June 8, 2010 / 9:40 PM / in 7 years

US jury finds ex-Duane Reade execs committed fraud

2 Min Read

NEW YORK, June 8 (Reuters) - A businessman credited with changing the landscape of Manhattan by rapidly expanding the Duane Reade chain of drug stores was found guilty by a jury of securities fraud and other charges on Tuesday.

Former Duane Reade Chief Executive Officer Anthony Cuti and former Chief Financial Officer William Tennant were charged by U.S. prosecutors in 2008 with falsely inflating the chain's income and lowering expenses between 2000 and 2005.

The Manhattan federal court jury decided after a two-month trial that Cuti was guilty of securities fraud, conspiracy and making false statements. The jury found Tennant guilty of securities fraud but acquitted him of charges of conspiracy and making false statements.

U.S. District Judge Deborah Batts scheduled Cuti's sentencing for Nov. 15 and Tennant's sentencing for Dec. 6. Each faces up to 20 years imprisonment.

Drugstore operator Walgreen WAG.N announced in February that it was buying Duane Reade. It had previously been owned by Oak Hill Partners, who prosecutors said had been given a false evaluation when it bought Duane Reade in 2004 for $614 million.

Cuti, who expanded the chain to more than 300 stores in New York City and surrounding areas, was said to have received about $25 million from Duane Reade and Oak Hill and Tennant $2.8 million in stock gains.

The case is USA v Cuti et al, U.S. District Court for the Southern District of New York, No. 08-00972. (Reporting by Grant McCool)

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