PENNSYLVANIA RECORD

A former Rite Aid Corporation Vice President and a New Jersey businessman have been charged by the U.S. Attorney’s Office for the Middle District of Pennsylvania in connection with a $14.6 million, surplus inventory sales/kickback scheme. Jay Findling, age 54, of Manalapan, N.J., is charged with conspiracy to commit wire fraud. Former Rite Aid Vice President Timothy Foster, 65, of Portland, Ore., is also charged with making false statements to authorities. The charges are based upon Foster’s and Findling’s alleged nine-year conspiracy to defraud Rite Aid, a national drug store chain headquartered in Camp Hill, Pa., via a surplus inventory sales scheme that took place between 2001 and 2010. As the vice president for Quality Assurance, Foster’s primary responsibilities at Rite Aid involved the liquidation of surplus Rite Aid inventory across the United States. According to the charges, Findling’s and Foster’s scheme succeeded by making Rite Aid believe its surplus inventory had been sold to Findling’s company, J. Finn Industries LLC, for amounts reported by Foster when, in fact, the inventory had been sold to third parties for greater amounts. Findling would then kick back a portion of his profits to Foster. The scheme allegedly started in 2001 and continued until February of 2010 when Foster resigned from Rite Aid. According to the criminal complaint, Findling established a bank account in New Jersey under the name of “Rite Aid Salvage Liquidation.” The account was allegedly used by the two defendants to collect the payments submitted by the real buyers of the surplus Rite Aid inventory. After the payments were received, Findling sent lesser amounts dictated by Foster to Rite Aid for the goods, thus inducing Rite Aid to believe the inventory had been purchased by J. Finn Industries, not the real buyers. According to the statement, Findling received at least $87.4 million from the real buyers of the surplus Rite Aid inventory but, with Foster’s help, only had to tender $72.8 million of that amount to Rite Aid, leaving Findling approximately $14.6 million in profits from the scheme. Investigators also allege that Foster knowingly and willfully lied when he was interviewed by FBI agents in January 2014 and denied he conspired with Findling to defraud Rite Aid. Foster later recanted his false statements when he was re-interviewed by the FBI in May 2014. During that interview Foster not only admitted he conspired to defraud Rite Aid with Findling, he voluntarily surrendered $2,941,940 in cash kickbacks Findling had paid Foster over the life of the conspiracy. The complaint was filed pursuant to plea agreements with the two defendants. Both agreements, which are subject to approval by the court, require the defendants to cooperate with the government and to pay restitution to Rite Aid as ordered by the court. Findling’s plea agreement also obligates him to make a $11.6 million lump sum forfeiture payment to the government at the time he enters his guilty plea. No date has been scheduled as yet for the entry of Foster’s or Findling’s guilty plea.