Ex-Rite Aid CEO's Sentence Cut by a Year

By MARK SCOLFORO
Associated Press Writer
August 11, 2005

HARRISBURG, Pa. — A federal judge on Thursday trimmed a year from former Rite Aid Corp. chief executive Martin L. Grass' eight-year sentence for conspiring to obstruct justice and to defraud the nation's third-largest drugstore chain and its shareholders.

U.S. District Judge Sylvia H. Rambo said she acted to reduce a disparity between Grass and other defendants sentenced for similar crimes. Grass, 51, smiled and blew a kiss to family members as federal marshals led him from the courtroom.

Rambo did not specify which other defendants she was comparing Grass's sentence to, but Assistant U.S. Attorney Kim Douglas Daniel said afterward he assumed she meant the high-profile obstruction defendants referenced in a recent defense memorandum, including banker Frank Quattrone and Martha Stewart.

"We were certainly hoping that the sentence would be reduced. We asked for less, but this is what the judge decided," said Grass' lawyer, William H. Jeffress Jr. Rambo had to resentence Grass because of a landmark U.S. Supreme Court decision earlier this year that invalidated the system under which his previous sentence had been calculated. Jeffress had sought a maximum term of four years, nine months.

Grass has been serving time at federal prisons in Florida since he was first sentenced in May 2004 for his role in the accounting scandal that rocked the pharmacy chain founded by his father, Alex. Grass declined to speak on his own behalf Thursday, but his lawyers had his mother, Lois Grass; a business partner; and an employee testify about his character and his adjustment to prison life.

"I thought he was doing unbelievably well," Lois Grass said. "He accepted his responsibility that this is something he has to pay the price for." Jeffress said Grass has tutored other inmates and works as a painter in prison. "It's truly remarkable, the degree to which Mr. Grass does not complain, blames nobody but himself for his situation," he told Rambo.

Last year, Daniel had recommended a seven-year sentence based on Grass' cooperation with law enforcement, but Rambo gave him eight years instead. "I think it's a fair sentence," Daniel said Thursday of the new sentence. "It was what we recommended last year, it's what we recommended this year."

Grass was forced out as CEO of the Camp Hill-based company in October 1999, as Rite Aid's financial picture was darkening considerably. The management team that assumed control was subsequently forced to retroactively lower net earnings by $1.6 billion.

Grass is one of five former Rite Aid executives to plead guilty to charges related to the investigation. A sixth, former vice chairman and chief counsel Franklin Brown, was found guilty by a jury of 10 criminal counts and received 10 years.