not been finalized and there was a requirement that Rite Aid maintain a certain market share of the companies' products.

As part of Sorkin's plea, the government will drop the second count of making false declarations before a grand jury.

Sorkin was the third of the four defendants to enter a guilty plea.

Grass, 49, pleaded guilty last week to conspiracy to defraud and conspiracy to obstruct justice. He could be sentenced to up to eight years in prison and required to pay fines and forfeitures totaling $3.5 million.

Earlier this month, Bergonzi, 57, pleaded guilty to conspiracy to defraud. He faces a sentence of up to five years in prison.

As part of their plea agreements, Grass and Bergonzi are cooperating with the government.

Brown, Grass and Bergonzi were scheduled for a jury trial on June 9. That trial date was postponed after Bergonzi's June 5 guilty plea and was further delayed after Grass pleaded guilty on June 17.

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