Hopes dim for Monus to keep assets

He owes $10 million in back taxes and penalties on embezzled money.
& lt;a href=mailto:shilling@vindy.com & gt;By DON SHILLING & lt;/a & gt;
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Mickey Monus stands to leave prison in two years with all of his assets turned over to the government and Giant Eagle seeking $50 million from his future earnings.
The imprisoned business executive has been losing court battles against the Internal Revenue Service and grocery chain for years but has refused to give up.
His 11-year-old personal bankruptcy case appears to be nearly over, however, said Harry Wright, a Columbus attorney representing the trustee who oversees the case.
As the case stands, the IRS would receive almost all of Monus' $4.8 million estate, Wright said. The state of Ohio also would be the only other creditor to receive money, $50,000 for a tax claim. Bankruptcy law says tax agencies must be paid ahead of other creditors.
Awaiting decision
The bankruptcy court in Youngstown upheld an IRS claim that Monus owes $10 million in back taxes, interest and penalties. Taxes are owed on the money that Monus embezzled from the former Phar-Mor drugstore chain which he founded, the IRS says.
Monus has appealed this ruling twice in the past four years and lost. Most recently, he has asked a federal appeals court to reconsider its decision.
Wright said he hopes to have a decision from the court within 60 days. If it doesn't change its decision and no appeal is made to the U.S. Supreme Court, Wright said he will begin work to wrap up the case and pay the IRS and Ohio.
The money in the estate was generated by the sale of Monus' real estate, artwork and business interests.
Giant Eagle's claim
Giant Eagle, however, has received a court order that allows it to pursue a $50 million claim against Monus' future earnings.
Normally, a creditor's claims disappear when a bankruptcy case is completed, even if it doesn't receive any compensation. Judge William Bodoh of bankruptcy court ruled last week, however, that Giant Eagle can continue to pursue its claim.
"They have the right to go after Mickey Monus for the rest of his life," Wright said.
He said Giant Eagle probably would have to file a lawsuit to get the money.
Bodoh ruled bankruptcy law allows Giant Eagle to pursue its claim because Monus shredded documents related to Phar-Mor finances just before the company filed for bankruptcy in 1992.
Giant Eagle says it is owed $50 million because it bought Phar-Mor stock for that amount in 1989 and 1990 on the basis of financial information that was falsified by Monus. He concealed about $150 million in company losses, including $9 million in unauthorized checks written to the World Basketball League, which he also founded, Giant Eagle says.
Michael Bernstein, a spokesman for the Pittsburgh-based grocer, said Giant Eagle is pleased with Bodoh's ruling but didn't want to comment further because of the possibility of appeal.
Wright said Monus has been acting as his own attorney with the help of the law library at the federal prison in Elkton in Columbiana County. Bruce Epstein, a Boardman lawyer listed in court documents as representing Monus, declined comment.
Monus was convicted in 1995 on 109 counts of fraud and embezzlement charges. He was sentenced to nearly 20 years but that was later reduced on appeal. The federal Bureau of Prison's Web site says his release date is December 2005.