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Second Rite Aid Executive Sentenced

Two former Rite Aid Corp. executives were sentenced to prison Wednesday for their role in a financial scandal at the drug store chain four years ago.
/ Source: The Associated Press

Two former Rite Aid Corp. executives were sentenced to prison Wednesday for their role in a financial scandal at the drug store chain four years ago.

The company's former chief financial officer, Franklyn M. Bergonzi, was sentenced by U.S. District Judge Sylvia H. Rambo to 28 months in prison and fined $5,000 for his guilty plea to one count of conspiracy.

"I just want you to know that my actions were not actions of greed," Bergonzi told Rambo. "I let down the company for which I spent 30 years of my life helping to build."

Prosecutors said Bergonzi, 58, conspired to commit an accounting fraud that inflated the value of Rite Aid stock. His lawyer convinced Rambo last week that Bergonzi played a relatively minor role in the scandal that prompted the company to retroactively lower net earnings by $1.6 billion in July 2000, thereby earning a reduction in his potential sentence. The maximum was five years in prison.

Rambo also sentenced former Rite Aid vice president Philip Markovitz to one month in jail, five months' home confinement and a $5,000 fine.

"I cannot tell you how deeply I regret my misconduct, nor how ashamed I feel at disappointing people who mean so much to me," Markovitz told the judge on Wednesday.

Markovitz pleaded guilty in July to conspiracy to obstruct justice.

Markovitz explained what prompted the charges when he testified against former vice chairman Franklin C. Brown at his trial last October. Markovitz said he lied when he told a federal grand jury that he had received a letter from former chief executive Martin L. Grass promising him $4 million in extra severance benefits before Grass left the company in October 1999. Markovitz said Brown actually gave him the letter weeks after Grass left Rite Aid.

Markovitz joined the Camp Hill, Pa.-based company in 1971, eventually rising to the position of vice president of real estate. He resigned in February 2000 and joined Elysian Partners in Lemoyne, Pa., a commercial real estate company in which Grass is a partner.

Eric S. Sorkin, 55, former vice president for pharmacy purchasing, on Tuesday was sentenced to five months in prison and five months of house arrest for one count of conspiring to obstruct justice.

Sorkin, Bergonzi and Markovitz all were ordered to surrender June 28 to begin serving their time.

Grass faces sentencing on two conspiracy counts Thursday, and could receive up to 10 years. A fifth executive, Timothy J. Noonan, will be sentenced next month for withholding information from company investigators. No date has been set for the sentencing of Brown, convicted by a jury of 10 criminal counts.