May 27, 2004 – LAWFUEL – On Wednesday former Rite Aid chief financial officer Franklyn M. Bergonzi received 28 months in jail and a $5100 fine for his guilty plea to one count of conspiracy to commit an accounting fraud that falsely inflated the value of Rite Aid stock.
The sentence, which is well below the statutory maximum of 5 years and even further below the sentencing guideline maximum for such crimes, is the result of a plea agreement negotiated by O’Melveny & Myers Washington, D.C. attorneys Ira Raphaelson and William Stuckwisch. The sentence also reflects the Court’s acceptance of their arguments that Bergonzi deserved a sentence reduction for his “minor role” in the offense despite being CFO.
Raphaelson said that Bergonzi was following orders from above.
“He did it because he’s a corporate soldier, and, at the end of the day, when the CEO says fill the holes, you fill the holes,” Raphaelson was quoted as saying.
Raphaelson also told U.S. District Judge Sylvia H. Rambo that Bergonzi “did everything he could to set it right” when he decided to plead, and that Bergonzi “lost everything” because of the events that led to a $1.6 billion restatement of Rite Aid’s earnings.
The O’Melveny team also included D.C. attorneys Alissa Starzak, Roger Fairfax, Hima Vatti, and Katie Wang and legal assistant Bryan Power.
Bergonzi’s sentence is 40 percent lighter than that prescribed by federal sentencing guidelines because Bergonzi provided “substantial assistance” to prosecutors. Bergonzi has also agreed not to serve as an officer or director of any publicly traded company.