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Ex-Rite Aid CFO pleads guilty, will help prosecutors

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HARRISBURG, Pa. — A former Rite Aid executive pleaded guilty Thursday to one count of conspiracy, just four days before he was to go on trial with two other former executives for what prosecutors say was an attempt to defraud shareholders.

Franklyn Bergonzi, 57, the drugstore chain's former executive vice president and chief financial officer, could face up to five years in jail. Under terms of his deal, 26 other counts against him will be dismissed if he continues to cooperate.

Prosecutors say Bergonzi and other top company executives falsified Rite Aid's books to inflate the stock price, which eventually resulted in the company's $1.6 billion earnings restatement in July 2000.

Bergonzi, who entered the guilty plea before U.S. District Judge Sylvia Rambo in Harrisburg, agreed to share everything he knows about company operations with the government, according to a copy of the plea agreement.

Besides the potential jail time, Bergonzi could be fined $250,000 and forced to pay restitution as well as being placed on probation for three years, under terms of the plea bargain.

Prosecutor Martin Carlson declined comment, except to say that Bergonzi's sentencing will occur after the conclusion of the upcoming trial, which begins Monday.

According to a statement provided by Bergonzi's defense attorneys, he accepted blame for his role in Rite Aid's accounting scandal.

"As CFO of Rite Aid, I should have served as gatekeeper on aggressive accounting. Instead, as the end of fiscal year 1999 approached, I was aggressive and pressured others to be aggressive in finding earnings and omitting expenses in what was ultimately a failed effort . . . to meet the expectations of Wall Street," the statement read.

His lawyer, Ira Raphaelson, said Bergonzi was "relieved" to have settled the charges and that painting his actions as overly aggressive was not an attempt to shift the blame.

"I don't think anyone in that courtroom believed that Frank (was) saying that being aggressive was doing a good job," he said.