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The principal owner of Bauder Pharmacy, who forcefully denied for two years that he sold hundreds of thousands of narcotic pills to drug abusers, has agreed to plead guilty and serve prison time, his lawyer said Tuesday.

Mark Graziano was accused of diverting about 700,000 hydrocodone pills from the Des Moines pharmacy. The painkillers allegedly wound up in the hands of addicts, at a time of rising abuse and deaths from such drugs nationally.

The Ingersoll Avenue store, which has been in Graziano's family for decades, is known for an old-fashioned soda fountain serving homemade ice cream. Defense lawyer Guy Cook said Graziano is negotiating a deal with state regulators that would allow the store to remain open if Graziano sells his share in it.

Graziano, 53, plans to plead guilty Nov. 6 to a federal count of conspiracy to illegally distribute drugs and a count of tax evasion, Cook said. In return, prosecutors have agreed to drop 16 other charges and recommend that the drug-store owner be sentenced to no more than three years and a month in a minimum-security prison camp, Cook said.

Graziano friend Michael Enloe, who used to run Peeples Music record store, also faces a drug-conspiracy charge in the case and is scheduled to plead guilty Nov. 6, court records show.

Former drug user alerted officials

The allegations came to light after admitted drug user Kirby Small called state regulators in 2011 and told them Graziano and Enloe were selling wholesale quantities of hydrocodone pills out of Bauder's back door. State agents raided the business in 2012, and the Iowa Board of Pharmacy filed administrative charges against Graziano and the pharmacy. Federal officials filed criminal charges last spring.

Small, in an interview Tuesday, said that he called the pharmacy board because he was angry at Enloe, who had been a longtime friend. Enloe and Graziano had been selling Small pills, but cut him off over money issues, Small said. Then Enloe called Small's probation officer and said that Small had been taking drugs, Small said. So Small decided to get back at them.

"You call the cops on an east-sider, what do you expect?" he said, chuckling.

Small, 62, who now lives in West Des Moines, said he no longer uses drugs. He said he still feels a bit bad about turning in his former friend, Enloe. But he said the men deserved to be punished for fueling drug abuse.

"I did it at the start for spite. But I feel like I did something good for society in the end," Small said. "I saw them walk a lot of people into this addiction."

Small said such pills remain readily available on the street, despite the take-down of Graziano's operation. "It might have made a dent for a while, but I'm sure it didn't last long, unfortunately," he said.

Graziano angrily denied Small's allegations during a 2013 hearing before the pharmacy board. However, the board found the tipster's testimony more credible than the pharmacist's. The regulators also noted that Graziano had inexplicably been buying pain pills from multiple wholesalers at once and that he could not explain where hundreds of thousands of the pills went. The board revoked Graziano's pharmacist license and pulled the store's permit to sell addictive drugs.

Graziano faces up to 37 months in prison

Graziano continued to work in the store, including at its soda fountain, but he was not allowed behind the pharmacy counter. His sister, Kim Robertson, who is a pharmacist and part owner of the business, continues to work there. She declined to comment Tuesday.

The pharmacy board has filed administrative charges against her license, but those proceedings have been on hold. Cook said prosecutors have agreed to issue a written statement that they found no evidence Robertson was involved in the drug diversion.

Cook said Graziano has agreed to plead guilty to two of 18 federal charges he's facing. In return, prosecutors will recommend that he be sentenced to 24 to 37 months in a federal prison camp, the defense lawyer said. If he'd been convicted of all charges, he could have faced more than 15 years in prison.

"Mark Graziano has chosen to accept responsibility and put this matter behind him," Cook said.

Cook said Graziano also has negotiated a deal with state lawyers that would allow the store to remain open. Graziano would sell his majority stake in the pharmacy within 30 days as part of the deal, which still must be approved by the pharmacy board. The board's executive director said Tuesday that board members would consider the proposal next week.

If the deal is approved, the store could apply for reinstatement of its permit to sell addictive drugs, including painkillers, Cook said. It also could try to regain contracts with health insurers, including Wellmark Blue Cross and Blue Shield, Cook said. Wellmark, which is Iowa's dominant insurer, declared in 2013 that it no longer would cover prescriptions filled at Bauder's.

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Graziano may sell interest in Peggy's Tavern

Mark Graziano's decision to plead guilty also could affect Peggy's Tavern, of which he is the principal owner.

The Des Moines City Council voted in July to deny a liquor-license renewal for the popular bar, which is near Drake University. The felony charges against Graziano were among the reasons cited for the decision.

The bar remains open while Graziano appeals the council's decision to an administrative law judge with the Iowa Alcoholic Beverages Division. Guy Cook, Graziano's attorney, indicated Tuesday that Graziano is looking to sell his interest in the bar, possibly to his partners.

"The Peggy's license should survive upon Mark Graziano transferring majority ownership," the lawyer wrote.

— Tony Leys

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