Scandal-Ravaged Phar-Mor’s Suppliers and Investors Fret

YOUNGSTOWN, Ohio — Fallout from the financial scandal surrounding Phar-Mor Inc. spread Thursday as suppliers worried about getting paid and a big company disclosed a substantial investment in the discount drug chain.

The fast-growing chain of 305 stores based in Youngstown announced Tuesday that it was taking a $350-million accounting charge to cover losses from an alleged swindle involving its ousted president, Michael I. Monus, and former chief financial officer, Patrick Finn. Both were fired last week.

The company said the pair diverted money for professional sports ventures and personal use and fraudulently inflated profits to hide losses. The alleged embezzlement plundered more than half the company’s worth, stunned employees and led to speculation of severe cutbacks or worse.

Monus, a prominent business figure whose expansion of Phar-Mor around the country had made him a civic leader in Youngstown, has been unavailable for comment.

Finn also has been unavailable for comment. His Cleveland attorney, Gerald S. Gold, said Monus “got involved in a situation, and he didn’t know when to stop.”

No charges have been filed, but Phar-Mor has asked the FBI and U.S. attorney’s office to investigate.

There were signs that the fallout from the Phar-Mor scandal was widening. Westinghouse Electric Corp., for example, disclosed that its Westinghouse Credit Corp. subsidiary had an $84-million investment in the drug chain and “believes there is a probability of a loss.”

Westinghouse said it holds about $50 million in Phar-Mor bonds, $26 million or about 3% of its common stock and an $8-million indirect investment through a limited partnership.