ABSTRACT
F. Donald Coster, M.D., Ph.D. was the president and largest shareholder of McKesson & Robbins, a 100–year–old pharmaceutical company with annual revenues exceeding $170 million. Musica/Coster used his bootlegging profits to purchase McKesson & Robbins, a struggling but respected 90–year–old company that sold milk of magnesia, cough syrup, and quinine. The company’s financial statements, audited by Price Waterhouse & Co., boasted $174 million of revenues and $87 million of total assets. The McKesson & Robbins fraud occurred at a Canadian subsidiary, McKesson & Robbins, Ltd. (M&R, Ltd.). M&R Ltd.’s primary purpose was to enable the Musica brothers to skim profits from McKesson & Robbins. The man most responsible for uncovering the McKesson & Robbins fraud was the company’s treasurer, Julian Thompson. Coster was unable to comply with the board’s directive—there was no Canadian inventory to liquidate—so he argued that it was important that all the subsidiary’s profits be reinvested to expand its operations. Thompson found the argument unconvincing.
