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There's no documentation it's the smoking gun--an alarm sounding privately before the fraud and embezzlement scandal was revealed publicly-only confirmation that Phar-Mor's legal guns are firing the best bullets they can muster.
The battle is over a memorandum dated May 31, 1991, from Charity Imbrie, then Phar-Mor's general counsel, to company chairman David Shapira and his brother, Daniel Shapira, outside counsel.
Jay Alix & Associates, the Southfield, Mich., CPA firm appointed examiner in Phar-Mor's Chapter 11 bankruptcy case, filed a motion Sept. 9 to compel production of the memo, claiming Phar-Mor intentionally impeded its investigation by not disclosing its existence.
According to bankruptcy law, an examiner can be employed by the court, at the debtor's expense, to determine whether creditors were defrauded, and if so, how and by whom.
Jay Alix filed the draft report of its findings Aug. 31. It's not known whether production of the memo in question will necessitate another draft, but it's clear the examiner wants all the evidence that can be gathered.
David Shapira has consistently said he first learned of the estimated $499 million fraud and embezzlement scheme in July 1992, and took prompt action to identify the ringleaders--allegedly former president Mickey Monus, former chief financial officer Patrick Finn and former vice president of finance Jeffrey C. Walley--all of whom were ousted by Shapira and subsequently indicted on federal charges.
The timing of the memo-May 31, 1991--coincides with the month when the now defunct World Basketball League began its fourth season of play--a season that would consume almost $4.4 million in Phar-Mor funds, claims the 129-count indicrment accusing Monus of embezzlement and fraud.
May...