- The Washington Times - Monday, September 29, 2003

HARRISBURG, Pa. (AP) — Former Rite Aid Corp. executive Franklin C. Brown tried to “line his pocket with millions” even as the drugstore chain’s survival was in doubt, a prosecutor told jurors yesterday as the former vice chairman’s fraud and conspiracy trial got under way.

Mr. Brown’s attorney said prosecutors were trying to blame his client, who had also been Rite Aid’s chief counsel, for the actions of others.

Mr. Brown, 75, is one of the first high-ranking corporate officers to face a jury since the rash of high-profile business scandals erupted across the country.

A grand jury charged Mr. Brown with conspiring with other executives at the Camp Hill-based company in the late 1990s to inflate its income and attempt to mislead federal investigators. He is accused of violating securities law, lying to accountants and auditors, and knowingly keeping false books and records.



The executives are accused of underreporting expenses and overstating income by hundreds of millions of dollars. In July 2000, Rite Aid was compelled to retroactively lower its net income by $1.6 billion.

Assistant U.S. Attorney Kim Douglas Daniel told jurors that several former Rite Aid executives who already have pleaded guilty to federal crimes will testify against Mr. Brown.

She said Mr. Brown defrauded the nation’s third-largest drugstore chain and its stockholders, and then concealed the fraud from investigators.

Mr. Brown “attempted to line his pockets with millions at a time when the company’s very survival was in question,” Miss Daniel said during a nearly two-hour opening statement that included a computer video presentation outlining the multifaceted case.

Defense attorney Reid Weingarten warned jurors that the other former Rite Aid executives who are expected to testify against Mr. Brown are “perjurers who are strongly motivated to help themselves.”

Mr. Brown never asked anyone to lie, Mr. Weingarten said, and held onto Rite Aid stock options as it lost more than 90 percent of its value, evidence he was not part of a conspiracy to build a financial “house of cards” to benefit him personally.

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