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Franklin Brown came to work several times during the spring of 2001. By itself, that doesn’t seem remarkable. He had been general counsel at the Rite Aid Corp. for three and a half decades, and even though he had retired a year earlier, his face was a familiar one at the drugstore chain’s headquarters in Camp Hill, Pa. But what was Brown doing when he made those visits to the company? That question is at the heart of the government’s case against the 76-year-old attorney, who is charged with 35 counts of participating in a conspiracy to manipulate accounting at Rite Aid. At press time, Brown was scheduled to stand trial in federal court in Harrisburg, Pa., starting on Sept. 29. In the spring of 2001, federal prosecutors were looking into Rite Aid’s $1.6 billion restatement of its earnings for 1997-99 � at the time, the largest accounting revision in U.S. history. Prosecutors were investigating Rite Aid executives to determine whether fraud led to the restatement, and, if so, who was responsible. Brown, the government maintains in its 96-page indictment, came to the office that spring because he was trying to help his former colleagues cover up their wrongdoing. During those visits to Rite Aid’s offices, Brown and CEO Martin Grass allegedly agreed to several fraudulent acts, including a plan to backdate some severance letters so that government investigators wouldn’t find them. ALL FOR ONE? Prosecutors know what Brown and Grass said at the time because there was a third person present during some of their meetings, according to the indictment. Former president and COO Timothy Noonan, who resigned from the company in February 2000, was cooperating with authorities in a bid for leniency. (He later pleaded guilty to a felony charge of withholding information from Rite Aid’s internal investigators.) As Brown and Grass talked, Noonan captured what they said with a hidden tape recorder. In addition to agreeing to backdate the severance letters, Brown also allegedly told Noonan and Grass that he was putting himself “totally on the line for you guys.” Unfortunately for Brown, his colleagues weren’t willing to do the same for him. Not only was Noonan taping their conversations, but Grass eventually reached a plea agreement with prosecutors. In fact, every indicted Rite Aid officer except Brown has made a deal with the government. Former CEO Grass has pleaded guilty to two counts of conspiracy, while Franklyn Bergonzi, ex-CFO, and Eric Sorkin, former vice president for pharmacy, have each pleaded guilty to a single conspiracy count. At his trial, Brown is likely to see his former colleagues in the witness box. Prosecutors appear to be relying on these men to help prove their case against the retired GC. The government’s indictment lobs 35 counts against Grass, Bergonzi, Sorkin, and Brown jointly, but doesn’t always make sharp distinctions about who allegedly did what. Citing federal regulations, lead prosecutor Marty Carlson says that he can’t talk about how the government will pursue its case against Brown. However, observers such as Henry Hockeimer Jr. expect prosecutors to focus on the obstruction of justice charge against the former GC because it’s the easiest to prove. Hockeimer, a former U.S. attorney in Oklahoma City, now practices white collar criminal defense at Hangley Aronchick Segal & Pudlin in Philadelphia and has been keeping up with the Brown saga. “If you’re a prosecutor in this case, you need to show intent,” Hockeimer says. “You need to try to make the case as clean and simple as you can.” That’s why Brown’s post-retirement office visits matter. If he hadn’t shown up then, Hockeimer says, Brown would have an easier time denying any involvement in the Rite Aid fraud. But now Brown must present a legitimate purpose for being at the company’s headquarters, Hockeimer says. So why did the former GC visit his colleagues in the spring of 2001? According to Joseph Metz, one of his defense attorneys, Brown didn’t have a formal consulting contract with Rite Aid, but he continued to do legal work for the company after he retired. “No one is saying that [the fraud at Rite Aid] was [Brown's] idea,” maintains Metz, a Harrisburg-based partner with Philadelphia’s Dilworth Paxson. “A mess was created by others, and the general counsel [was] called in to clean it up. That’s the history of the world with general counsel.” Metz also says that Brown still felt an overwhelming sense of loyalty to the company that treated him so well for so many years. In 1965, after three years of doing outside counsel work for Rite Aid, Brown accepted an offer from Alex Grass, the company’s founder, to come in-house. Brown, then a 38-year-old solo practitioner who was struggling to pay his bills, joined a business that was growing by leaps and bounds. A 1968 IPO turned Rite Aid’s original executives into rich men. Many took the money and left, but Brown stayed. THE PRICE OF LOYALTY Over time, Brown’s loyalty to Alex Grass extended to the executive’s son, Martin, who took over as CEO in 1995. As close as Brown had been to the father, he became even closer to the son. According to Metz, this relationship had risks for his client. “Martin was the rich kid who got his neck in incredible situations. And Franklin, with his good brain, was the one who got him out of [them]. That had been the history of their relationship since Martin was a kid.” Martin Grass instructed his attorneys not to talk for this article. Others who know Brown agree that he had a special affection for the younger Grass. “Martin and Franklin were extremely close,” says Jack Staph, the former GC of Revco D.S. Inc., who worked with Brown for more than 20 years on various matters. “Whenever I was around Martin Grass, I got the impression that he relied on Brown.” Former Irell & Manella attorney Edmund Kaufman, who represented Thrifty PayLess Inc. in its 1996 merger with Rite Aid, says that Brown was a “father figure” toward Martin. The Thrifty PayLess deal “was very complicated because there were always antitrust people around,” Kaufman says. “My recollection was that Martin Grass went very public with his derogatory comments toward the government antitrust people,” he says. “And they didn’t like him that much. Franklin had to step in.” Brown’s close involvement with Martin Grass might help explain why he was at Rite Aid’s headquarters in the spring of 2001. It may also produce a moment of high drama in court, if Grass testifies as expected against his former protector. “When Martin actually takes the stand, I think we’ll have the local area riveted for a day,” Metz says. But whether from dedication to a job he no longer had, or loyalty to the man he viewed as a son, Brown’s reasons for being at Rite Aid in 2001 don’t matter as much as what he did there. Hockeimer, the former U.S. attorney, says, “I don’t know whether there was a consulting arrangement, or what he was doing there at the office after he retired. His defense attorneys will need to show that he was trying to perform his job as general counsel � even retired as such � to benefit the company, and certainly not to violate any rules or laws.” However, Hockeimer notes, “In this environment, it is a tough case to defend in court.” Eriq Gardner is a staff reporter at Corporate Counsel, an American Lawyer Media magazine.

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