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3 former Rite Aid officials go to jail

One sentencing remains in $1.6b accounting fraud

HARRISBURG, Pa. -- Former Rite Aid Corp. chief executive Martin L. Grass and two other former executives turned themselves in yesterday to begin serving federal conspiracy sentences related to an accounting scandal at the country's third-largest drugstore chain.

Grass, 50, surrendered shortly before 1 p.m. at the federal prison camp on the grounds of Eglin Air Force Base in Florida. He is serving eight years after pleading guilty to conspiracy to defraud and conspiracy to obstruct justice.

The son of the company's founder, Grass ran Rite Aid during a period of aggressive expansion in the late 1990s. After he was forced out in October 1999, Rite Aid had to restate its earnings downward by $1.6 billion.

Also surrendering was former chief financial officer Franklyn M. Bergonzi, 58, who will serve a 28-month sentence at the Allenwood federal prison camp in Pennsylvania.

Bureau of Prisons spokesman Mike Truman said both Eglin and Allenwood prison camps house inmates considered to present the lowest security risk. Camp inmates live in dormitories and are required to work, he said.

A third ex-official, Philip D. Markovitz, 63, began serving a one-month term yesterday morning at the Cumberland County Prison in Carlisle, Pa., after which he faces five months of house arrest. Markovitz, a former Rite Aid real estate vice president, admitted to lying about when he received a fraudulently backdated severance letter from Grass.

With the four-year federal investigation and prosecution into accounting irregularities winding down, four former top officials are behind bars.

Last week, Eric S. Sorkin, former vice president for pharmacy purchasing, began serving a five-month sentence.

Still unresolved is the fate of former vice chairman Franklin C. Brown, 76, who was convicted of 10 criminal charges in October.

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