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Third Former Rite Aid Exec Pleads Guilty

Jun 26, 2003 | AP

A third former Rite Aid Corp. executive pleaded guilty Thursday in the pharmacy chain's accounting-fraud case, and a judge gave the company's former chief counsel further time to decide whether to face a trial or change his innocent plea.

Eric S. Sorkin, 54, pleaded guilty to one count of conspiracy to obstruct justice. He faces a maximum of five years in prison and a fine of up to $250,000. A charge of lying to the grand jury is being dropped.

"I'm truly sorry for what I did. I wish to apologize to the court, to my friends and family, and to Rite Aid associates," Sorkin told U.S. District Judge Sylvia H. Rambo in a trembling voice. "I take full responsibility for what I did."

Also Thursday, Rambo gave Franklin C. Brown until July 14 to decide if he wants to change his innocent plea, or stand trial for 35 criminal counts related to the fraud and efforts to conceal it.

A change-of-plea hearing for Brown, 75, the company's former chief counsel and board vice chairman, was postponed before its start Thursday. Neither his lawyers nor prosecutors would say why.

Two others have also pleaded guilty to conspiracy in the Rite Aid case: former chairman and chief executive officer Martin L. Grass, and former chief financial officer Franklyn M. Bergonzi.

Brown is accused of conspiring to inflate the company's stock price in the late 1990s and interfering with federal investigators. His lawyers and prosecutors declined comment, and Brown did not respond to phone messages left at his home north of Harrisburg.

The count to which Sorkin pleaded alleges he conspired with Brown and Grass after Grass had stepped down as CEO to provide false and misleading information to government and company investigators, destroy physical evidence, intimidate witnesses into lying and create backdated documents.

One of those documents was a severance letter for Sorkin, signed by Grass and delivered by Brown, that would have entitled Sorkin to about $1 million over three years, lead prosecutor Kim Douglas Daniel said. The benefits letter was dated April 2, 1999, but it actually was composed after Grass resigned in October 1999, Daniel said.

Because Sorkin did not leave Rite Aid until the company's board voted to fire him Wednesday, he never received the money. The value of the benefit may figure in how Rambo calculates his sentence.

After federal investigators began looking into the company, Sorkin met with Brown "to mislead them" about the severance letter, Daniel told Rambo.

Unlike Grass and Bergonzi, Sorkin's deal does not require him to cooperate with investigators.

Last week, Grass admitted falsifying the books at the drugstore chain, becoming the first major CEO to plead guilty in an accounting-fraud case since the Enron scandal stirred public outrage over white-collar crime.

Grass, whose father founded Rite Aid, pleaded guilty on June 17 to conspiracy to defraud Rite Aid and its stockholders and conspiracy to obstruct justice. His plea deal calls for eight years in prison and a $3.5 million fine, subject to Rambo's approval.

As a result of accounting practices during the period when the four men were top-level company executives, Rite Aid was forced in July 2000 to restate earnings downward by $1.6 billion.


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