ROANOKE TIMES
Copyright (c) 1995, Roanoke Times
DATE: Friday, December 1, 1995 TAG: 9512010024
SECTION: BUSINESS PAGE: B6 EDITION: NEW RIVER VALLEY
DATELINE: CLEVELAND
SOURCE: ASSOCIATED PRESS
MEMO: shorter version ran in the Metro edition.
A lawyer for Michael Monus, co-founder of Phar-Mor Inc., argued Thursday that the retailer actually benefited from the fraud and embezzlement scheme Monus directed.
J. Michael Murray also accused the government of exaggerating the losses of the discount drugstore chain to justify a long sentence for Monus.
Monus, 48, faced penalties of 1,246 years in prison and $36 million in fines on more than 100 federal felony counts of fraud, embezzlement and tax evasion. U.S. District Judge George White recessed Thursday's hearing until today.
Under federal sentencing guidelines, Monus' sentence will depend on a variety of factors, including a final determination of Phar-Mor's losses. The company estimated its losses at $500 million.
Under the government's calcuation, Monus should receive between 14 and 17 1/2 years in prison, Assistant U.S. Attorney John Sammon said. By Murray's calculation, the most Monus should receive is about five years.
Murray acknowledged that the jury decided that Monus inflated the inventories and juggled the books to hide the mounting losses of the Youngstown-based discount drugstore chain.
Even if he did all that, Phar-Mor benefited from the $1 billion that banks and investment groups put into the company on the strength of Monus' phony financial data, Murray said.
``Phar-Mor used that money to expand, used that money to increase its inventory, used that money to increase its stores,'' Murray said.
``In a sense, when one considers what happened here, any Phar-Mor losses that the government seeks to include ... represent disgorgement of Phar-Mor's ill-gotten gains,'' Murray said.
Sammon called the contention ``truly absurd.''
``To view Phar-Mor as anything but a victim in this case is outrageous,'' he said.
Monus and two other top executives were fired in July 1992 after Phar-Mor said it had discovered evidence that its books and inventory records had been altered.
Monus' first trial, in 1993, ended in a hung jury; charges of jury tampering are pending.
In his second trial, Monus was convicted on all charges: 96 counts of interstate transportation of stolen property; five counts of wire fraud; two counts each of bank fraud, mail fraud, and filing false income tax returns; and single counts of obstruction of justice and conspiracy.
LENGTH: Medium: 55 linesby CNB