Rite Aid Scion, Law Firm Blamed for Jail Time

     BALTIMORE (CN) – The jailed former general counsel for Rite Aid says corporate scion Martin L. Grass and a Baltimore law firm conspired to steal $30 million in stocks from the company by forging his signature, a fraud that he is now paying for in jail.

     Franklin C. Brown, 81, worked alongside Rite Aid founder Alex Grass from 1954 until his retirement in 2000, helping to grow the retail drug store from a one-store concern into a Fortune 500 corporation. Brown has been incarcerated for the last four years and has six years left on a sentence related to a fraud he says was perpetrated by Grass’ son, Martin L. Grass, with the help of the law firm Neuberger, Quinn, Gielen, Rubin & Gibber and others.
     When Martin Grass ascended to the helm of Rite Aid after his father’s retirement, he “acted with near unfettered power in the company, often diverging from the longstanding, successful business practices established by his father,” the complaint claims.
     This included “boisterously commut[ing] by helicopter from Maryland to Rite Aid’s Camp Hill, Penn., corporate office,” the suit claims, and an ambitious growth plan to be financed by selling off several business interests not related to the retail arm of the company, including a company called Sera-Tec.
     When Grass’ expansion plans failed and Rite Aid’s stock price plummeted, Grass was removed from the helm, after which federal authorities investigated the company and charged several of its officers with wrongdoing, including Brown.
Brown says he later discovered that Grass and Neuberger Quinn had forged his signature on “key documents” used to cover up an embezzlement scheme related to the Sera-Tec sale.
     Grass and the law firm “had conspired to steal investment securities from Rite Aid by secretly transferring [them] to A.G. Capital as if they were part of the Sera-Tec sale,” the lawsuit claims. “Although Brown had no substantive involvement in the Sera-Tec auction, and would not have become involved if invited to participate, [Grass and the law firm] deliberately utilized Brown’s name and position in their scheme to give it credibility.”
     To keep Brown from discovering the misappropriation of his signature, the suit says, the law firm offered to defend Brown and his wife – who had briefly served on Rite Aid’s board – free of charge. In doing so, the firm sought to “restrict the flow of information to Brown and Mrs. Brown, including the fraudulently created disclosure documents purportedly bearing Brown’s signature,” according to the lawsuit.
     The Browns seek $100 million in compensatory damages and $100 million in punitive damages. They are represented by Ray Shepard of Duane Morris.

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