Pharmor was a “deep-discount” drug store chain in the United States that grew extremely fast in the 1980s. The business model used was based on selling huge volumes of merchandise at a very small markup. This business model worked well for the chain, until greed by a few executives caused the company to unravel. By 2002 Pharmor was out of business. Bad accounting practices were used to cover up the scandalous behavior, increasing the burden felt by employees, investors and suppliers. This paper provides an overview of the history of Pharmor, explains the financial crimes committed, and reveals what systems of control failed to prevent it. Michael “Mickey” Monus and David Shapira open the first Pharmor store in 1982. The business partners secured startup money from Giant Eagle, a grocery chain that Shapira’s family had invested in heavily. By 1988 the chain featured 100 stores; by 1991 there were 200 stores. Sam Walton once called Monus the only retailer he feared. Walton couldn’t understand how Pharmor grew so rapidly in a short time. While signs of overextension began to show, it was July 1992 revelation by the board member of Pharmor alleged that financial books showed that the company inflated its profits by huge margins. …show more content…
To support his extravagant lifestyle and he World Basketball League, Monus embezzled about $10 million from the company. He was convicted of one count of conspiracy, two counts of bank fraud, five counts of wire fraud, two counts of mail fraud, two counts of filing false income tax returns, tax evasion, 96 counts of interstate transportation of stolen property, and one count of obstruction of justice. He was sentenced to 19.5 years and had to pay $36 million in fines and restitution. He served 10 years due to cooperating with FBI against another fraudster. He not only hurt himself, but many other people as