Friday , December 14, 2018

August 2012

Featured In This Issue

August 2012


Hot dogs, popcorn, beer and baseball—America’s favorite pastime comes to uptown Charlotte. But it doesn’t come as a coincidence. It’s taken six years of blood, sweat and community support to get it here.

Just a month ago,Charlotte’s City Council approved the financial plan for building the new ballpark for the Knights at the Third Ward site, between Graham, Mint and Fourth Streets andMartin Luther King Jr. Boulevard, along with a $7.25 million grant to support the ballpark construction.

Come April 2014, both white collar and blue collar can sit elbow to elbow watching the Charlotte Knights play ball during their lunch breaks. This could be the stepping stone to building a baseball culture that hopefully someday could support a major league baseball team in Charlotte.

“For now, AAA baseball is a still a good move uptown and an even better business decision,” says Charlotte Knights General Manager Dan Rajkowski. With plenty of room surrounding the future stadium, City Center Partners says the Third Ward would be a “super catalyst for development.”

Rajkowski is not shy to share his vision about where he sees the team going in the future and why he thinks the Knights will become the most successful minor league baseball club in the nation.


Baseball is Good Business

“This isn’t just a ‘handout’ for a baseball team,” explains Dan. “Take away the warm and fuzzy feelings—the popcorn, hotdogs, mascots and players that make up baseball—this is really a business decision. It’s about a business in South Carolina relocating to North Carolina. And with any relocation comes the added benefits to the community. You get property taxes, jobs, sales tax, and food and beverage tax just like a corporate relocation.”

The money being used is from the hotel and tourism tax, private loans and the personal money of the owners, Don Beaver and Bill Allen. The land is leased for $1 per year for 49 years from Mecklenburg County. Rajkowski points out that, given the confidence of lending institutions these days, if loans are approved (especially this large), they’re looked at very carefully to ensure the plans will work, to ensure that the plan is a smart one for everyone involved.

“Taking comparables from other cities with successful uptown ball clubs such as Toledo, Sacramento and Columbus, it only makes sense to bring the Knights uptown. These teams now average about 600,000 fans a year,” reports Rajkowski. The Knights get around 300,000 fans a year now in Ft. Mill and they’re losing money. They expect to double attendance in the new stadium and finally put the Knights’ bottom line back in the black.

But Rajkowski doesn’t just think they’ll do well. He’s confident that the Charlotte Knights will become one of if not the most successful AAA baseball clubs in the nation.

“Charlotte has everything and it’s so vibrant,” proclaims Rajkowski. “It has the light rail, the economy, uptown businesses, uptown living, and it’s a great place to raise a family. What better to do on a hot summer day than watch baseball with your kids and create memories that last a lifetime!”

“Putting the stadium uptown creates a 20-mile radius that hits a larger populated area. It makes the park more accessible for those in North Charlotteand even Iredell and Cabarrus counties. That’s what people want, they want it to be easy for them to take the family out for a game,” says Rajkowski. This is how the Knights plan to increase revenue from $3.5-$4 million to $10-$12 million a year.


Next Up

After hitting the tight deadline for submitting a stadium financial plan on June 30, the dream starts to become a reality. That may have been the last hurdle needed to get this project underway, but it sure wasn’t the first. The Knights have been campaigning since 2005, way before Rajkowski took over as GM. They’ve secured their financial investors and built strong relationships with the partners of Mecklenburg County and the City of Charlotte, as well as BB&T Corp. which has purchased 18 years of naming rights.

“The next thing to do is break ground in October, and I’m spending a whole lot of my boss’s money to make sure that happens,” laughs Rajkowski. He says that now it’s about the small details.

“It’s about making sure the team gets it built, built on budget, and built on time. We’re in full stride with architects and construction management folks. We have a great design of a building. We’re piecing together ticket packages and selling suites. We’re starting and building relationships with sponsors. Right now I’m spending a great deal of time working on the core of the building, making sure we’re looking at the details so we can get all the amenities we want in there and not go over budget.”

Some Charlotteans might be concerned about going over budget and leaving taxpayers stuck with the bill.

“If we do, then that’s the obligation of the ownership, not the taxpayers,” claims Rajkowski.

“This isn’t a building that if you miss by a couple of million dollars you go back to a ‘pot’ to fund the rest. The pot is the ownership. We may run into hurdles along the way, but my staff and I are committed to making this happen. I like my job…and don’t want to lose my job…so I’m going to do everything in my power to make sure that’s just what we do,” adds the GM with a chuckle.


Team Expansion

Of course where there’s growth, there are opportunities. The Knights support about 308 jobs in Ft. Mill, according to the team. The new stadium will obviously bring new construction jobs for electricians, carpenters, architects, landscapers, concrete workers, and so on. But what about afterwards? Well, from a study by UNC Charlotte economist John Connaughton, the new stadium is projected to support 490 full or part-time jobs.

Rajkowski also speaks about the development opportunities. He mentions the next closest ball park down the street, Durham Bulls Athletic Park. “That was just a ballpark 10 years ago,” says Rajkowski. “Now the development surrounding it is booming due to the American Tobacco Complex with shopping and restaurants such as Mellow Mushroom, Tyler’s and many more.”

The Charlotte Center City 2020 Vision Plan also recognizes the valuable potential of the Third Ward site. It calls for a “ballpark neighborhood,” with construction of Romare Bearden Park and streetscape improvements setting the stage for revitalization, and Knights stadium being key to catalyzing additional development.

As thick as the entrepreneurial spirit is in Charlotte, it’s certain there will be plenty of ways to take advantage of 600,000 plus fans swarming the Third Ward area. Rajkowski believes that area will soon boast hotels, apartments and condos, bars, and restaurants—not to mention the increase in advertising dollars. There’s lots of potential for the future of Third Ward, with development being the biggest.

The Knights couldn’t have picked a better time to move. They’re in 1st place in their league with 54 wins and only 42 losses. Of course, being a minor league team means they’re at the mercy of the big leagues. The White Sox have activated four key players so far this year and the way the Knights are playing there could be several more. Not even Rajkowski knows where they’ll be at come 2014.

“It’s always nicer when a team’s winning,” says Rajkowski, “but I want to focus on the core of baseball,” he says. “I want the fans to come out and have the best experience possible.

“I tell my staff that our goal is to have fans leave the ballpark not remembering whether we won or lost. I want them to enjoy the food, cold beer, the fireworks and talk about that foul ball they almost caught (or almost got hit by).

“Since the franchise left Crockett Park in 1989, there hasn’t been a true baseball community. The dads and moms that were kids then are going to be able to bring their children out to the show to relive those memories. There’s going to be something exciting about it like a honeymoon—everyone wants to be a part of it.”

Rajkowski says he can’t wait to have this conversation in October 2014 so he can say, “See, this is what we thought was going to happen!”

Aside from their nightly ball games, the Knights are going to hire full-time positions to attract other events. Anything from Rotary meetings to wedding receptions, banquets, concerts, and college and high school games as well.

“We’re not going to only rely on 72 ball games a year. The idea is to attract as many events as possible all year round,” asserts Rajkowski.


Batter Up

If the future prospects for the team are as cavalier as Rajkowski’s induction to baseball management, all will go well.

Rajkowski started as a general manager at the young age of 24 with the Blue Jays Class A team in Florence, S.C.

“I had players older than me,” remembers Rajkowski. “I learned a lot without the luxury of a big staff. Traveling to many different cities has shown me that this game isn’t about a player making $20 million a year. It’s about a guy who’s trying to make it to the big leagues. It’s personal. Fans have the opportunity to get autographs and actually talk to the players.”

From all of Rajkowski’s accomplishments throughout the years—including being inducted into the Knoxville Baseball Hall of Fame in 2000, being awarded the Larry MacPhail Promotional Award by Minor League Baseball for outstanding promotional efforts throughout the season, and many others—he still remembers the most memorable moment in his career.

“It was the day I stood on home plate inSevierville, Tenn., in 2000 and saw a packed house in a ballpark that I had worked to get for 10 years and helped to build. I want my second most memorable moment to be standing on home plate in BB&T Ballpark the day it opens.”

Rajkowski’s no stranger to taking franchises to the next level. Midway through the second year at Sevierville’s new ballpark Beaver asked him to go to New Orleans to make some adjustments.

From the helm of the Charlotte Knights, Rajkowski’s convinced the team’s hit a big home run in moving to Third Ward.

The name may be new but the service has roots that can be traced back for generations.

In April 2012, Wells Fargo launched Abbot Downing to address the financial needs of ultra high net worth clients, their foundations and endowments. Their suite of services exceeds traditional financial planning and is specifically tailored to manage the unique needs of a select market of households with $50 million or more of investable assets or a net worth of at least $100 million.

Formed by combining two Wells Fargo wealth management businesses—Lowry Hill Private Asset Management and Wells Fargo Family Wealth—it also has a North Carolina lineage through the former Wachovia family office, Calibre.

“Calibre’s roots date back to Winston-Salemand the early 1970s,” explains David Parker, managing director of the Abbot Downing office inCharlotte. “It was a specialized group created to serve the needs of families from three quintessentialNorth Carolinaindustries: tobacco, furniture and textiles. Abbot Downing is similar to Calibre in that it is a multi-family office practice but our new organization captures the best of the previous companies. We’ve pulled all those strengths together under the brand Abbot Downing.”


All-American History

History played a key role in choosing the name for the new brand. It was Wells Fargo’s Chief Historian Dr. Andy Anderson who suggested the name not only for its important role in Wells Fargo’s colorful beginnings but also for the qualities of the company that Lewis Downing and J. Stephens Abbot created when they built their first custom stagecoach in 1827.

Before railroads linked the American coasts, Wells Fargo used Abbot Downing stagecoaches to successfully transport their customers’ business across often inhospitable terrain to their final destinations. Since then, Wells Fargo has been indelibly linked through history and logo with the iconic stagecoach and the company that built it.

Their Concord stagecoach was renowned for the smooth ride of its ingenious thoroughbrace design, its fine interior and the custom workmanship that allowed the coach to reliably traverse plains, deserts and mountains.

“The Concord stagecoach was a masterpiece of its day,” says Senior Vice President and Communications Director Sandra Deem. “Its builder, Abbot Downing, was known for custom craftsmanship and for providing a distinctive passenger experience. When we researched what clients wanted from us, we found that they wanted a distinctive experience. The Abbot Downing name perfectly conveyed that.”

Only about 10,000 U.S. households fall into the category of ultra high net worth individuals that make up Abbot Downing’s target market, but it’s estimated that this group collectively controls more than $1 trillion nationwide and is a growing segment both in the U.S. and internationally.

Director, Client Management Ann Marie Schmitz credits this partially to demographics. “Statistics show that 65 to 70 percent of U.S. businesses will transition over the next 10 years, largely due to baby boomers coming into large amounts of liquidity when they sell their businesses. That’s why this segment is growing.”

Director, Asset Management, Russell Wenner says that as of June 2012, Abbot Downing services more than 500 clients in all 50 states and has $30.7 billion in client assets through offices in San Francisco, Palo Alto, Los Angeles, Scottsdale, Denver, Houston, Minneapolis, Chicago, Philadelphia, Charlotte, Winston-Salem, Raleigh, Naples, Jacksonville, Washington, D.C. and Palm Beach.

Parker lists several factors that drove the decision to open the Charlotte office two years ago. Among them is the fact that Charlotte is the 17th largest U.S. city, ranks 7th in number of Fortune 500 headquarters and is home to 11 venture capital and private equity firms.

“Our client base consists of entrepreneurs, corporate executives, retired corporate executives and those with inherited wealth,” he says.

“Our clients are a cross-section of the strongest industries in the Carolinas,” adds Schmitz. “But there is no stereotypical Charlotte client. We see first generation new wealth but we also have fourth and fifth generation clients.”

“The Charlotte office is responsible for the greater Charlotte area and the entire state of South Carolina. Since many of our client families are multi-generational with members disbursed throughout the U.S., we’re often traveling throughout the country. Wherever the families are is where we are.”


The Best of Both Worlds

Abbot Downing currently serves some 15 families out of their Charlotte office. With two client managers, the Charlotte office has an even more desirable ratio than the corporate goal of 15 clients to one professional.

“We have the resource of time,” explains Wenner. “I don’t handle 50 clients; I handle, at most, 15 at any time. It allows us to provide a highly dedicated rate of service.”

“All of our clients are treated with the highest level of service delivered today,” adds Parker. “I equate it to the premier luxury brands such as Tiffany’s—that’s the level of service excellence we provide.”

“Our goal is to always exceed our clients’ expectations and we often receive feedback that we do,” explains Schmitz.

A former Calibre client who continues as a client of Abbot Downing agrees. He relates how he was recently working against a deadline to transfer funds for a donation to a charitable remainder trust for the benefit of his alma mater and for various reasons, including an upcoming holiday, he was having difficulty getting it accomplished.

“That was when David Parker jumped in and took care of it for me,” he recalls. “The entire staff goes out of their way to assist clients. There’s real personal attention.”

But outstanding service isn’t the only reason he is an Abbot Downing client. “They offer a wide range of unusually sophisticated investment opportunities,” he says. “Part of the reason for that is the size of Wells Fargo. It has huge amounts of dollars under management and so they can offer investments not available to smaller firms.”

Deem describes it this way, “Abbot Downing delivers a small boutique feel with an intimate service model of highly experienced and credentialed people who know their clients and their clients’ families personally, and yet it also has the strength and the vast resources of Wells Fargo supporting it. That’s a real distinction for Abbot Downing.”


Unique Services for Unique Families

Unique wealth requires unique services and Abbot Downing uses four primary business lines to address the financial, social and personal dimensions of their clients’ needs: private banking; asset management; trust, fiduciary and administrative services; and planning and family dynamics.

Within each of these lines is a wide array of services tailored to meet the needs of the ultra high net worth client including business succession planning, specialized loans, philanthropic guidance, trust administration, custom credit solutions, estate settlement and fiduciary services.

Through Abbot Downing’s asset management team, clients can invest in hedge funds, private capital investments, private real estate, real assets, fixed income and equities often unavailable to most investors.

“For us, asset management is an approach, a philosophy and a process,” explains Wenner. “Everybody uses the term ‘risk management’ but the families we work with have already taken a risk and the reward for that risk is the liquidity they’ve built. My primary responsibility is to understand what they want that wealth to do for them and their families and then to protect that wealth so that it can meet their goals and be there for the generations going forward.

“We never make assumptions about a client’s goal. When we meet with a new client, I kiddingly say that my presentation is a blank sheet of paper. From an asset management perspective, the possibilities are almost endless.

“We have this broad platform with Wells Fargo, but I look at everything available within the organization and outside of it to see what best fulfills what my client wants to accomplish. My loyalty is to the client and what’s in their best interest.

“The challenge is that sometimes their goals aren’t realistic. That’s when we have an honest, open conversation and that leads to a refining and prioritization of objectives. We use the term ‘steward’ in our mission statement. That’s a strong word and carries a certain amount of responsibility. There’s a responsibility to our client to not just be ‘yes men.’ We work with them to accomplish their goals but we do it in the appropriate manner,” affirms Wenner.


A Family Vision

Determining goals can often be challenging for the high net worth client. Family members can have differing and even conflicting goals. Several generations with distinct perspectives are often involved. And in some cases, differences arise when some family members work within the business and others do not. All this adds a high level of complexity to financial planning.

In response, Abbot Downing has a team of professionals from several disciplines that not only assist clients in clarifying goals but also in dealing with a wide range of “soft issues.”

“Our Family Dynamics practice is a huge differentiator for us,” Schmitz explains. “A vital role of this team is to be facilitators. We have licensed psychologists who work with families to determine goals or a family vision or mission. They facilitate the conversation, and often it’s a very difficult conversation when you have families with multiple generations. We help them clarify values, to communicate more effectively and to make decisions.

“We also have a lot of experience in managing multi-generational family transitions, whether it’s a business transition or assisting them in establishing and managing a private foundation.

“The Family Dynamics practice can also provide educational opportunities to younger generations. Reputation management is important to many families as is impactful gifting and giving and developing financial acumen. We provide programming to develop effective leaders for the next generation.

“Dr. Anderson, our chief historian, can research a client family’s roots to educate the family about the history, the social, economic and political changes and the cultural differences their family members overcame. It’s important for families to understand their history.”

“This industry is just beginning to recognize the importance of family dynamics for their clients,” adds Parker. “Our competitors like to use the terminology, but we’ve been doing this since the early years of Calibre. We’re not new to the game.

“This is a competitive industry but ourCharlotte office and each Abbot Downing office is leveraging all the experience of the 300 professionals across Abbot Downing. Our professionals are very collaborative, both internally and with our clients’ other advisors.

“This is a business based on specialized expertise and it’s also based on relationships. We build strong relationships with our clients and our communities. Philanthropy is important to our clients, to Wells Fargo and to us. This year, Abbot Downing has made a commitment of $150,000 to non-profits throughout our regions and our Charlotte office is contributing and volunteering at The Harvest Center of Charlotte.

“It takes us back to the reason we’re in this business,” Parker continues. “There’s an intangible reward in working with these families, in understanding them and earning their trust and confidence, in developing a plan to achieve their goals, implementing it and seeing the benefits and in engaging all the different generations in a shared family vision. There’s nothing more rewarding than that.”

Rick Admani and his brother Ramzi Abulhaj are the owners of Prodigy Diabetes Care, located in Charlotte on the I-77 corridor near Northlake Mall. Prodigy designs and manufactures medical testing kits and supplies for glucose level monitoring by people with diabetes.

The brothers’ family has a history of diabetes, and their grandfather lost his eyesight because of the disease. For Admani and Abulhaj, it was the impact of this disease on their family that led them to the business they have built. They believe that if better blood glucose monitoring devices had been available—especially for the vision impaired diabetic—their grandfather might still have his sight.

Spurred by this experience, Admani and Abulhaj brought an innovation to the diabetic community by creating the first blood glucose testing devices that provide audible results in addition to a visual display.

People living with diabetes struggle daily with their body’s inability to produce or effectively use insulin, a sugar-removing hormone that enables cells to receive the energy needed to function. An insulin deficit leaves you with too much sugar in your blood. This is akin to having a car with a tank full of fuel but no ignition key. You have no way to start using that fuel.

Over 16 million Americans live with diabetes, with adult-onset being the most common type. Those prone to Type II diabetes are individuals over 40 who are overweight and lead a sedentary lifestyle. Quite often diabetics also have sight-threatening eye problems including glaucoma, diabetic retinopathy and cataracts.

According to the CDC, obesity now affects 17 percent of all children and adolescents, tripling the rate found only a generation ago. Almost one half of those 16 million people will develop some level of diabetic retinopathy—with up 25,000 individuals going blind each year.

Given the consequences, it is easy to understand the importance of monitoring glucose levels. It is also important that the monitor be easily read by the individual. This is especially true in the case of an individual who is already visually impaired as a result of the disease. Until Prodigy introduced its line of talking meters, patients had to read a digital display to obtain their results.


Personal Commitment

Admani and Abulhaj were born and raised in Jerusalem, but moved to theUnited States in their teenage years. Both attended college in Minnesota. Admani studied biology and engineering, and was drawn to the health care field. Abulhaj, five years older than Admani, focused on engineering.

“I am now working more on the growth of our company, including research and development of new products through engineering—more of the big picture of the company,” says Abulhaj. “My brother basically handles the day-to-day operation from sales to marketing to purchasing to shipping and receiving. We have found that this division of responsibilities keeps the company operating and moving forward at the same time.”

“We’re about keeping people healthy through self-monitoring when they’re stricken with diabetes,” adds Admani. “We want to make sure they have the correct preventive maintenance. This disease is an epidemic right now. The statistics show that more people are developing diabetes because more people are overweight, inactive, and have poor diets. Studies predict that more than half of all Americans could develop diabetes or pre-diabetes by 2020.”

“We looked at several locations for our business, and decided to operate fromCharlotte because of the pool of educated labor in place, the mature interstate trucking industry and airline hubs, and geographic accessibility in general. We supply Medicare patients around the country, and they depend on us. We have to be able to deliver our product every day to every place, and Charlotte is great for that.”


Healthcare Business Model

Diabetes is a silent killer and regular monitoring is critical. Meeting the need for self testing seemed to be a straightforward proposition. But competition in this industry is tough, Adman says, because the market is dominated by four mega corporations, Johnson & Johnson, Roche Diagnostics, Bayer and Abbott.

“These companies spent hundreds of millions in marketing and sales departments,” laments Admani. “We had to figure out how to introduce a better product at a lower price without having to spend that kind of money on marketing. Unlike the big companies, we don’t have a huge sales force that approaches doctors to convince them to prescribe our products for patients.

“Instead, we go to the payers, the insurers, and show them the savings they can achieve with us. This is our strategy: produce an innovative, high quality product that costs less money, and pass the savings on to the consumers.”

Admani says Prodigy’s products provide the same clinical data, accuracy and precision as the big manufacturers, but at a large reduction in price. The key to Prodigy’s success, he says, is the innovation of the audible meter, the quality of its products, and its perseverance in the marketplace.

“Because of our audible meters, diabetics with low vision or blindness can test their blood sugar without assistance from anyone else. Though we developed the products for those diabetics with vision problems, all diabetics can use the meters and benefit from the audio features. A study by the Universityof Florida has shown that patients who use an audible meter are more likely to test as directed by their doctor.

“We tried to find a niche that’s attractive to everybody in the market, one that will be beneficial to the physician, patient and health care company. We do this at a small fraction of the price charged by the big companies. That is basically why we have succeeded. With our focus on quality, continued innovations for patients, and low costs in a tighter health care spending environment, we expect that demand for our products will continue to grow.”

Prodigy is focused on quality control for its products, Admani says. Diabetic patients need to get accurate and reliable results. In addition to testing at the site of manufacturing, the company has a lab in Charlotte that tests every lot of meters and test strips before they are shipped to any customers.

“Our main competitors are the big four companies. We compare our product quality-wise to all of these brands. Results consistently show that our quality is as good as, if not better, than their products,” he asserts.

Prodigy also prides itself on being small enough to make decisions quickly, without all the red tape of a mega multi-national corporation. Abulhaj points out, “We can listen to the diabetic community and adjust our products to respond to their needs without having to go through months and years of focus groups and committees.”


Wide Vision

Admani has spent 22 years in health care. He and Abulhaj are true entrepreneurs, having always been drawn to creating their own opportunities rather than working for someone else.

The brothers have a deep working knowledge of the global economy. They have visited various locations throughout the world to research manufacturing processes and options.

According to Admani, “You have to have a wide vision. We have some product needs that are best done overseas. We also have many requirements, whether because of the level of technology, automation, and engineering that we want to do domestically. We try to find that balance. It’s important to us that we are an American company selling products to Americans.”

Prodigy Diabetes Care distributes its products for patients insured under the federal Medicare program, Medicaid programs in many states, and for private health insurance providers. Prodigy’s reach, however, is worldwide. It is one of only seven North Carolina companies to receive the U.S. Commerce Department award for excellence in exporting.

“The Department of Commerce has been a great benefit to us in exporting,” adds Admani. “Our company buys a lot of products from overseas, and it’s important that we sell products to other countries. Commerce was invaluable in expanding the export business. They opened a lot of doors for me that I could not get through on my own. They bring a lot of credibility when you place your product on the market.”


Looking Ahead

Today, Prodigy’s revenues primarily derive from the sale of blood glucose meters and test strips. As the population of diabetics grows, and as health care providers realize the benefit to preventing rather than treating diabetic problems, Prodigy is poised to grow and innovate in its product categories. New features for existing products, and new products to help diabetics follow their testing plans, are always in the works at Prodigy.

“I believe that there are benefits to Obamacare,” says Admani, “because I think it will allow more people to pay for preventive testing through insurance. People who don’t have insurance typically won’t test. That often leads to higher costs for medications, surgeries and hospitalizations. Also, because the larger burden of providing insurance will fall on Medicaid and Medicare, the federal government will have to seek lower cost providers of quality products.”

Both Abulhaj and Admani agree, Prodigy is positioned well to meet the demand. They began the business that is now Prodigy in 2006 with only five employees; now they are approaching 100. The company has been recognized for several years as one of the fastest growing businesses in Charlotte, and in the southeast.

“I enjoy the technology side of our business. I am happy to provide a way for people all over the world to live healthier lives. I’m excited to operate a business that benefits our employees and their families here in Charlotte.”

Like a lot of immigrants, Admani came to this country and fell in love with it. He saw a better future, better opportunities for his children, and feels blessed to be here.

“Except for business travel, I am pretty much always with my wife and children. Family is the most important part of life. Our good fortune in Charlottehas allowed us to shoot for our dreams.”

What’s the harm in buying a Gucci, Prada, Fendi, or Dior designer bag knock-off? Who does it hurt? You might save hundreds of dollars and, well, it may look almost the same as the real one.

“Plenty” and “Lots of people!” answers Ross Bulla, president of The Treadstone Group, Inc. “Intellectual property infringement, including counterfeit manufacturing, is perceived to be a victimless crime—but it definitely is not,” maintains Bulla. “Companies suffer hundreds of millions of dollars in lost revenue which, in turn, results in job losses which, in turn, affect the entire economy.”

Bulla also cites brand damage for companies whose names are tarnished when counterfeit products fall apart or fail to fulfill their purpose. Even more serious, some counterfeit products can affect health and safety and even result in death, according to Bulla.

“Plus, we do know that counterfeit products have been used to sponsor and fund terrorist activities,” says Bulla. The protection of trademarks and design patents is just one of the areas of security expertise of The Treadstone Group, a 10-year-old company located in Denver, N.C.

The Treadstone Group is a global security risk mitigation and investigations firm which specializes in investigation and enforcement and acquisition of intellectual property rights; physical security risk assessments; and security consulting and litigation support. Intellectual property is defined as intangible assets that are proprietary to a particular owner; the most common properties are trademarks, patents, copyrights, trade secrets or domain names.

The nature of the work is extremely confidential and so, too, is Treadstone’s customer list which represents many of the largest brand owners in the world—Fortune 500, 100 and 50 companies in a wide range of industries including soft drink manufacturers, retail, automobile, consumer services and pharmaceuticals.

“We’re working with every industry I can think of and certainly have customers that are among the top 10 most well known brands.” says Bulla. “We also have smaller companies and start-ups, but many of them are multinationals.”

Sixty percent of Treadstone clients are businesses in the United States; 40 percent are abroad. Clients include corporate security departments, law enforcement agencies, event planners, transportation companies, high-profile delegates and speakers, local, state and national candidates and elected officials, contract security vendors and hotel and venue owners and managers.

While most of the firm’s investigation clients come from the private sector, some of its security consulting work is government-related. The company also offers training for law enforcement agencies.

“We’ve just instructed a course in dignitary protection for law enforcement through a local community college in preparation for the Democratic National Convention and are providing services to public and private sector clients involved in the DNC,” says Bulla.

The Treadstone Group operates with just five full-time investigators but employs a large group of sub-contractors around the world.

“Today, we may have an investigation in Russia; tomorrow, Istanbul; next day,Latin America,” says Bulla. “That’s probably the most challenging thing; coordinating all the subcontractors. On any given day, we will have five to 20 subcontractors at work in 20 different places, somewhere in the world.”


Name is Everything

Protection of intellectual property rights has become a huge industry with values measured in the hundreds of millions of dollars. Treadstone investigates how trademarks are used—in what types of services, where they are marketed and the critical question of how long they’ve been used in commerce.

“Trademarks exist to prevent customer confusion,” explains Bulla. “If you like a trademark that is used to sell shoes, you might be able to use it to sell tires, but you couldn’t use it to sell socks—too similar a purpose,” explains Bulla. “If both companies are doing the same thing, then it comes down to who was using the trademark first.”

Similar considerations go into a company’s trade dress, or design concept. For instance, most people (where Time magazine is marketed) could identifyTime magazine without actually seeing the name on the front of the magazine, so no one else can copy that. The same is true for the TGIF Restaurant chain’s red and white striped awnings and uniforms and the overall image of McDonald’s, according to Bulla.

The company also anonymously purchases trademark rights, domain names and patents on behalf of its clients. “We buy domain names for $100,000 from owners that may have paid in the single digits for them,” says Bulla. “Domain name owners are either the first to buy them or they paid a lot of money for them.”

Negotiations aren’t always easy. “When telephone negotiations fail, I literally fly into a town and knock on someone’s door to offer them instant retirement if they will sell their domain name to my client.” Domain names have been sold for as much as $8 million, according to Bulla.

Every investigation involves privacy issues. “We always have to be cognizant of whether it is legal to obtain certain types of information,” says Bulla. “We don’t knowingly break any privacy laws.”

Treadstone investigators, including Bulla, are private investigators, licensed by the State Department of Justice. Bulla is board-certified in security management and physical security. Continuing education is required to keep abreast of laws.


A Darker Side

Criminals infringing on design patents and engaging in counterfeit manufacturing and diversion activities bring about especially dangerous challenges. Very often, income from these activities is used to fund or supply terrorists. Bulla cites the large anti-terrorist busts in response to an illicit operation to divert counterfeit cigarettes here in North Carolina.

An ongoing problem exists with the purchase of large numbers of mobile phone handsets for the purpose of facilitating terrorism. All but the handsets are discarded. The handsets are then used by terrorist cells to make one phone call before being thrown away. Or the handsets are re-flashed or re-programmed to operate on a local carrier.

Worse yet, the phones can be used to detonate IED’s in Afghanistan and Iraq, according to Bulla, who confirms that some of their investigations have resulted in terrorism charges being brought.

Even when money is the chief motivator for counterfeit manufacturing, the results can be deadly. “Five percent of our medications in the United States are counterfeit,” says Bulla, who says they can be found in major retail stores. “Another problem is the redistribution of drugs that were manufactured according to the lower standards of other countries, back into the United States.”

Examples abound. According to Bulla, the American helicopter crash during the Iran hostage crisis was due to counterfeit products on the aircraft. “The counterfeit parts couldn’t withstand the conditions of the desert.” Bulla recounts other cases involving poisonous baby formula, exploding batteries, and teabags filled with sweepings off the factory floor including sawdust and rat droppings.

In certain countries, the problems are exacerbated by governments turning a blind eye. “In China there is a fake Apple store right across the street from the real one. The government makes money from it; there is no way to shut it down,” says Bulla in disgust.

Even in America, consumer education is the most difficult challenge. “There are documentary specials and news reports but consumers have short attention spans,” says Bulla, adding that it is also necessary to educate legislators to the loss revenue, job impact, damage to brands and dangers to consumers. As of now, most cases are handled in civil courts.


Building the Case

The Treadstone Group’s security consulting and litigation support division conducts investigations primarily for attorneys who represent clients or are in-house attorneys for corporate clients. To determine facts in civil claims, it interviews and vets witnesses—including field experts—and investigates backgrounds and reconstructs accidents to see if there is anything different from police reports.

“We’re looking for anything that would challenge credibility in a legal proceeding,” asserts Bulla.

On the physical side of security, The Treadstone Group provides security risk assessments for facilities around the world to identify vulnerabilities and make recommendations. The company’s team examines a facility’s physical access controls with regard to persons and vehicles and how they screen them.

It also looks at how the facility is protected physically and technologically with barriers, barricades, alarms, lighting, intrusion detection devices, guard forces and credentialing systems.

“Most of our work comes out of concern for terrorism, but we don’t focus solely on anti-terrorism. We also focus on preventing illicit entry, workplace violence and demonstrators,” says Bulla.


Law Enforcement Dream

“From the time I was four or five years old, I wanted to be a police officer or federal agent,” remembers Bulla, who grew up in Graham, N.C. After high school, he attended UNC Charlotte. His double major in criminal justice and psychology was purposely planned to prepare him to become a behavioral scientist with the Federal Bureau of Investigation, but inability to meet the vision requirements kept him out of the federal agency.

Bulla first went to work as operations manager with the Blockbuster Pavilion, now known as the Verizon Wireless Amphitheater, and continued to do security risk assessment and security management work within the private sector. He was then hired by the Atlanta Olympics and became one of its lead instructors, developing all of the security training programs for the 1996 Olympics.

“I fell into intellectual property by accident,” says Bulla. “I was working as a branch manager for a security guard company in Charlotte and a former secret service agent hired me for a company who did intellectual property investigations. I managed the anti-counterfeiting for a major auto parts manufacturer. That was my start.”

The company closed in 2001 but Bulla was armed with knowledge, experience and contacts. In 2002, he opened The Treadstone Group.

Fans of author Robert Ludlum’s Bourne Identity book series and the subsequent film versions will instantly recognize Treadstone as the name of the fictitious, CIA-backed, secret organization which programmed former agents into morally vacuous assassins.

“By the time the movie came out, everybody wanted to name their company Treadstone, but I had already registered the trademark rights,” smiles Bulla.

Despite a busy work schedule, Bulla is also committed to the local community. He says he’s aiming at a higher level of service with a run for the North Carolina Senate.

Bulla insists that he is not jaded by the job. “I see as many good guys as bad buys,” he says, adding that a lot of infringement is unintentional. “I look forward to coming to work every day; I always have.”

“I’m fascinated every day by the reality that a little unassuming building in a small town in Lincoln County and a handful of employees are involved in acquiring trademarks for major companies and investigating the world’s largest brands,” muses Bulla.

“I go home and see our work on national television, in magazines and newspapers—every day. The result of our work is visible everywhere.”


It doesn’t happen often. You find yourself walking through an extraordinary space. You want to keep on exploring what you’ve found. You marvel at the matchless architecture and design features enfolding before you. You are instilled with feelings of awe, inspiration, satisfaction and pleasure that a surrounding can be so beautiful, distinctive, intriguing and ultimately practical to its purpose. You are moved. The experience has enriched you.

That is exactly the type of reaction ai Design Group wants to evoke in its award-winning architecture and interior design work.

In their perch on the Green across the street from the convention center, amidst cosmopolitan thoroughfares, eclectic eateries, green space and art sculptures, they are immersed in the very creativity that they seek to design for others.


The Name Says it All

“Obviously our name is indicative of how strongly we feel about architecture and interiors,” says Kim Marks, one of three principals at ai Design Group along with Wes Jones and John Weller.

“We’re really focused on having one point of contact for our clients but being able to bring both the ‘a’ and the ‘i’ to the project and work together as a team,” she remarks. “We are almost half and half architectural staff and interior staff, really trying to bring the right person to the project no matter which side they are on.”

ai Design has always been involved in projects all over the map, both figuratively and literally.

“Many architectural firms have a client base that is primarily focused on one market sector. When that market sector tanks it can severely impact the firm,” explains Jones. “Being mid-sized and diverse is one of the keys to our success. We practice across many market sectors including automotive, corporate interiors, retail and racing. When we innovate in one area, such as racing, it carries over into our other areas of practice and keeps us thinking outside the box.”

Marks and Jones had previously worked together in Washington, D.C., in the early 1990s. First Marks, and then in 1995, Jones came to Charlotte and joined an older firm. Unfortunately, that firm, which was heavily invested in banking, was seriously affected by the economic downturn in 2000-2001, and the firm dissolved in 2003.

At that time Jones, Marks and Weller made the decision to form their own firm, taking 11 or so people from that former firm and carrying on with most of the non-banking work.

“It was a great way to get started because we got the pick of all the experienced people that we’d been working with for many years,” explains Jones. “As it’s worked out, many of those people are still here. It’s been a good fit and we have a very strong, experienced core of people.”

Initially located in South End in the Design Center before moving to their present location, the three have seen the city grow up around them. When they first came here, the Ratcliffe condominiums and convention center were the only anchors.

Now, nearly 10 years later, the cultural campus is complete and they find themselves in the center of the most exciting part of the city. One reason they are uptown now is their longstanding strong relationships with brokers in the uptown office market. But more than that…they just like being uptown and part of the center of the city.


Diversity is Key

While the economic downturn has presented challenges for the firm, it has been manageable at the same time. Their diversity of practice has been key to their survival.

Jones leads the racing and automotive areas and has had continued involvement in corporate office headquarters and office building projects. The dealership and racing projects have taken the firm all across the country and, in some cases with racing, overseas.

Jones began working on projects in the racing venue with Speedway Motorsports in 1996, and has been involved with them ever since, working on speedways all across the country. He also works with other racing project developers. The involvement has led to dealership work all over the country with Sonic Automotive as well as other dealership groups.

Jones’ corporate office headquarters projects are no less high profile for the likes of SPX, Time Warner Cable, Barloworld and Sonic Automotive.

Marks, with degrees in both interiors and architecture, manages the firm’s interiors practice and focuses on delivery of services to the building owners and management groups located uptown and throughout the metro area.

She says, “Our longstanding relationships with clients like Spectrum, Childress Klein and Trinity keep us continually sharpening our skills to make sure we remain highly competitive while delivering the highest quality product.” Marks’ projects have included the Charlotte School of Law, Fifth Third’s headquarters, and most recently, new offices for Babson Capital Management on two floors of the Duke Energy Center.

Weller focuses on developer-based architecture including everything from the high-end theater complex in Ballantyne and the Okatie Village multi-building complex in Bluffton, to smaller neighborhood centers, food stores and most recently, extensive work with the Automobile Association of America.

“While we each have our own areas of focus,” explains Jones, “there is also a lot of overlap between the buckets. Every market sector has been affected, but not necessarily all at the same time, so it’s sort of been an up-and-down thing since 2009. We feel like we’ve turned the corner, and we’ve even added three people over the last year or so.”

“The corporate world can require a sophisticated approach,” comments Weller. “We strive to develop strong relationships with corporate groups who have ongoing needs for design services.” He cites by example the work for AAA Carolinas to develop a prototype building incorporating their insurance group, travel agency and automotive service. As a result, they are working with AAA nationally to implement the prototype.

“The AAA development team leader had gone to other clubs around the country with this program and taken us with them to AAA Mid-Atlantic in the D.C. area,” says Weller. “We’ve started doing some work in for them in the Chicagoarea, New York and California. AAA has been a great client to have because their clubs have been able to continue developing through the down economy.”


A Collaborative Approach

Though ai Design Group is a mid-sized firm with one office in the heart ofCharlotte, they’ve teamed up with an alliance of architectural firms in different regions across the country as well.

Their work on various projects in collaboration with other firms led them to join the alliance branded under the name ONE. This is a way for firms of their size to band together for cross-marketing purposes and to serve clients nationally without having to maintain separate offices in multiple locations.

“We now have a peer group of all like-minded firms across the country,” says Jones. “While the idea is not new, it represents a tremendous resource for us and our clients going forward.”

Jones also describes how the delivery of their services has changed: “Working at a larger firm we worked with larger accounting and infrastructure systems—we were working with very large clients and so had to deliver our services in that way. Now that we’re registered and have worked all over the country, it has kept our perspective more national and not so totally focused on our immediate world here.

“This also keeps us fresh. We don’t take much for granted because when you go into a new locale, you’ve got to learn what the rules are anyway. Most companies would say they are service-oriented, but there is something about what we are doing service-wise that bears that out, because we do keep our clients for so long. We definitely are focused on what the client needs.”

“We also deliver within their time frame which is sometimes gracious and sometimes demanding,” adds Marks. “Our firm does not have to worry about scoring big on a particular project; we are expecting it to be part of a 10-year relationship.”


Creative Accomplishments

ai Design Group will celebrate their 10-year anniversary just after the first of the year and they have a lot to show for it. Although they’ve completed projects across the spectrum, they consider as some of their primary strengths designing amateur sports arenas, hospitality banquet and meeting spaces, critical infrastructure facilities, restaurant and food service venues, medical offices and higher education venues. Their marketing is now aimed at highlighting these areas of expertise.

“We’re also taking a real hard look at hotels morphing out of banquet meeting facilities, and further developing our hospitality sector,” says Jones. “And in the retail world, John is finding that even if they’re not building neighborhood centers, they’re still building food centers such as Food Lion or Bottom Dollar, which we’ve also done.”

“We have clients who know us as an interiors firm, ones who know us as a retail shell firm and others who know us as a racing design firm,” adds Jones. “Racing gets a lot of notoriety, but part of our mission is to get the message out that we are all of these things. It is core to who we are that we bring all these different points of view and areas of expertise to every project and to each of our clients,” Jones continues.

Jones admits he’s never worked in a firm that has such an equal weight and level of respect for both the architectural and interiors disciplines. A more typical firm has a stronger focus on one or the other. Trying to keep those disciplines integrated and working together has been a core part of their approach, he says, and they continue to structure their design approach around making that happen.

The principals believe wholeheartedly in the value of good design. They work to ensure the entire team at ai Design Group is very focused on design and strives to deliver the highest quality design solution within the project parameters. One of the keys to their success is their ability to do things quickly and at low cost, while being prepared to deliver a high end project when called upon—and knowing the difference between the two.

“We work hard to be a firm that can deliver every level of design solution our client’s may need, from the signature towers to prototype service facilities,” adds Jones. “That’s what the design part of the name is all about: understanding the opportunity and responding appropriately.”

For the ai Design Group, that sounds like a plan!

In 2002, the Carolinas practice of the global public accounting firm Grant Thornton was just getting underway with the acquisition of a local Charlotteaccounting firm. Ten years later, the Carolinas practice has become the firm’s third largest practice, trailing only New York and Chicago.

Over that same time period, it has flourished under its core leadership group of Brad Gabosch, managing partner of the Carolinas Practice, Randolph Smith, national managing partner for the transportation and trucking industry, and Mike McGuire, recently named national managing partner of markets, industry, people and culture.


Synergistic Returns

Grant Thornton’s rapid growth in the Carolinas was fueled by the May 2002 arrival of hundreds of associates from the Carolinaspractice of Arthur Andersen.

Grant Thornton offered Andersen’s Carolinas team the opportunity to move as a unit, while immediately giving Grant Thornton the critical mass they needed to become a key player in the public accounting business in Charlotte and the entire region.

The association has been a classic win-win, as a number of veterans of the Carolinas practice have become part of Grant Thornton’s national management team, and the Carolinas practice has emerged as a major force for innovation and talent development for the entire organization. The Grant Thornton name also now occupies a prominent place in the Charlotte skyline atop their offices in the Charlotte Plaza building.

Grant Thornton has a storied history, tracing its roots back to Alexander Richardson Grant, founder of Chicago’s Alexander Grant & Co. in 1924. Grant had been a senior accountant with Ernst & Ernst, but chose to leave to pursue his plan for public accounting. Grant was committed to providing services to mid-sized companies, a commitment the firm still holds today.

Despite Grant’s untimely death in 1938, Alexander Grant & Co. grew nationally over the ensuing decades, and expanded internationally in 1969 joining with firms from Australia, Canada and the U.K.

By 1980, Alexander Grant & Co. had joined with 49 other accounting firms, including Thornton Baker in the U.K., to form the global organization Grant Thornton International.

Following its merger with Denver-based Fox & Co. in 1985, Alexander Grant & Co. became the ninth largest accounting firm in the U.S. behind that era’s cadre of “Big Eight” firms. In 1986, both it and Thornton Baker in the U.K.changed their names to Grant Thornton, reflecting their affiliation.

Today, Grant Thornton LLP ranks fifth largest of U.S. public accounting firms, and is the U.S. member firm of Grant Thornton International Ltd., one of six global accounting, tax and advisory organizations. With 56 offices in the United States and nearly 600 offices in over 100 countries, the firm offers personalized attention and the highest quality audit, tax and advisory services to public and private clients all over the world.


Rebranding for Success

For over 20 years Mike McGuire and Brad Gabosch had worked together in Arthur Andersen’s Carolinas practice. But by March of 2002, as Andersen crumbled around them, McGuire, Gabosch and the other partners could see they would need to find a new home. Instead of scattering to multiple firms, as had many other Andersen offices, the Carolinas partners made a commitment to keep their team together, and joined forces with Grant Thornton.

“It was a lot of change for our team in a very short period of time,” remembers Tom Shepherd, one of the partners in Gleiberman Spears Shepherd & Menaker, Grant Thornton’s original acquisition in the Carolinas.

“First we changed to Grant Thornton, and then five months later we had the influx of around 250 Andersen folks. We had to blend three different cultures,” he explains. “Fortunately, when you have quality people working together, they work through the minor cultural differences. We all meshed very well.”

“When joining Grant Thornton, we felt like we were immediately part of the team, and I never felt like the new kid,” adds McGuire. “I give a lot of credit to Tom, who welcomed us with open arms, and put his own interests behind the interests of the firm.”

While the team moved as a unit, their clients had to be converted one by one, with competing firms working hard to lure them away. Further complicating their efforts, the Grant Thornton name was virtually unknown in the Carolinas. But within two months, a significant number of the Andersen clients were successfully transitioned to Grant Thornton, and the firm was well on its way to a successful launch.

“We were confident that many of our clients would follow us to Grant Thornton, but we didn’t know how many,” recalls Randolph Smith, who headed theCarolinas tax practice at that time. “We were optimistic that our clients would recognize they would be served by the same professionals with the quality, breadth and depth they were accustomed to receiving.”

McGuire identifies his three key milestones critical for a successful venture: “I knew that we needed to secure our client base, retain our quality team of professionals, and attract the best talent in the marketplace as we grew,” explains McGuire. “We kept our people together and we converted most of our Andersen clients.”

McGuire’s final checkpoint—recruiting new talent—was making sure a firm with little name recognition in the Carolinas could still attract quality talent from college campuses. At the time, interns and recent graduates who had thought they were going to work for Andersen had to be convinced to stay, and the upcoming recruiting season had to generate a strong crop of recruits for the following summer.

“As it turned out, we had one of our best recruiting years ever,” beams McGuire. “Our recruiting team did a fabulous job, and that’s when I knew joining Grant Thornton was going to work.”


Growing Leadership

“As evidence of a commitment to providing opportunity for our people, Grant Thornton has admitted 45 people in the Carolinas to the partnership over the last 10 years,” shares Gabosch. “Many of our leaders have grown up in the Carolinas and then have had the opportunity to grow their careers in other markets around the U.S. and the globe.”

With the move to Grant Thornton, Gabosch left his role as managing partner of the Carolinas practice to become Grant Thornton’s national managing partner for audit. McGuire replaced Gabosch as the managing partner in the Carolinas.

“I committed to a two-year revenue target and many may have thought I was crazy,” laughs McGuire. “We were going to go from nowhere to one of the largest offices in the firm in just two years. Well, we nearly hit that number in just one year. I’ve never seen a group of people work as hard as they did to make it happen. I was so proud of everyone on the team.”

When Gabosch became the national head of audit, he was first of a long line of Carolinas veterans who have gone on to play major roles in the national organization. But because Gabosch was immediately sitting at the table with the national leadership, the channels of communication were open and new ideas flourished.

One of the Carolinas partners who have taken on a major national role is McGuire. About two and a half years ago, Gabosch returned to his former role leading the Carolinas practice, and McGuire became the national managing partner for industry and market development (sales and marketing, industry programs, private equity, and client service). On August 1, McGuire’s leadership expanded again, to include national responsibility for people and culture.

“Of the six people who report directly to CEO Stephen Chipman, two came through the Carolinas practice—Trent Gazzaway, our national managing partner for audit services, and me,” explains McGuire. “Three members of our nine-member U.S. partnership board also have ties to the Carolinas practice—Randy Robason, Dave Wedding and Doug Gawrych. In addition, Ken Sharp, who once ran the Carolinas audit practice, is now the global head of audit for Grant Thornton International.”

McGuire believes that the Carolinas practice has been successful partly because of the unique leadership opportunities available to younger team members in the Charlotte community.

“The size of this city is perfect because Charlotte is a large business center, but it is small enough to let our younger people take on leadership roles in civic organizations,” says McGuire. “I think it helps us develop our people, and I really believe that one of the reasons our people have been so successful in leadership roles is because of the experience they can get in Charlotte. I think this community is a very open and embracing community where young leaders can develop and flourish.”


The Instinct for Growth

In 2002, Grant Thornton was primarily an audit and tax firm, having sold their consulting practice a few years earlier. But with newer regulations, the team knew they needed to re-establish an advisory services practice to include litigation support, forensics, Sarbanes-Oxley consulting, valuation, and mergers and acquisitions. The Carolinas practice also built expertise in managing large-scale engagements involving as many as 500 people from around the firm.

“The Carolinas practice was the incubator for a lot of our firm’s new initiatives,” says Gabosch. “We had the vision to go out and start some of these services and make them into lines of business. As a result, a lot of our people have been promoted into national positions.”

“The economy over the last four years has been tough on businesses,” continues Gabosch, “and we provide the type of advisory services that help our clients figure out their path forward.”

“We built a corporate restructuring service at just the right time,” adds McGuire, explaining how the recession has offered Grant Thornton opportunities to help clients weather the storm. “We serve as the chief restructuring officer for companies and get them back up and running.”

For Grant Thornton’s Carolinas practice, their instincts have proven well-directed.

Says CEO of Grant Thornton LLP Stephen Chipman, “The Carolinas practice is one of our leading practices, helping our dynamic clients achieve their potential for growth.

“The commitment of the Carolinas leadership team to quality, our clients and employees led them through a difficult transition. They persevered and are continually recognized for their contributions to the firm.

“This practice has managed some of our firm’s largest engagements, is a consistent revenue leader, and is recognized as a notable local employer.”

Ed Nusbaum, CEO of Grant Thornton International, who was the CEO of the U.S.affiliate when the combination took place, lauds their “outstanding leadership in helping dynamic Carolina companies grow their businesses.”

He says, “The ultimate winners have been our clients and the former Andersen clients through our combined world-class repository of best practices, intellectual capital, and professionals with an instinct for growth.”

“Ed made a bold move to take us 10 years ago, and the firm has nearly quadrupled in size over the last decade,” adds McGuire.

“There is a tremendous sense of pride in what we have accomplished,” adds Gabosch. “But this is still an entrepreneurial play because it isn’t all built yet. A young person can still influence how things get done around here.”

“We felt from the beginning that the real benefit of this transaction was for our younger people,” McGuire concludes. “We thought this was a platform where they could thrive in a rapidly growing firm where there will always be an appetite for talent that allows our people to take on new roles and gain new experiences.

“As we look back now on the last 10 years, the reality is greater than the dream.”


Fresh Start Installment Agreement

An installment agreement provides taxpayers who are unable to pay their entire tax liability immediately the ability to pay a set monthly payment (equal amounts), as determined by the IRS under their guidelines, over a period of time. However, penalties (rate reduced) and interest continue to accrue on the outstanding tax liability and, therefore, the taxpayer will end up paying more than the original tax liability owed.

Generally, an installment agreement will suspend enforcement collection actions such as levy/garnishment while the IRS considers an installment agreement, for 30 days after the rejection of an installment agreement request, during the time period the IRS considers an appeal of a rejected or terminated agreement, or while an agreement is in effect and the taxpayer is in compliance.

Note that the collection statute (10 years from the date of assessment) is suspended upon the submittal of the installment agreement, 30 days after the rejection of the installment agreement, and during the time period the IRS considers an appeal of the rejection of the installment agreement.

The IRS doubled the threshold amount from $25,000 to $50,000 for qualifying under a streamlined installment agreement without providing the IRS with financial information, i.e. Form 433-A, Collection Information Statement. Additionally, the IRS increased the maximum payment term for such streamlined installment agreements to 72 months, up from 60 months.


„For balances of $25,000 or less, the following criteria must be met:

  • The tax liability (taxes, penalties and interest) must be paid in full within 72 months or prior to the expiration of the collection statute (10 years from date of assessment), whichever is earlier
  • Taxpayer must be in compliance with all tax return filings and payment requirements
  • The installment agreement can apply to any type of tax (i.e. Form 1040- Individual Income Tax, Form 941-Trust Fund (employment taxes), etc.)


„For balances between $25,001and $50,000, the following criteria must be met:

  • The tax liability (taxes, penalties and interest) must be paid in full within 72 months or prior to the expiration of the collection statute (10 years from date of assessment), whichever is earlier
  • Taxpayer must be in compliance with all tax return filings and payment requirements
  • If an individual, the installment agreement can apply to any type of tax (i.e. Form 1040- Individual Income Tax, Form 941-Trust Fund (employment taxes), etc.)
  • The streamlined installment agreement is also available to defunct sole proprietors who owe any type of employment tax
  • Payment must be made by Direct Debit drafting of taxpayer’s bank account
  • A limited amount of financial information may be required for application


Fresh Start Offer in Compromise

An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities, including penalties and interest, for less than the amount owed. An OIC is generally not accepted if the IRS believes the liability can be fully paid as a lump sum or through an installment payment agreement. However, the IRS is likely to approve the OIC if they believe it is the most they can collect within a reasonable period of time.

In determining the taxpayer’s reasonable collection potential, the IRS will analyze, based on Form 656 (OIC) and as applicable Form 433-A (Individual) or Form 433-B (Business), the taxpayer’s equity in assets and income less allowable expenses. While the offer is being evaluated, the IRS will suspend all other enforcement collection efforts.

If the taxpayer is applying for a lump sum offer, the taxpayer must submit 20 percent of the offer with the application. If the taxpayer is applying for a short-term offer (spread over 24 months), only the first payment must be submitted with the application. A filing fee of $150 is required for both lump sum and short-term offers. A taxpayer is not required to make any payments on existing installment agreements during the evaluation phase. Additionally, the collection statute (10 years from date of assessment) is suspended during the IRS’s evaluation of an OIC.

The IRS has created more flexible guidelines in determining the taxpayer’s collection potential. For lump sum offers that can be spread out over five or fewer months, the IRS will now analyze 12 months of future income, whereas previously the IRS analyzed 48 months of future income. For short-term offers (non-lump sum) to be paid over six to 24 months, the IRS will now analyze only 24 months of future income rather than 60 months of future income.

The above discussed IRS collection policies offer a window of opportunity for the taxpayer to resolve collection tax problems during these difficult economic times.

Customer relationship technologies took root in the early 1980s, with the introduction of personal computers. The launch of ACT! in 1986 was one of the first big milestones in the era of CRM. Not long after, Siebel, Goldmine, and other firms launched their flagship products, thus announcing the birth of enterprise CRM. If you look back 30 years, you will see how CRM technology has transformed to match our understanding of the customer.

Today CRM is a mainstream concept across organizations large and small. A recent Gartner report noted that CEOs see CRM as their number one technology-enabled investment in 2012. As the foundational understanding of customer needs is changing in favor of a rich, multichannel experience, companies face the challenge of determining whether their existing technologies and processes can effectively compete. While the market pushes companies to re-invent approaches for managing customer-centric processes, large organizations are often reluctant to change. Such hesitation is largely driven by four factors:


  • Existing CRM investment. Over the past three decades, a large number of enterprises embarked on highly complex, multiphase CRM deployments. For these organizations, the very idea of abandoning such an investment can be disheartening. What is often overlooked is an inquiry into whether an organization has already effectively realized a return on such investments—or is even capable of doing so.


  • Incurred technical debt. Technical debt refers to the gap created by the misalignment of needs, processes, and technology throughout the solution’s lifetime. This represents all the work that needs to be done to minimize misalignment rooted in the past in order to be effective in the present and future.


  • Business reactivity. Most organizations (as well as individuals) are highly emotionally reactive in the way they make decisions. They make changes only when they can no longer maintain the status quo, and the pain is intolerable. Solution and process handicaps are not given proper attention until the escalation chain arises.


  • Lack of sponsorship. Financial systems have the support of a CFO. Supply chain and logistics are sponsored by a COO. HR systems have PeopleCare. CRM processes run across many functions throughout the customer life cycle, from marketing to service. Who advocates for and sponsors the customer?


Working under the combined weight of the aforementioned factors is like trying to move a mountain. Organizations are sandwiched between these internal obstacles and the external marketing pressures that demand customer centricity.

However, it is possible to move away from the old modes of managing customer interactions and adapt new ones. Following are the key steps to navigating this process:


  • Understand the problems. Initiate your inquiry by looking at the challenges and problems the business faces. Ask yourself: Do we know who our customers are across all service lines? Are we able to effectively drive cross-sell and upsell revenues? Are any of the problems the organization is experiencing further handicapped by the existing CRM solution set or absence of it? Understand metrics around the problems. What is the cost of acquiring or losing a customer? Where does my revenue come from?


  • Evaluate opportunity costs. Previously, I mentioned that reactivity is one of the major obstructions in effective decision making. Assess what the risk and cost to your business would be if the status quo were to be maintained. Monetizing this will help justify financial decisions needed to address the problems at hand.


  • Identify solutions. As you research solutions, do not limit your assessment to the technology only. The success of the technology as the enabler of business success is intertwined with the process effectiveness and ability to properly define and consistently track key metrics that measure organizational effectiveness.


  • Think big, start small. Too often we delay our decision process for fear of the potential size of the task. No one wants to open a can of worms. Truth be told, we can take small steps in the right direction, keeping our eyes on the larger vision all the while. On the technology front, there are many choices available that do not include hastily discarding your legacy solutions. You can easily introduce smaller pieces of the solution and technology within the fabric of CRM while still allowing it to play well within the overall existing architecture. Once this is accomplished, the answer to the question of whether to completely replace or augment the CRM innovation will be clear.


  • Monitor progress. Create a consistent feedback loop, monitoring key process indicators around your CRM and related processes. Continuous feedback will help modulate your approach throughout the life cycle of your efforts and maximize the returns.


CRM evolution is imperative in the modern marketplace. We need to start embracing the new paradigm, or the new paradigm is going to embrace us. Such innovations within an organization can be done in an elegant fashion, gradually bringing everyone along. By understanding the problems and opportunity costs and by developing solutions in an agile, step-by-step way, businesses will be able to successfully re-invent their relationship with the consumer and reap the returns of their innovation by utilizing a strategic, methodical approach to change.



If you haven’t heard this word yet, you soon will. The term was coined by congressional aides and is their own, and others’, bleak prophecy of what could transpire on January 1, 2013. Think of it as a perfect storm that will abruptly and sharply raise taxes while also cutting government spending.

Certain aspects to this scenario might draw applause from either political party and could reduce our deficit, but in combination, their degree could result in another recession. Obviously, neither party desires this result, but the key variable making such a situation feasible is that the events will be automatically triggered, barring legislative compromise and action.

The tax repercussions in such a scenario are significant.

There are several groups of legislative tax cuts that are set to expire at the end of the 2012 calendar year: the Bush-era tax cuts, a group of various provisions that are routinely renewed called “extenders,” and some of the remaining 2009 stimulus provisions. These events will affect both corporate and individual taxpayers.

Corporations alone will see nearly 30 credits and deductions revised unfavorably. The most notable is the elimination of the research and experimentation credit and the decrease in favorable depreciation rules. The research and experimentation credit allows a 20 percent credit for certain research expenses and is part of the extenders package that may not be renewed.

Additionally, the favorable depreciation rules that have been in effect for several years are scheduled to expire on December 31, 2012. Included in this are the elimination of the 50 percent bonus depreciation allowance on new equipment and the reduction of the current section 179 expensing limits on new and used equipment from $139,000 in 2012 to $25,000 in 2013.

Although corporations will clearly be affected, the majority of the tax hikes hit individuals. In terms of revenue, the most significant of the potential changes comes through the expiration of the payroll tax cut, non-renewal of the AMT patch, and increase in individual marginal tax rates, respectively.

The payroll tax cut affects the payroll taxes of employees and self-employed individuals by reducing their portion of payroll taxes withheld or paid by 2 percent on compensation or self-employment net income up to $110,100. The next two items require a little more explanation.

The Alternative Minimum Tax (AMT) sets a minimum tax rate on businesses and individuals who fall within certain income ranges. It was a response to wealthier taxpayers’ taking advantage of too many loopholes. Essentially, the AMT works by eliminating some of taxpayers otherwise deductible expenses (i.e. state income taxes, property taxes, etc.), allowing a uniform exemption amount and taxing the resulting amount by a flat 26 percent or 28 percent rate.

The exemption is what keeps the AMT tax from affecting the unintended target of the middleclass. However, the exemption is not adjusted for inflation and requires legislative action to be raised, hence the name the AMT patch. If there is no patch, the exemption will be reduced from $74,450 to $45,000 and is estimated to affect 28.5 million households, up from 4 million. The non-patched AMT will especially affect taxpayers in states with high income and property tax rates.

The third largest tax hike in the Taxmageddon scenario is the increase in individual marginal tax rates. If no changes are made starting in 2013, the 10 percent bracket would be eliminated and the highest tax bracket would increase from 36 to 39.6 percent.


Other notable changes adding to Taxmageddon:

  • Estate tax exemption decreases from $5 million to $1 million and the top rate increases to 55 from 35 percent
  • Elimination of state and local sales tax deduction
  • Maximum capital gains rate will increase from 15 to 20 percent
  • Qualified dividends maximum rate will increase from 15 percent to the taxpayer’s ordinary income tax rate (up to 39.6 percent)
  • Maximum child tax credit will decrease from $1,000 per child to $500
  • Expiration of marriage penalty provisions
  • Reinstatement of phase-outs for itemized deductions and personal exemptions for high-income taxpayers
  • Reductions in tuition expenses/credits and student loan interest deductibility
  • Reductions in the dependent care tax credit


Although nobody wants Taxmaggedon, the current political climate does not guarantee its resolution and time is running short. The fact that these mechanisms trigger automatically is the scary part to this perfect storm.

Although the consensus is that most parts will be extended for another year, as some of them routinely are, most also agree that Taxmaggedon is possible. Given the uncertainty of the situation, now would be an opportune time to contact your accountant or tax advisor to understand the effect that these expiring provisions could have on you and your business.

The L-1B (Intracompany Transfer) Visa allows employees who possess “specialized knowledge” to transfer from a company abroad to a properly relatedU.S. business. The L-1B has been the “go-to visa” for multinational businesses seeking to relocate talent to the U.S. and maintain a globally competitive workforce.

To qualify for an L-1B visa, an employee must be transferring from a foreign parent, subsidiary, affiliate, or branch to a properly related U.S. company. The individual must have served in a “specialized knowledge” capacity with the overseas company for at least one year within the preceding three years and must be transferring to the U.S.entity to serve in a similar capacity.

Specialized knowledge has been defined as particular knowledge possessed by an individual of the organization’s product, service, research, equipment, techniques, management or other interests and its application in international markets, or an advanced level of knowledge or expertise in the organization’s processes and procedures. Specialized knowledge is not widely known, even within the company.

Recently, however, U.S. Citizenship & Immigration Services (USCIS) adjudicators have been interpreting specialized knowledge extremely narrowly. In doing so, the agency is creating a barrier to employers seeking to transfer key employees to the U.S. By issuing Requests for Evidence (“RFE’s”) in approximately seventy percent of L-1B cases filed, the USCIS is requiring international companies to spend additional time, effort and expense to bring specialized workers to their U.S. locations. Further, adjudications are often inconsistent, with the same company receiving one approval and one denial for workers with identical experience, training and knowledge to perform the same job.

This lack of predictability makes it difficult for multinational companies to plan. As a result of ever-increasing denial rates, companies are reconsidering whether to expand U.S. operations or send work overseas, a trend that will lead to a decline in U.S. job creation and which will undoubtedly harm the U.S.economy. Until the USCIS ameliorates its restrictive interpretation, multinational employers must continue to expect challenges in obtaining L-1B status for key employees.




Good news for “DREAMers”—Bad news for Employers?

The term “Dreamer” comes from the “DREAM Act” (short for Development, Relief, and Education for Alien Minors), legislation which has been introduced repeatedly in Congress since 2001. The legislation would provide permanent residency to aliens brought to the U.S. as minors who meet certain requirements.

On June 15, 2012, the Department of Homeland Security announced that it will issue guidance within 60 days to implement the Obama Administration’s policy to grant “deferred action” to “Dreamers.” Deferred action is an administrative policy, as opposed to a law. The policy announced will grant a status for a period of two years, subject to renewal.

The policy, announced by the President the same day, allows Foreign Nationals without legal status in the U.S. to apply for work authorization and avoid deportation.


In order to qualify, applicants must prove they were under the age of 30 on June 15 and must meet the following conditions:

  • Continuous residence in the U.S. for at least 5 years and physical presence in the U.S. on June 15, 2012;
  • Current student, high school graduate, GED recipient, or honorably discharged veteran of the Coast Guard or Armed Forces of the United States; and
  • No conviction for a felony offense, a significant misdemeanor offense, multiple misdemeanor offenses, or threat to national security or public safety.


An employer may be approached by one or more employees seeking assistance in applying for deferred action (i.e. requesting confirmation of employment to satisfy proof of continuous residence or physical presence). If previously thought to be “work authorized,” requests by such employees can be problematic. Careful thought should be made and legal counsel should be considered in determining whether potential liability exists in connection with I-9 compliance and issues resulting from continuing to employ such a worker before proper authorization is obtained.

Publisher's Posts

You may have heard about the “fiscal cliff” facing the American economy. Major fiscal events can happen simultaneously at the end of 2012 and early in 2013. These include the expiration of the Bush era tax cuts, the payroll tax cut and other tax-relief provisions. They also include the first installment of the $1.2 trillion across-the-board cuts of domestic and defense programs required under last summer’s bipartisan deficit reduction agreement.

     It is also likely that lawmakers will have to raise the debt ceiling again, potentially triggering another standoff in Congress. If and/or when these events take place, many predict we will be driven into another deep economic downturn.

     We can do better, but you need to help. Here’s how!

     Local financial advisors and coaches, Bill and Mary Staton, recently wrote me about an incredibly important organization. This is their invitation.

     “Erskine Bowles and I have been friends since the early 1970s and for a brief time, we worked at the same investment firm. Today he’s spearheading a grass-roots campaign for the United States to get its financial house in order.

     “Business leaders, politicians, and policy experts are coming together to galvanize citizen support for a comprehensive debt-reduction plan. The challenge is to make Congress see the potential for an America beyond partisan politics, ultimately united to meet this challenge.

     “Erskine asks each of us: Will you get your neighbors and friends to join you to FixTheDebt by immediately signing up at:

    “As former Senator Sam Nunn points out, ‘This is not physics, this is not calculus, this is arithmetic.’

     “Mary and I realize this country faces the most predictable preventable financial crisis in history. And along with the FixTheDebt leadership, we know there are solutions to this gigantic problem. We also know that if our country is going to overcome Congressional impasse and infighting, it will require each and every one us to get involved—and stay involved.

     “ is an American movement for fiscal responsibility at the national level. Please sign up at By adding your voice, we can make sure that this country does not face a relapse into recession. When you do, you’ll demonstrate to Congress your commitment to a comprehensive debt-reduction deal.”

     Thank you, Bill and Mary Staton! Well said!

     You might like to know The Campaign to Fix the Debt is built around the following core principles:


„Policymakers should acknowledge that our growing debt is a serious threat to the economic well-being and security of the United States.


„It is urgent and essential that we put in place a plan to fix America’s debt. An effective plan must stabilize the debt as a share of the economy, and put it on a downward path.


„This plan should be enacted now, but implemented gradually to protect the fragile economic recovery and to give Americans time to prepare for the changes in the federal budget.


„In order to develop a fiscal plan that can succeed both financially and politically, it must be bipartisan and reforms to all areas of the budget should be included. The plan should: (i) reform Medicare and Medicaid, improve efficiency in the overall health care system, and limit future cost growth; (ii) strengthen Social Security, so that it is solvent and will be there for future beneficiaries; and (iii) include comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues, and reduces the deficit.


„The recommendations of the bipartisan Simpson-Bowles Commission, which saved $4 trillion and addressed all parts of the budget, as well as other solutions and proposals that have been put forward, provide effective frameworks for such a plan.


„The plan should be conducive to long-term economic growth, protect the vulnerable, include credible enforcement mechanisms to ensure that the debt reduction is achieved, and leave the next generation better off.


     “It will take all of us to spread the word and bring fiscal integrity back to the halls of government. It can—and must—be done!!”



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