Opening statements begin Monday in the federal fraud and conspiracy trial of a former Rite Aid Corp. executive accused of inflating the company’s financial performance and then obstructing an investigation.
Franklin C. Brown, 75, was the drugstore chain’s longtime general counsel and former board vice chairman. He faces 35 criminal counts for allegedly conspiring with other high-ranking
Five other former Rite Aid executives have already pleaded guilty to federal charges and are awaiting sentencing, including former chief executive and board chairman Martin L. Grass, 49, and former chief financial officer Franklyn M. Bergonzi, 58.
All five could be called as witnesses against Brown.
Also Monday, jury selection starts on Monday in New York in two other major cases: the state criminal trial of former Tyco executives L. Dennis Kozlowski and Mark H. Swartz, and the obstruction-of-justice case against former investment banker Frank P. Quattrone.
“I think everyone suspects that this is about the worst moment for a defendant to go on trial anywhere in a case involving accounting or financial irregularities,” said Columbia University Law School professor John C. Coffee, who teaches a course on white-collar crime and was a consultant in civil proceedings that grew out of the Rite Aid accounting scandal.
Brown was indicted in June 2002 and accused of conspiring with Grass and Bergonzi to inflate Rite Aid’s financial statements during the late 1990s, a period when the company’s stock soared. Rite Aid, the nation’s third-largest pharmacy chain, was compelled in 2000 to lower net earnings by $1.6 billion because of accounting irregularities. The Camp Hill, Pa.-based company operates 3,386 stores in the United States.
Other charges against Brown include wire fraud, lying to the Securities and Exchange Commission, conspiring to obstruct justice, obstructing a grand jury and witness tampering.
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