A former Rite Aid Corp. vice chairman was sentenced on Thursday to 10 years in prison for his part in an accounting scandal that brought the U.S. drug store chain near bankruptcy.
Franklin Brown, 76, received the longest sentence of six Rite Aid officials charged in the case, which involved allegations of inflating profits and orchestrating executive compensation schemes during the late 1990s.
Brown, 76, was convicted in October of making false statements to the Securities and Exchange Commission, obstructing justice, witness tampering, and other crimes.
U.S. District Judge Sylvia Rambo in Harrisburg, Pennsylvania, rejected defense arguments that Brown should be spared a prison sentence.
Rite Aid was left saddled with debt and was forced to restate $1.6 billion in profits in 2000. The company began a turnaround in December 1999 under new management. Until recently, however, it has struggled under the weight of paying its former executives' legal fees and coping with competition from rapidly expanding rival Walgreen Co.
Ellen Brotman, defending Brown, argued that he should be detained at home because of his age, his heart condition, and the risk that he would be abused in a prison environment, where he would likely be much older than other inmates.
"Imprisonment of any significant length is going to be a de facto life sentence for Mr. Brown," Brotman told the court.
But Asst. U.S. Attorney Kim Daniel urged the judge to follow sentencing guidelines of at least 10 years in prison because of the severity of Brown's offenses.
Brown had contributed to $23 million in losses for the victims of the Rite Aid fraud, had planned and organized the fraud, and had abused his position of trust as a Rite Aid board member and its top legal official, Daniel said.
In a statement to the judge, Brown referred to his conviction as "the most painful and humbling experience of my life."
"It is absolutely awful to think that I failed in my responsibility because some innocent people have been hurt. I'm deeply sorry," he said.
Peter Goldberger, another attorney for Brown, called the sentence "clearly excessive," and noted that it was significantly longer than the eight years received by former Rite Aid Chief Executive Martin Graff. Goldberger said he would be appealing both the conviction and the sentence.
If Brown's sentence is carried out, he can expect to serve at least 8.5 years of his tenure, Goldberger said.