Financial Accounting Blog

Monday, May 31, 2004

Former CEO of Rite Aid has been sentenced to serve eight years for his part in an accounting scandal and coverup.
Grass took control in 1995 and began an acquisition spree. Rite Aid grew from 1,618 stores and $943 million in debt in 1995 to 3,821 stores and $4.1 billion in debt by 1999.

But the grand jury said the boom years were accomplished by 'massive accounting fraud, the deliberate falsification of financial statements, and intentionally false SEC filings. Less than a year after Grass left the company, the new management team restated the company's net earnings for 1998 and 1999, reducing them by $1.6 billion. Rite Aid recently recorded its first profits since the Grass years.