
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, June 2, 1994                   TAG: 9406030006
SECTION: BUSINESS                    PAGE: C-8   EDITION: METRO 
SOURCE: Associated Press
DATELINE: CLEVELAND                                LENGTH: Medium

PHAR-MOR FOUNDER FACES FRAUD TRIAL

Michael Monus maintained his reluctance to talk about the demise of Phar-Mor Inc. as his trial began for allegedly plundering the discount drug store chain, duping investors and evading taxes.

No jurors were chosen Tuesday, the first day of jury selection for the federal trial. The process continued Wednesday.

Phar-Mor has closed about half of its more than 300 stores nationwide and laid off thousands of employees since seeking protection from creditors in August 1992. The discount merchant operates one store in Roanoke.

Prosecutors say Monus directed a $1 billion fraud and embezzlement scheme that forced the Youngstown, Ohio-based chain into bankruptcy. Monus says he knew nothing about the alleged scheme and claims to have been one of the biggest losers in Phar-Mor's collapse.

``We're ready for it to begin,'' said Monus, his trademark long hair trimmed above the collar for the trial. The Phar-Mor co-founder and former president has said little about the case other than that he expects to be vindicated.

Defense lawyer Gerald Messerman steered Monus away from reporters.

Monus faces four counts of wire fraud, two counts each of bank fraud, mail fraud and filing a false income tax return, one count of embezzlement and 118 counts of money laundering. He faces a maximum of life in prison and $38.25 million in fines if convicted on all counts.

About 50 potential jurors answered questions about their knowledge of the case. Several said they were familiar with Phar-Mor and its parent company, Giant Eagle Inc., a Pittsburgh-based grocery chain.

Monus' trial begins 22 months to the day after Phar-Mor announced his firing. The company filed for bankruptcy court protection a few weeks later.

Monus has said he lost millions of dollars in Phar-Mor's fall. After he was fired, the company suspended its involvement with many sideline ventures in which Monus had an interest.

Phar-Mor also fired chief financial officer Patrick Finn and vice president of finance Jeffrey Walley. They were accused of inflating the company's worth on financial statements to dupe banks and investors out of more than $1 billion. The company has estimated it lost $499 million from the scheme.

Walley pleaded guilty in February 1993 to charges of aiding and abetting bank fraud and related charges. He was sentenced to six months of home detention and three years of probation.

Finn, who pleaded guilty a month later to mail fraud, bank fraud and other charges, was sentenced to 33 months in jail.

Both have agreed to testify against Monus.

by CNB