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U.S. top court declines Duane Reade executives' appeals
October 20, 2014 / 2:07 PM / 3 years ago

U.S. top court declines Duane Reade executives' appeals

WASHINGTON (Reuters) - The U.S. Supreme Court on Monday declined to hear two former senior Duane Reade Inc[OKHLPD.UL] executives’ appeals of their 2010 securities fraud convictions for inflating earnings at the New York drugstore chain.

Anthony Cuti, Duane Reade’s former chief executive, and William Tennant, who served as chief financial officer, both asked the court to throw out their convictions. They said in court papers that testimony from accountants used at trial should not have been allowed.

In June 2010, a federal court jury in Manhattan found Cuti and Tennant guilty of engaging in a scheme to inflate Duane Reade’s earnings from 2000 to 2004. Prosecutors said the scheme resulted in misleading information being provided to shareholders and private equity firm Oak Hill Capital Partners, which bought Duane Reade in 2004.

Oak Hill sold Duane Reade in 2010 to Walgreen Co for $614 million.

Cuti was found guilty of securities fraud, conspiracy to commit securities fraud and making false statements to the U.S. Securities and Exchange Commission, among other things. He was sentenced in August 2011 to three years in prison and fined $5 million.

Tennant, who was convicted of securities fraud, was sentenced to time served and fined $10,000.

On appeal, they argued that U.S. District Judge Deborah Batts should not have allowed two witnesses they claimed were not experts to offer expert testimony.

The lead partner from auditor PricewaterhouseCoopers and John Henry, Tennant’s successor as Duane Reade CFO, answered hypothetical questions about how they would have accounted for various fraudulent real estate sales.

The New York-based 2nd U.S. Circuit Court of Appeals upheld the convictions in a June 2013 ruling.

The cases are Cuti v. United States and Tennant v. United States, U.S. Supreme Court, No. 13-1491 and No. 13-1493.

Reporting by Lawrence Hurley; Editing by Will Dunham

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