McKesson & Robbins, c. 1952.
McKesson & Robbins was one of the first wholesale houses to manufacture therapeutic drugs and chemicals in the country. Today, it is the 7th highest revenue-generating company in the U.S. and is on the Global Fortune Global 500 list.
The pharmaceutical company was named for Charles M. Olcott in 1828, with founders John McKesson and Charles Olcott. The company took the name of both of its partners in 1833 and was renamed Olcott, McKesson & Co. In 1853, after Daniel Robbins joined as a partner and founder Charles M. Olcott passed away, the company took the name McKesson & Robbins. Mckesson & Robbins dealt with the importing and wholesale of botanical drugs, therapeutic drugs,and chemicals. In the early 1900s, numerous wholesale firms were persuaded to join as subsidiaries of McKesson and Robbins, making the firm the leading distributor of pharmaceutical products in the country. However typical the company's growth seems from its founding to present success, this is not a story without some scandal! The McKesson & Robbins Scandal of 1938 was a watershed case that prompted massive reforms in auditing procedures and corporate governing structures.
In 1925, the company was acquired by Phillip Musica, a swindler who then worked under the alias F. Donald Coster. Musica, a two-time convicted felon with a three-decade spanning criminal career, was a master of fraud. He began his career by creating an import-export operation. After being busted for tax evasion, fraud, and bribery, Musica served time in jail. However, his one-year sentence was cut to just six months after President Howard Taft pardoned him.
Musica later founded U.S. Hair, which was a front used to sell tonics that could be distilled to make alcohol during prohibition. After the project collapsed, Musica, now going by the name "Frank D. Costa" founded Adelphia Pharmaceutical Manufacturing as yet another front for bootlegging. Musica a.k.a. Costa manufactured "Dandrofuge," a hair product that used a high volume of alcohol. With this business, Costa was permitted to acquire 5,000 gallons of alcohol per month. Most, if not all of the company's profits came from beer and liquor bootleggers. Musica later purchased McKesson & Robbins as "F. Donald Coster." From 1927 through 1938, Musica cashed in on the company's assets. In 1938, it was found out that $20 million of the company's $87 million of assets were falsely reported. Musica had stolen about $3 million for his own gain over the decade he was head of the company. "F. Donald Coster" was arrested by the Security Exchange Commission (SEC) and released on bond. Before the SEC realized that "Coster" was only an alias for Musica, and moved to rearrest him, Musica committed suicide. In his four-page note, Musica wrote: "“As God is my judge, I am the victim of Wall Street plunder and blackmail in a struggle for honest existence."
Ultimately, the scandal led to a massive change in American auditing standards and security regulations. McKesson & Robbins, now known as McKesson Corporation, recovered from the hit, moving forward to secure a place as one of the largest pharmaceutical companies in the United States.
