HARRISBURG, Pa. — A federal jury convicted Rite Aid Corp.'s former chief counsel Friday of conspiracy, witness tampering and other charges in a scheme to inflate the pharmacy chain's earnings so he and other executives could get big payouts.
The guilty verdict for Franklin C. Brown, 75, marked the first conviction by a jury since a string of high-profile scandals rocked the business world two years ago.
After two-and a half days of deliberations, the jury found Brown guilty of conspiracy, conspiracy to obstruct justice, obstruction of grand jury proceedings, obstruction of government-agency proceedings, witness tampering and five counts of lying to the Securities and Exchange Commission. He was acquitted of wire fraud.
Brown faces a maximum sentence of 10 years on the witness tampering charge and five years for each of the nine other charges. But any sentence likely would be dramatically reduced under federal guidelines.
"We're all satisfied. This jury did what one hopes juries will do. They looked at the evidence and they fairly and truly tried the case," Assistant U.S. Attorney Martin Carlson said.
Brown appeared to close his eyes as the verdicts were being read, and declined to talk to reporters as he left the courthouse with his wife. He remained free pending sentencing.
His attorney, Reid Weingarten, blamed the outcome on "a difficult environment for corporate executives in America."
"These would have been normal business transactions in a different environment," said Weingarten, who promised to appeal.
Indications of accounting fraud at Rite Aid emerged well before the late 2001 collapse of Enron Corp., which was the first in a series of high-profile scandals that shook public faith in Wall Street. But Brown's indictment by a grand jury came later, in June 2002.
Prosecutors said Brown conspired to inflate income at the drugstore chain in the late 1990s; helped backdate severance letters so that he and other senior executives could collect big payouts; and tried to mislead internal and federal investigators.
His attorneys had argued he was a zealous company lawyer, but never a lawbreaker. Weingarten also suggested to the jury that some of the former executives who testified against Brown had lied under oath.
Brown had been indicted along with former chief executive Martin L. Grass, former chief financial officer Franklyn M. Bergonzi and Eric S. Sorkin, the vice president for pharmacy purchasing who has since left the company.
The three other executives pleaded guilty, along with another executive implicated in the scandal, former vice president for real estate Philip Markovitz.
The case against Brown, 36 counts when he was originally indicted, was whittled down to 11 counts by the time his trial began Sept. 24.