MANHATTAN (CN) - The former CEO of the Duane Reade pharmacy chain will serve three years in prison for securities fraud.
Anthony Cuti was convicted last year of conspiring with former Duane Reade CFO William Tennant to inflate company income through "fraudulent real estate transactions" with third-party brokers from November 2000 to June 2005.
The men also reduced expenses through "fictitious credits from vendors who did work for Duane Reade," according to the U.S. Attorney's Office.
"In order to convince the brokers and developers to participate in these fraudulent transactions, Cuti promised, through various side agreements, to reimburse the third parties for the costs of the transactions," prosecutors said in a statement.
The men misled auditors by failing to tell them that "the real estate rights being sold were largely worthless" and that they reimbursed brokers.
Cuti, 65, must also pay a $5 million fine and eventually make restitution, which will be determined at a later date.
Tennant's sentencing is scheduled for next week.
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