Who Knew What When?Zachary Schiller
Federal prosecutors recently won an indictment of Michael I. "Mickey" Monus, Phar-Mor's former president, on numerous charges of fraud and conspiracy. But what about Phar-Mor's chairman, David S. Shapira? Federal investigators concluded Shapira knew nothing, and did not file charges against him.
Yet Shapira, who is still chief executive at Pittsburgh-based Giant Eagle Inc., the supermarket chain that spawned Phar-Mor, remains on the hot seat. So, too, does Phar-Mor's former accounting firm, Coopers & Lybrand.
For starters, Jay Alix, an examiner appointed by the bankruptcy court, could soon be looking into the numerous business transactions that occurred between Phar-Mor and Giant Eagle to see if any money can be recovered for Phar-Mor's creditors. One possible area of inquiry is the March, 1992, sale of Giant Eagle's interest in Tamco Distributors Co., a distribution arm held jointly with Phar-Mor. Just five months before the filing, Phar-Mor bought out Giant Eagle's stake in Tamco for $10 million.
Did Shapira use Giant Eagle to wring cash improperly out of Phar-Mor? Shapira declines to comment, but his lawyer denies any improprieties, saying all transactions were fully disclosed, arm's-length deals.
Shapira also has to deal with a lawsuit filed by Coopers, which maintains that he is liable for not catching the fraud. Phar-Mor is suing Coopers for negligence, and a multitude of creditors have gone after both Coopers and Shapira. Coopers says it is innocent of wrongdoing. And Phar-Mor has said Shapira acted properly. But while Monus stays in the spotlight, plenty is happening in the shadows.