Unraveling Phar-Mor: A Study on Corporate Fraud

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Case Study Examination and Ethical Questions Fraudulent activities within a company can lead to its downfall and prosecution of those responsible for said fraud. More than 80% of fraud committed within an organization occurred within accounting, operations, sales, executive or senior management, customer service or purchasing according to an Association of Certified Fraud Examiners (ACFE) 2010 survey (Association of certified Fraud Examiners, 2010). In the case of Phar-Mor, the fraud was initiated by the Chief Operating Officer (COO), Mickey Monus, and supported by the Chief Financial Officer (CFO), Patrick Finn in response to declining profits of the company. Case Study: Phar-Mor Fraud can be perpetrated by anyone within an organization. Where the blame lies is dependent upon who commits the fraud, and the length of time it goes undetected. IN the case of Phar-Mor, the fraud the inevitably resulted in the destruction of the company was perpetrated by Mickey Monus, the COO, but is he solely to blame? Not in this case. Yes, he utilized his authority to perpetrate the fraud, however his CFO, not only agreed to comply with Mr. Monus’ instructions, he was later assigned the job of continuing to falsify the financial statements. Furthermore, Mr. Anderson, the accounting manager also became embroiled in the fraudulent activities. …show more content…

Mr. Cherelstein had been informed of the company’s dual accounting records. Though he did not initiate or participate in the fraud, he engaged in the first step of Rest’s model because he was now aware of the unethical situation and its immorality as he felt compelled to do something about the situation. Furthermore, he understood that should the fraud be brought to light or suppliers refuse to stock the stores, it would result in the end of the

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