(CN) – A federal jury in Manhattan on Tuesday convicted the former CEO and CFO of the Duane Reade pharmacy chain of securities fraud. Former CEO Anthony Cuti and former CFO William Tennant conspired to inflate company income through “fraudulent real estate transactions” with third-party brokers from November 2000 to June 2005, prosecutors said.
The men also reduced expenses through “fictitious credits from vendors who did work for Duane Reade,” the U.S. Attorney’s Office said in announcing the verdicts.
“In order to convince the brokers and developers to participate in these fraudulent transactions, Cuti promised, through various side agreements, to pay the third parties back the cost of doing 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.
Both men face up to 20 years in prison for securities fraud. Cuti also was convicted of conspiracy. He will be sentenced on Nov. 15, Tennant on Dec. 6.