Phar Mor Fraud Case Study

Phar-Mor Inc. was a discount drugstore chain that was founded in 1982 by Michael J. “Mickey” Monus. Within ten years of their first store opening, Phar-Mor had 310 stores, and over 20,000 employees in 34 states. Mickey Monus also owned Tamco warehouse, which was the distributer for Phar-Mor. Mickey Monus also owned 60% of each of the ten teams in the World Basketball Leage (WBL). While everything seemed to be growing, and succeeding rapidly, in reality the company was losing money. Between shortages and overbilling of inventory, moving company funds for personal uses, and the embezzlement of funds from Phar-Mor into WBL, Monus was finally in the spotlight and being investigate. In 1992, Phar-Mor went bankrupt after being accused of embezzlement. Due to this investigation, it also came to light that Phar-Mor’s independent audit company, Coopers & Lybrand LLP, was also involved with the fraudulent …show more content…
In the Phar-Mor case, we can see many instances that would’ve been brought in the open by the SOX titles, and I will investigate them. Ways the SOX could have prevented the Phar-Mor …show more content…
This is due to the fact that SOX regulations require a change in partner every five years (Williams, 2011). SOX would’ve also prevented the hire of Patrick Finn, Stanley Sherelstein, and Jeffrey Walley because of their recent employment at Coopers. This gave them inside knowledge of how the company was going to be audited, even before the audit would begin. While SOX includes codes of ethics in regards to management, we can safely say “the code of ethics for senior officials, would’ve been ignored” ( Williams,