Drugstore Chain Reveals $350-Million Fraud

Phar-Mor Inc., a growing discount drugstore chain, said Tuesday that it lost $350 million in an “elaborate financial swindle” orchestrated by two executives ousted late last week.

The disclosure transformed what had been a case of financial irregularity into a full-blown scandal involving fraud and embezzlement that plundered more than half the company’s net worth.

It also put a bigger cloud over the dealings of Mickey Monus, the former Phar-Mor president who is a well-known sports aficionado and leading investor in professional athletics. Monus and the company’s chief financial officer, Patrick Finn, were fired Friday after questions about the company’s finances surfaced.

Chief Executive David S. Shapira, who took over as president, said a financial review turned up the fraud and embezzlement. The company has asked for a federal investigation of Monus.

Shapira also said that the company immediately laid off 100 people at its Youngstown headquarters and will account for the $350-million loss through an accounting charge against earnings.

Phar-Mor still has a net worth of $220 million, he said.