Former Duane Reade CEO Sentenced to Federal Prison for Securities Fraud
In late August, 2011, the former chief executive officer, president and chairman of the board of Duane Reade, Inc., Anthony Cuti, was sentenced for his role in a securities fraud scheme involving the company. The former head of New York’s ubiquitous pharmacy stores now faces three years in prison following his conviction for several white collar crimes that falsely inflated the company’s income and reduced its expenses to improve its apparent performance to regulators and investors.
According to court records, Cuti and the former chief financial officer and senior vice president of the company, William Tennant, made fraudulent real estate transactions that artificially increased Duane Reade’s income by selling real estate rights that were essentially worthless. With a different senior vice president, Jerry Ray, Cuti also falsely reduced the company’s expenses by seeking fake credits from vendors working with the company.
Following a two-month trial, in June 2010, Cuti was convicted of:
- Conspiracy to make false statements in regular reports to the SEC and auditors
- Making false entries in the books and records of the company
- Securities Fraud (one count)
- Making false statements in SEC reports (three counts)
For these convictions, Cuti was sentenced in August, 2011, to:
- Three years in prison
- Three years of supervised release
- A $5 million fine
- A $500 special assessment fee
In addition to these consequences, Cuti also will be ordered to pay restitution at a later date.
The sentence imposed on Cuti demonstrates the significant penalties that can follow conviction of white collar crimes and the serious impact it can have on one’s personal and private life. For people accused of securities fraud or other crimes, the counsel of an experienced criminal defense attorney can help reduce the potential consequences that may result.