Phar-Mor Case Study

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Phar-Mor was operated as an American discounted drug and variety store opening its first doors in Youngstown, Ohio in 1982. It came to be when the heir to Giant Eagle; David Shapira and the former Tamarkin VP Michael Monus established the well-known drug store. (Press 1996) Between the years 1985-1992 it expanded from 15 to 310 stores in 34 different states and the sales of the stores at hit virtually $1.5 billion dollars. The low priced drugs and all of the different locations of the stories were the reason the public was so attracted to the countrywide company. (Gilpin 1993) The five hundred million dollars in fraud led the company to bankruptcy. Top management and auditor members were convicted of the big scandal.
Tamco was formally known as a private grocery store chain named Tamarkin Co. Tamco had a big role in the scandal. (Press 1996) Their relationship to Phar-Mor was Tamco shipped orders for Phar-Mor yet only sending half of the orders while Phar-Mor was paying the full bill. Phar-Mor was being billed for inventory that it did not receive and after the fraud case was out in the public they had to shut down a lot of stores to cover up the companies losses. (UNITED STATES v. MONUS 1997) Giant Eagle paid Phar-Mor seven million dollars on behalf of Tamco. They did not know this at the time because Tamco did not retain records of logging shipments to companies. Giant Eagle later sold Tamco to Phar-Mor so there was no more inventory and billing issues. The

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