Phar-Mor Files for Bankruptcy in Scam’s Wake
Phar-Mor Inc., which charged earlier this month that two former officers masterminded a $350-million fraud and embezzlement scheme, filed for bankruptcy court protection from its creditors and sued its accounting firm Monday.
Court clerks said Phar-Mor filed for protection under Chapter 11 of the U.S. Bankruptcy Code late Monday afternoon.
The chain of 305 discount drug stores announced Aug. 4 that it was taking a $350-million accounting charge to cover losses from an alleged swindle by its former president, Michael Monus, and former chief financial officer, Patrick Finn. Both were fired two weeks ago.
In a statement, Phar-Mor said it had filed for Chapter 11 as a result of the alleged scheme.
Phar-Mor also announced that it had filed suit against its former outside auditors, Coopers & Lybrand, charging negligent, intentional or reckless failure to uncover the alleged embezzlement.
A spokeswoman for the firm had no comment on the charges.
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