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NEW YORK - The former c.e.o. of No. 3 U.S. drug store chain Rite Aid Corp. signed a plea deal with prosecutors under which he will serve up to 10 years in prison, according to a Reuters report.
Martin Grass, whose father founded the Camp Hill, Pa.-based drug chain, pleaded guilty to conspiracy to defraud and conspiracy to obstruct justice. The deal came three weeks after U.S. District Judge Sylvia Rambo rejected an eight-year sentence as too lenient.
Rambo, of the U.S. District Court for the Middle District of Pennsylvania in Harrisburg, said Grass, must also agree to pay $500,000 in fines and forfeit $3 million to the United States to ensure he "does not receive unjust enrichment" as a result of the plea.
Six former Rite Aid executives have faced criminal charges for inflating profits and reaping rich awards through executive compensation schemes during the late 1990s. The company had to restate profits of $1.6 billion in July 2000.
One of the former executives, ex-vice chairman Franklin Brown was convicted of making false statements to the Securities and Exchange Commission, obstructing justice, witness tampering and other crimes.
Brown, who also served as the retailer's chief counsel, faces a maximum of 65 years imprisonment and $2.5 million in fines on the 10 counts.
Prosecutors alleged that Grass and Brown sought to retain the loyalty of their co-conspirators by providing them with bogus severance letters. Grass allegedly signed the documents after he left Rite Aid in 1999, but they were back-dated on corporate letterhead to appear legitimate.
Among the misdeeds Grass has acknowledged are a failure to disclose to shareholders and to the SEC his ownership stake in a real estate company that used Rite Aid funds to purchase an 83-acre parcel of land for a new corporate headquarters.