Ex-Duane Reade CEO Sentenced to 3 Years in Prison
Former Duane Reade Chief Executive Officer Anthony Cuti was sentenced Monday to three years in prison after a jury convicted him last year in connection to an accounting fraud at the drug store chain.
In sentencing Cuti, U.S. District Court Judge Deborah Batts in Manhattan called him a ``gifted, arrogant, driven, and entitled individual'' who ``bullied people into committing fraudulent acts to make the company look better than it actually was.''
Cuti, who is credited with changing the landscape of Manhattan by rapidly expanding the Duane Reade chain of drug stores, was ordered pay a $5 million fine and to report to prison on Jan. 31, 2012.
U.S. prosecutors charged Cuti and former Duane Reade Chief Financial Officer William Tennant in 2008 with falsely inflating the chain's income and lowering expenses between 2000 and 2005.
In June 2010, a federal jury in Manhattan found Cuti guilty of securities fraud, conspiracy and making false statements in Securities and Exchange filings. Tennant was was found guilty of securities fraud, but cleared of charges of conspiracy and making false statements.
Tennant is scheduled to be sentenced Aug. 29.
Drug store operator Walgreen Co bought Duane Reade last year from the private equity firm Oak Hill Capital Partners. Prosecutors said Oak Hill was given a false evaluation of Duane Reade when it purchased it in 2004 for $614 million.
On Monday, Cuti told Batts that it was ``incomprehensible'' that he found himself being sentenced for a crime. Throughout his career, he felt he always acted in the interest of the shareholders first and with integrity.
``My entire life over the last four and half years has been turned upside down,'' he said. ``I humbly ask you to show compassion and please not separate me from my family.''
Federal prosecutor Jonathan Streeter said that Cuti's offense required a ``significant'' prison term. ``It was not a one time event,'' he said. ``It was on-going. It was continuous. It was deliberate. It was calculated.''
The case is USA v Cuti et al, U.S. District Court of the Southern District of New York, No. 08-00972.