UPDATE: Sorensen Pleads Guilty in USA Drug Embezzlement Case

Garret Sorensen, the former USA Drug marketing executive, pleaded guilty Wednesday morning to two felony counts.

Thirty-one other counts against Sorensen were dismissed by federal prosecutors, as were corresponding charges pending against his wife and her sister.

Assistant U.S. Attorney Pat Harris confirmed the plea, which was accepted by U.S. District Judge Bill Wilson just before the jury was empanelled in the long-delayed trial of Garret and Katherine Sorensen and Shannon Walters. The trial had been scheduled to start Tuesday but was delayed one day by Wilson. (The presiding judge was misidentified in an earlier version of this article.)

Garret Sorensen will be sentenced Sept. 7, Harris said. The sentencing guidelines for the two counts -- one of money laundering and one of mail fraud -- call for about three years in federal prison, but the judge is not bound by the guidelines. Restitution, likely in the neighborhood of $500,000, will be determined at sentencing, according to Harris.

A 33-count indictment was issued against Garret Sorensen, Katherine Sorensen and Shannon Walters in May 2009 and replaced with a slightly modified indictment in August 2010. The Sorensens and Walters allegedly bilked as much as $584,000 from Garret Sorensen's employer by setting up a dummy ad-placement company and running USA Drug advertising through it, keeping a commission of almost 20 percent.

The owner of USA Drug, LaFrance Holding Inc. of Little Rock, simultaneously pursued an almost identical civil case against the Sorensens and Walters - one that led to sanctions against LaFrance's attorney and the federal prosecutors who intervened.

Sorensen had proclaimed his innocence for three years, and as Arkansas Business reported Monday, appeared prepared to argue that Stephen LaFrance Jr., son of the USA Drug founder, knew and approved of the side business that he operated with his wife and sister-in-law. The last-minute plea deal, then, came as a surprise.

Ted Boswell of Bryant, Sorensen's criminal defense lawyer, was not immediately available for comment. 

Pat James, the Little Rock attorney who has been defending the Sorensens in the civil case, learned of his client's plea in criminal court in a phone call from ArkansasBusiness.com. He said he didn't know how the plea would affect the civil case, in which the Sorensens had filed a counterclaim alleging defamation by the LaFrance organization.