Thursday, October 9, 2008
The SEC charged two former senior executives of Duane Reade with fraud for orchestrating multi-million dollar accounting schemes that caused the Duane Reade to inflate its reported earnings and overstate its net income. Duane Reade is the operator of the largest chain of drug stores in the New York Metropolitan area. The SEC’s complaint, filed in federal court in Manhattan, alleges that the former Duane Reade executives entered into a series of fraudulent transactions designed to boost reported income and enable the company to meet quarterly and annual earnings guidance. According to the SEC’s complaint, the fraudulent transactions were designed by the company’s former CEO, Anthony J. Cuti, and primarily implemented by its former Real Estate Administrator and one-time CFO, William J. Tennant and caused Duane Reade to overstate its pre-tax income by a total of approximately $17.5 million.