HARRISBURG, Pa. (AP) – A former Rite Aid Corp. chief counsel told a colleague that a computer used to create backdated letters that inflated benefits for some executives was dumped in the ocean, according to testimony Wednesday.

Timothy J. Noonan, former chief operating officer, told a jury that Franklin C. Brown made the claim in a bagel shop in March 2001 – after Noonan began cooperating in an investigation that led to conspiracy and fraud charges against Brown.

Noonan said Brown reassured him investigators would not be able to examine the computer of secretary Janene Kope, who allegedly helped former chief executive Martin L. Grass create bogus documents leading to millions in benefits.

“He said they’ll never get her computer now, it’s in the Atlantic,” Noonan quoted Brown as saying. Noonan allowed the FBI to tape-record the conversation, but background noise rendered it unintelligible so he described it for the jury on the trial’s third day.

Noonan said he decided the severance-benefits letter Brown gave him was inappropriate and never submitted it to the company. Instead, he negotiated his own deal – worth millions less – with Grass’ successor.

Brown, 75, is accused of conspiring to falsely inflate income at the nation’s third-largest pharmacy chain in the late 1990s, and then misleading investigators. The Camp Hill, Pa.-based company was forced to retroactively lower its net earnings in July 2000 by $1.6 billion and a new management team has struggled to return it to profitability.

In addition to conspiracy and wire fraud charges, Brown faces obstruction of justice, witness tampering, and five counts of lying to the Securities and Exchange Commission.

AP-ES-10-01-03 1737EDT