Martin Grass, Rite Aid's chief executive and chairman until October 1999, faces 36 charges ranging from accounting fraud and fabricating board minutes to lying to the SEC and tampering with a witness. The government says Mr. Grass inflated Rite Aid's earnings in order to reap bonuses and other rewards tied to financial performance. The 47-year-old company founder's son could face years in prison and millions of dollars in fines.
Thomas A. Marino, the Pennsylvania federal prosecutor in charge of the two-year-old criminal investigation, and the SEC, levied numerous accounting-fraud charges against Franklin Brown, 74, Rite Aid's chief counsel until February 2000, and Franklyn Bergonzi, 57, Rite Aid's chief financial officer until October 1999.
Lawyers for the three former executives plan to fight the charges.
Moderator Comment: What does the indictment of Martin Grass and other former executives mean to Rite Aid?
Rite Aid can finally get running its business and not have to dedicate needed resources to dealing with the SEC. On Friday, Rite Aid filed a cease and desist order with the SEC ending the agency's investigation of former company executives related to accounting practices and financial reporting. Under the settlement, Rite Aid neither admits nor denies the charges and that it won't have to pay any fines. The company's stock price rose on Friday presumably because the market was optimistic that Rite Aid could focus solely on the business at hand. [George Anderson - Moderator]