Phar-Mor Essays

ACCT 4327.01 (Group #3) Anakaren Rios Abel Martinez Madelein Torres Phar-Mor Originated in Youngstown, Ohio, Phar-Mor was a discount drugstore chain founded on 1982 by Michael Monus. Due to its success, David Shapira jumped on board and became the CEO. The company grew from 15 stores to 310 in less than 10 years, but mostly due to the greed of its chief operating officer, Michaels Monus. The reason they grew so much was because their prices were 20 to 40 percent lower than the market. Inside the

Background of the Company Phar-Mor Inc., founded in 1982 as an affiliate of Giant Eagle, was one of the top ten deep discount drug store chains in the United States. The deep discount segment of the drug store was the result of the Great Depression in the past. During that time, because consumers wanted quality goods at low prices, a lot of companies tried to cut down the overhead costs and used purchasing techniques to maintain profit. Phar-Mor was not the exception. Phar-Mor saved its money by renting

Phar Mor, Inc. was one of the largest private companies in US. In the late 1980s, Phar Mor expanded itself in 32 states and recorded sales of $3 billion. But in 1992 Phar-Mor, Inc. faced an accounting fraud of $500 million and came to bankruptcy. For enhancing the credit line, the company made and submitted untrue financial statements to the auditor and investors. These fabricated financial statements benefitted Phar Mor to defrauded many banks and investors. The president, Vice president of marketing

Phar-Mor Inc., Waste Management, and WorldCom Frauds In the fraud case of Phar-Mor Inc., Waste Management, and WorldCom, the auditors not only failed to discover these companies fraudulent financial reporting but some even help in guidance to continue fraud schemes. Andersen Accounting helps Waste Management in their fraudulent activities by issuing unqualified audit reports of the company’s false financial statements, and engaged in a secret agreement to write-off error of data over the periods

This is primarily a case of gluttony and self-indulgence. Phar-Mor received a bill for inventory that was not received from Tamco, its sister company. To make matters worse, when it came to properly recording inventory that was received from its sister company, Phar-Mor dropped the ball drastically and failed. With the unsound bookkeeping it made it difficult to separate the products received. Michael J. “Mickey” Monus, the then Vice President, took over 15 million dollars and transferred to the

pharmacy. In 1991, Sara Creek wanted to buy out the existing anchor tenant, which was struggling and had recently declared bankruptcy, and replace it with Phar-Mor, which would be a discount store containing a pharmacy. As a result, Walgreen’s sued Sara Creek for a breach of contract, as the exclusivity clause in the lease would be violated. Phar-Mor was also a Defendant, but it was determined that they were not liable for any wrongdoing and all claims

store with even lower prices products than Walgreens just 200 feet away in the same mall. Walgreens took this case to the court and Walgreens was granted a permanent injunction against the new lease between Phar-Mor and Sara Creek by the Seventh Circuit Court of Appeals. This means that Phar-Mor was prohibited to move to the mall during the agreement period between Walgreens and Sara Creek.

Two days later, the Phar-Mor board confronted him with two books that had been found. The board had found that one of the books had largely inflated profits. This revealed that with the board, banks, and investors deceived, Monus was able to pull in more pay and sell stock