Former Rite Aid CFO Pleads Guilty

Rite Aid's RAD former CFO pleaded guilty on Thursday to charges related to one of the biggest-ever corporate accounting scandals.

Frank Bergonzi pleaded guilty to one conspiracy charge, according to published reports. Bergonzi had faced charges including mail and wire fraud, lying to the Securities and Exchange Commission and fraud in the purchase or sale of securities.

According to reports, Bergonzi has agreed to cooperate with federal prosecutors. The government has charged former Rite Aid CEO Martin Grass and former vice chairman Franklin Brown with similar offenses alleged against Bergonzi. All three were slated to stand trial on Monday. The government is pursuing a separate case against another Rite Aid executive, Eric Sorkin.

The charges stemmed from a restatement of Rite Aid's 1998 and 1999 income. The company overstated its earnings by $1.6 billion in those years. Prosecutors have charged the four executives with intentionally misleading investors. In the complaint filed last year, the SEC said the executives artificially boosted reported income by using such techniques as improperly accounting for vendor rebates and inflating the deductions taken by the company against amounts owed vendors for damaged products.