ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, February 15, 1996 TAG: 9602150092
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: PITTSBURGH
SOURCE: Associated Press
Jurors found the accounting firm of Coopers & Lybrand L.L.P. liable Wednesday for failing to uncover $500 million in fraud at the troubled Phar-Mor Inc. discount drugstore chain.
Four Phar-Mor investors sued the accounting firm, claiming it should have done more digging to uncover bogus inventory entries engineered by Phar-Mor's former president, Michael I. Monus. The investors were Sears, Roebuck & Co., Westinghouse Electric Corp., Debartolo Realty and the Equitable Life Assurance Society.
After the fraud was uncovered, Youngstown, Ohio-based Phar-Mor laid off 16,000 people, closed 200 stores and sought protection from creditors in U.S. Bankruptcy Court.
Coopers & Lybrand will appeal the verdict, said its chairman, Nicholas Moore.
Another jury will decide later what damages New York-based Coopers & Lybrand, one of the nation's six largest accounting firms, must pay. That part of the trial has not been scheduled.
Coopers & Lybrand has said the audit was meant to report on whether Phar-Mor executives' financial statements were calculated using accounting standards.
``The real villains in the Phar-Mor affair are the company's former senior management who conceived and carried out the fraud,'' Moore said.
Monus was sentenced to nearly 20 years in prison by a federal judge in Cleveland last year. Patrick Finn, the company's former financial officer, testified against Monus and was sentenced to 33 months.
LENGTH: Short : 39 linesby CNB