Today, Martin L. Grass probably longs for the good old days of the late '90s, when the biggest rocks in his shoe were the neighbors who complained about his howling jet-powered helicopter.
The former chief executive of the 3,600-store Rite Aid Corp. drugstore chain -- indicted yesterday on multiple counts of conspiracy and accounting fraud -- waged a four-year battle with zoning boards and sleep-deprived neighbors in two states over the helicopter he used at the time to speed between Rite Aid headquarters in Camp Hill, Pa., and his home, then in the Green Spring Valley suburb of Baltimore.
Back then, Grass's public aggravation came from letters to the editor of small-town newspapers: "At my place of employment, my steady shift is 11 p.m. to 7 a.m.," wrote an irritated reader to the Harrisburg Patriot-News in March 1999. "Imagine trying to get a decent amount of sleep as the helicopter noise wakes you two, three and even four times daily."
Today, the press is much worse: "Grass and his co-conspirators also defrauded Rite Aid, its directors, its stockholders, the investing public and various financial institutions via other fraudulent conduct," reads the indictment of Grass and other current and former Rite Aid executives handed up by a federal grand jury in Pennsylvania yesterday.
Grass released a brief statement yesterday, denying any wrongdoing. Through his lawyer, William Jeffress Jr. of Washington's Baker Botts LLP, he declined additional comment, as did Jeffress.
Grass joins a parade of corporate executives who've generated negative headlines over the past year, including Enron's troika of Kenneth L. Lay, Jeffrey K. Skilling and Andrew S. Fastow, WorldCom's Bernard J. Ebbers, Tyco's L. Dennis Kozlowski, Global Crossing's Gary Winnick and ImClone's Samuel Waksal.
From his youth, Grass was the anointed successor to the drugstore empire created by his father, Alex. He is described by those who know him as family-oriented; he is married with two school-age daughters and lives in Virginia Beach, Va.
When he lived near Baltimore, he was an avid Orioles fan and a benefactor of the arts, donating $1 million to the city's opera house and several thousand dollars to the Baltimore Symphony Orchestra.
Those who know Grass say the man once described as a "Dustin Hoffman-lookalike" has long been resigned to the inevitability that he would be blamed for Rite Aid's massive 1990-2000 earnings restatements, which severely injured the company. As chief executive, Grass earned a $1 million salary with bonuses in the high hundreds of thousands of dollars.
Grass, who took over the company from his father in 1995, eventually resigned under board pressure in 1999 as company stock tumbled from a high of about $50 a share to less than $10. The family's eldest son, Grass was in line for the Rite Aid helm since his twenties, a move resented by Roger Grass, one of Martin's three siblings, who once described Martin as incompetent.
In the grand jury indictment, Grass emerges as an arrogant bully, pressuring underlings to endorse phony documents and bragging that coverups would never be discovered.
In June 2000, Grass "lured" his brother-in-law -- Tim Harrison, who formed a real estate development company with Grass called CCA Associates Inc. -- from his Staten Island, N.Y., home to a private terminal at the Morrison, N.J., airport. According to the indictment, Grass forced Harrison to sign a phony, back-dated contract between Rite Aid and CCA.
Grass "told Harrison he was not leaving until he signed it," reads the indictment. "Fearful as to what might happen if he did not comply with Grass's demand, Harrison executed the bogus, back-dated contract." Harrison, who was not charged, did not return a phone call yesterday.
Grass told Harrison, "things only go smoothly if you control the people who work for you," according to the indictment.
In May 1999, the indictment says, Grass telephoned the KPMG LLP partner in charge of auditing Rite Aid and told him "skeletons would come out of KPMG's closet" if Rite Aid suffered as a result of a KPMG audit.
The following month, Grass traveled to KPMG's offices in New York and sought removal of the partner in charge of the audit, the indictment says. At the same meeting, Grass allegedly offered to sign a consulting contract with KPMG -- a deal that was later consummated.
The indictment also alleges that Grass had Rite Aid pay a $3 million settlement to a former senior vice president to "silence" him after learning he was threatening to expose a scheme the company was using to defraud vendors and inflate income.
Even after Grass resigned as CEO, he prepared backdated letters to two of his co-defendants and a third employee granting them millions of dollars in enhanced severance and deferred compensation.
In May 2001, while Rite Aid officials were being interviewed by federal investigators over suspicious severance letters, Grass is heard on a recorded conversation reassuring colleagues that investigators "do not have and will never have" the computer that generated the back-dated severance letters "unless they use a Trident submarine."
Grass's father, Alex -- who opened his first health and beauty store in 1962 in Scranton, Penn. -- said in a 1999 Wall Street Journal article that it was a father's "natural inclination" to let his son take over the family business. Alex Grass did not return a phone call yesterday.
Martin Grass already physically resembled his father in his twenties, but some Rite Aid employees did not have the confidence that he could duplicate his father's business acumen, even though Grass is a graduate of the University of Pennsylvania and has a master's degree in business administration from Cornell University. He started working at his father's company in 1978, when he was 23.
Helicopter-commuting wasn't the first time Martin Grass got stung.
In 1989, while president of Rite Aid, Grass took the company jet from the Camp Hill headquarters to Cleveland, where he met with a member of the state pharmacy board at an airport hotel. As he handed the man a check for $33,000, Cuyahoga County sheriff's deputies and prosecutors entered the room and arrested Grass on bribery charges. The meeting had been videotaped from adjacent rooms.
Grass was acquitted 15 months later, and he immediately filed suit against his accusers.
"When somebody comes at you like that, you don't just sit back and take it," he said at the time. "You have to retaliate."
