The other day I watched a documentary on PharMor, a Youngstown, Ohio retailer who even once scared the Great Walton of WalMart. They praised themselves on having full shelves and cheap prices. They had so much purchasing power they made manufacturers pay exclusivity fees. However, when PharMor looked like the new upcoming retailer to take on WalMart, they were ing the process of a very large fraud, hence the name of the documentary: "How to Steal $500 Million".
Mickey Monus, the founder, began the fraud when he noticed profits so quickly disappearing with the substantial growth of the company. He thought that with the exclusivity fees that he was having companies pay to have their product sold in his store would cover the new losses that were developing. Therefore, he cooked the books, having two sets, one real and one sent to the original venture capitalist, David Shapira. The young CFO, Patrick Finn, backed Monus and did nothing to prevent the fraud but continued with it. Before you know it, these guys became so tricky that they were shipping inventory between stores to cover their fraudulent inventroy accounts. How is this possible? Their auding firm, Coopers & Lybrand, told management months in advance what 4 PharMor stores were being physically touched. Yes, 4 out of hundreds!
I guess you might be wondering what's my point? Well, how is it that a company responsible with more than 300 stores and 25,000 employess can so easily get away with such large fraudulent acts. Yes, this was the late 80's and early 90's but isn't it still so frequent today (ENRON & Adelphia)? It is said that total loss to all investors exceeded $1 billion. If you were to tell me our world is not driven by greed I would have to laugh right at you! As the famous quote from the movie "Wall Street" goes, "greed is good!" Well, as much as I would love to agree with that, where is the cutoff where greed becomes hazardous?
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