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CVS execs charged in influence-peddling probe

Two former executives at drugstore chain CVS Corp. were charged Thursday in a federal probe into influence peddling at the Rhode Island Statehouse.
/ Source: The Associated Press

Two former executives at drugstore chain CVS Corp. were charged Thursday in a federal probe into influence peddling at the Rhode Island Statehouse.

John R. “Jack” Kramer, former CVS senior vice president for corporate affairs and government relations, and Carlos Ortiz, former vice president of government affairs, were charged with one count each of conspiracy and bribery and 21 counts each of fraud for allegedly paying former state Sen. John Celona to kill legislation CVS opposed or sponsor bills the company supported.

The charges were contained in a grand jury indictment returned Thursday in U.S. District Court in Providence, U.S. Attorney Robert Clark Corrente said.

Celona, who resigned from the General Assembly in 2004, pleaded guilty to federal mail fraud charges the following year and has been cooperating with the federal government in hopes of a lighter sentence.

Kramer and Ortiz have been on leaves of absence from Woonsocket-based CVS since 2004, CVS spokesman Mike DeAngelis said.

CVS, the nation’s largest drug store chain by store count, was not charged. Corrente couldn’t comment on whether CVS is cooperating and would not rule out further investigations into CVS. He said the probe into Statehouse corruption was continuing.

“We’re still at it, and we’re going to stay at it,” Corrente said.

In a written statement, CVS said it has fully cooperated with the probe.

“CVS remains committed to maintaining the highest degree of ethical standards in all aspects of our business,” the statement said.

Kramer’s lawyer, Peter DiBiase, said in a statement that the charges should not have been filed and that Kramer, who is 74, has had a “successful and unblemished business career for over 50 years.”

“We look forward to a trial where Jack Kramer’s innocence will be confirmed,” the statement said.

A lawyer for Ortiz did not immediately return phone messages left seeking comment.

The charges grew out of the same influence-peddling probe that led to the convictions last year of two former hospital executives who had also employed Celona.

Kramer and Ortiz hired Celona in February 2000, supposedly as a $1,000-per-month consultant to educate senior citizens about health topics and do other public relations tasks. Instead, the indictment said, the money was meant to influence his votes and power as a lawmaker.

Celona served on several committees that deal with health care and pharmacies.

His chairmanship on the corporations committee, for example, allowed him to block legislation that CVS opposed. One bill he blocked would have eased restrictions on where customers could get their prescriptions filled. The position was a switch: Before he was on the CVS payroll, Celona voted in favor of the bill.

He also blocked the progress of a bill that would have allowed Canadian pharmacies to sell drugs to Rhode Island, a law that could have hurt the chain’s business in the state.

Celona also introduced legislation that would benefit CVS, allegedly at the request of Kramer and Ortiz. In one example, he sponsored a bill to require drug manufacturers to accept the return of recalled or damaged pharmaceuticals.

Celona was paid $45,000 total until the relationship ended in September 2003, the indictment said, and he also got benefits including sports tickets and trips to Florida and San Diego.

Corrente said Kramer and Ortiz concealed the true nature of the company’s relationship with Celona from other company officials.

CVS is currently embroiled in a battle over prescription benefits manager Caremark Rx, which it said in November it planned to purchase. Later, Caremark rival Express Scripts, put in a competing offer.

Shares of CVS were up 14 cents, less than 1 percent, to close at $32.58, on the New York Stock Exchange.

In October, Robert Urciuoli, the former president of Roger Williams Medical Center, and former vice president Frances Driscoll were convicted of hiring Celona to do the hospital’s bidding at the Statehouse. Sentencing for Celona, Urciuoli and Driscoll is set for Jan. 31.

Celona has also admitted hosting a cable television program financed by Blue Cross & Blue Shield of Rhode Island and supporting bills favorable to the insurer.