Rite Aid Fraud

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(AP) Former Rite Aid Corp. chief executive Martin L. Grass was sentenced to eight years in prison Thursday for conspiring to falsely inflate the value of the company his father founded and cover up the scheme. Grass, 50, who headed up the nation's third-largest pharmacy chain in the late 1990s before being forced out in October 1999, also was fined $500,000 and given three years' probation for his role in a billion-dollar accounting fraud that sent the company's stock tumbling. Before U.S. District Judge Sylvia H. Rambo handed down the sentence, Grass apologized to Rite Aid, its stockholders and employees. "For the harm caused to them, I am truly sorry," he said. Grass was indicted by a federal grand jury two years ago. On the eve of trial that was to start last June he pleaded guilty to conspiracy to defraud Rite Aid and its shareholders and conspiracy to obstruct justice, in a deal that required him to cooperate with prosecutors. He reached a plea deal that called for up to eight years in prison, but Rambo refused to go along with it. A new deal called for him to serve up to 10 years in prison for conspiring to defraud and obstruct justice. At the time of his plea, prosecutors said Grass admitted to a series of illegal activities, from backdating contracts and severance letters to misleading the company and federal investigators about a $2.6 million real estate deal. They said he also met with employees called to testify before the grand jury and encouraged them to lie. During Grass' time at the head of the Camp Hill-based company founded by his father, Alex Grass, its stock price soared as Rite Aid engaged in an aggressive expansion effort. But the grand jury said the boom years were accomplished by "massive accounting fraud, the deliberate falsification of financial statements, and intentionally false SEC filings." Less than a year after

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