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Court rejects appeals of former Duane Reade executives
June 26th, 2013
NEW YORK – A federal appeals court has upheld the convictions of former Duane Reade executives Anthony Cuti and William Tennant for securities fraud.
The 2nd Circuit U.S. Court of Appeals on Wednesday let stand a 2010 ruling by the District Court for the Southern District of New York finding Cuti and Tennant guilty of arranging fraudulent transactions between 2000 and 2004 to inflate Duane Reade's reported earnings in Securities and Exchange Commission filings.
Cuti is a former president, chief executive officer and chairman of Duane Reade. Tennant is a former senior vice president and chief financial officer of the New York drug chain.
In its decision Wednesday, the 2nd Circuit Court rejected Cuti's claim that the lower court should not have admitted testimony from nonexpert witnesses regarding hypothetical questions about the accounting treatment of certain fraudulent transactions. Tennant had argued that there was insufficient evidence of whether he knew or should have known about the fraud, but the 2nd Circuit Court determined that his claim was without merit.
Cuti was sentenced to three years in prison and levied a $5 million fine in August 2011. In September 2011, Tennant was sentenced to three years of probation and a fine of $10,000.
Duane Reade, which has over 250 drug stores in the metropolitan New York area, mainly in Manhattan, was sold to Walgreen Co. in February 2010 by its parent company, private equity firm Oak Hill Capital Partners, in a $1.08 billion deal. Duane Reade was publicly traded before Oak Hill acquired the chain in July 2004.