Andy Chapelle

Blog Image
News and notes on business in the greater Ann Arbor area by managing editor Andy Chapelle
Business in A-Squared
We’re shifting gears today.

For you Gen Xers and Millennials, that means we’re taking our foot off the accelerator, pressing in the clutch, and easing the gearshift into second.

After more than a year of delivering you a package of Washtenaw and Livingston business news via e-mail every Wednesday, we’re going to offer you a couple of alternatives.

And yes, we know you want more business news, not less.

That’s why we’ll continue covering the greater Ann Arbor area and that’s why our own internal audits continue to surprise us at the depth of our
Washtenaw area coverage.

We write lots of stories about Ann Arbor.  The area is such a cradle of entrepreneurial activity and high-tech startups, our reporters are just naturally drawn to the place.

And we’ll still get the scoops and exclusives that you value.

But today’s e-mail is our last.

Instead, here’s how you can continue to read Washtenaw and Livingston business news written by Crain’s Detroit Business reporters:

n Visit
www.crainsdetroit.com/washtenaw for all the freshest business news about the greater Ann Arbor area.

n Subscribe to the FREE Crain’s Detroit Business RSS Feed for Washtenaw/Livingston news via your favorite service.  Go to
www.crainsdetroit.com/rss to access instructions.

If you’re a farmer like me that can drive a tractor, but wouldn’t know an RSS Feed from an XML Tag, we’ve got help for you.

Christine Lasek, our tech-savvy web editor here at Crain’s, has put together a video that will take you through a simple step-by-step procedure that will show you how to sign up for all our RSS news feeds.

Watch her video here

And please continue sending us tips on business news from Washtenaw and Livingston counties.

Share your Ann Arbor area business news tips by e-mailing them to me at
achapelle@crain.com or by calling (313) 446-0402.

History almost repeated itself this week in Ypsilanti.

On Monday, I was reading accounts of contract negotiations between Eastern Michigan University administrators and the university’s chapter of the American Association of University Professors.

Talks had been ongoing since May.

From my outsider’s perspective, the two sides looked far apart at the beginning of this week, especially on how to resolve increasing health care costs.

And as late as yesterday, the AAUP union meeting could have ended in a strike vote.

Luckily for faculty and students, the union and the university hammered out a deal.

A strike was averted.

But watching negotiations unfold brought back memories for me.

I have a degree from Eastern and early in my career I worked at EMU in university relations.

And I was on campus in 1978 when faculty members did quit their classrooms to walk the picket line.

And that’s why this week I was remembering the best professor I ever had.

His name was Ronald Trowbridge.

Trowbridge taught English language and literature at EMU.  He also served as editor-in-chief of the Michigan Academician, the journal of the Michigan Academy of Science, Arts and Letters.  And he served as a member of Ann Arbor’s City Council.

Hands down, he was the most literate, intelligent and gentle teacher I ever had.

He taught more than English.

Using great literary works as examples, he taught us to think about such things as the rights of a minority, individualism, the role of a university, the value of a liberal education…and political tolerance.

And one day in 1978, after 13 years teaching at EMU, Ronald Trowbridge taught us about courage.

Following his principles, he stepped through his colleagues and he went into his classroom to teach.

He crossed the picket line.

Here’s how he described what happened next in an essay he wrote and delivered in February 1979 at Hillsdale College during a seminar on The Future of American Labor Unions. He had left Eastern to teach at Hillsdale and edit Imprimis, a conservative journal printed by the college.

“I was, of course, aware of all the nasty things that happen when individuals cross picket lines, but I imagined — naively so — that strikes by intellectual, broadminded, tolerant academicians would be different. To the contrary, I suffered the depressing revelation of seeing some of my colleagues and once very close friends transform into characters I no longer recognized — changing from butterflies back into worms,” Trowbridge wrote.

And here’s another of Trowbridge’s observations:
“There was yet another irony: the illegally striking faculty never lost pay, yet called me a ‘scab.’ As I understand it, scab implies a parasite that lives off something else — as they were doing, not I. So here I was, the individual working and getting paid, while my accusers were not working and drawing a salary. No one need ask who the real scabs were.”

You can read his essay in its entirety here.

I think many of the points Trowbridge made in his essay more than 30 years ago still ring true.

Strikes by their nature are ugly and can polarize even the best of colleagues.

Fortunately, there won’t be one at EMU.

Share your Ann Arbor area business news tips by e-mailing them to me at achapelle@crain.com or by calling (313) 446-0402.

In case you missed it, a new study released by a University of Michigan researcher should make you think twice about ordering a drink over dinner on your next job interview.

The study, by Scott Rick, assistant professor of marketing at UM’s Stephen M. Ross School of Business, and Maurice Schweitzer at the University of Pennsylvania's Wharton School, found that merely holding an alcoholic beverage “influences the perceived intelligence of the person drinking the glass of wine or beer,” a UM summary said.

It’s something Rick and Schweitzer call the 'imbibing idiot bias" in their study.

The researchers found “job candidates who ordered alcohol in simulated interviews were perceived as less intelligent and less employable — though no less likeable, honest or genuine — than those who did not, regardless of whether the boss ordered an alcoholic beverage first,” the UM statement said.

And even if a boss orders first, the result is the same.

That’s because “conformity is an ingratiation tactic that is commonly effective, the imbibing idiot bias suggests that following the boss' lead may backfire when alcohol is involved,"  Rick said.

Rick, who earned his doctoral degree from Carnegie Mellon University in 2007, is interested in research that examines individual and interpersonal decision-making phenomena, the emotional causes and consequences of spending money, and the interpersonal consequences of consumption.

He discussed his latest study in an e-mail exchange with Crain’s earlier this week.

What prompted you to undertake this type of study?  I note your academic interest in individual decision-making.  Was there something specifically that triggered your drinking study?
blog post photo
My colleague, Maurice Schweitzer, and I were talking about silly things that happen during job interviews that end up having undue influence on hiring decisions.
In academia and other industries, meals with prospective bosses are a big component of the interview process. Alcohol can directly cause trouble, of course, but we got to thinking whether merely being seen with alcohol might be dangerous because it is so commonly associated with stupidity.

Was there anything that surprised you?
The bias makes sense from a theoretical perspective, but I was still surprised that we observed the bias so consistently across studies. Lots of effects make sense theoretically but don't pan out empirically because of overlooked factors.
 
What about cigarettes? Is it your sense that reaction to smoking would be even worse than "the imbibing idiot bias?"
Because cigarettes don't immediately impair cognitive functioning, I don't think smoking would lead to diminished perceptions of intelligence. But being seen with a cigarette will surely activate a variety of expectations and stereotypes among observers, some of which will not be flattering.
 
Alcohol plays such a prominent role in social functions sponsored by businesses, do you feel there's a double standard?
Our results suggest that people in a position to judge don't realize they're judging based on the selected beverage, so it's not an intentional double standard. Also, there are probably lots of professional interactions where alcohol is harmless, like a negotiation between equals, where both sides know the other side is competent.
 
Can you give me the short take on the logistics of your study?  You conducted six experiments with more than 1,700 people.  How did that work?
Most were pretty straightforward.
Because observers were judging pictures of people under different conditions, most studies could be conducted online with big panels. We conducted one study where intoxicated MBA students interviewed actors drinking soda or (non-alcoholic) beer.
That was more of a logistical adventure. We had a lot of help that night.
 
What would you like to study next?
In this area, we'd like to understand whether the bias is strong enough to influence actual cognitive performance. For example, if I'm fooled into thinking I just consumed alcohol, does that hurt my own subsequent cognitive performance?


Share your Ann Arbor area business news tips by e-mailing them to me at
achapelle@crain.com or by calling (313) 446-0402.

Running a restaurant or coffeehouse is hard enough work without having to wonder about how cash is flowing.

Now, Ypsilanti-based Ergun Technologies has developed a software system that aims to relieve that headache for restaurant owners.

It’s basically a touch-screen checkout system the company calls Own.

The system integrates restaurant cash registers and the Web, allowing owners real-time remote access to all their stores.

Ergun Technologies, founded by University of Michigan graduate Verdi Erel Ergun, was one of three Michigan companies that received a loan this week from the Michigan Microloan Fund Program.

Microloans, administered by Ann Arbor Spark, range from $10,000 to $50,000.

To qualify, companies must be a small business located in Ann Arbor or eastern Washtenaw County, have ownership or license to innovative technology, and be privately held.

Ergun, president of Ergun Technologies, said the microloan will help his company meet anticipated customer demand, expand in new markets and protect its intellectual property.

He talked about his young startup and it’s growth potential in an e-mail exchange with Crain’s Detroit Business earlier this week.

Tell me a little about your company.  What is Ergun Technologies?  How old is the company? How did you get started?
blog post photoWe're 3.5 people and we just celebrated our first anniversary. I started Burrito Joint restaurant in Ann Arbor and quickly realized the touch-screen checkout systems on the market today are too complicated.

I was determined to create exactly what I would have wanted as an operator and build it for coffeehouses, because coffeehouses are ahead of restaurants and retail stores when it comes to loyalty programs.  And coffeehouses will soon be a signal for the rest of the quick-service industry to innovate their loyalty programs.

Our system, Own, is going to be the next generation in touch-screen checkout systems.
 
What is your business niche?  Who are some of your customers?
Through the first half of 2011 we're focused on independent Michigan coffeehouses, wherein we’ll evaluate additional horizontal market opportunities.

We're entering a private beta program this November.  Because the beta program is private, I cannot comment on which coffeehouse companies will be involved.
 
Care to discuss revenue goals, your strategy for future growth?
Our plan is to have 200 locations using the Own system by the end of 2011.
In our fifth year, with 4,000 locations, we will be an $11 million company. We're going to need to raise our first round of funding to meet anticipated customer demand.

Do you have any competitors?  Who are they?
There are many competitors and over 99 percent of them are software — including Micros, SelbySoft and Radiant.

What were some of the critical milestones you had to overcome to get your business started?
First, we had to assemble our team. This was a challenge because we use a very modern programming language and the nature of our product requires an exceptional, high degree of technical competency.

Second, we had to prove our technology. We spent nearly a year evaluating designs and testing them to create the most intuitive, beautiful system possible for our customers.

Third, we had to earn initial consumer validation. We took our proof of concept to potential customers and shared the direction we are planning for the Own system to take touch-screen checkout system industry.

They were excited.

How will you use your portion of the Michigan Microloan Fund?
The Microloan funds will be used to successfully meet our beta program and protect our intellectual property position.
 
Tell me a little about yourself.  What is your background?  What motivated you to start a business?
I'm a serial entrepreneur. While an undergraduate student at the University of Michigan, I purchased an ice cream truck and spent my summers selling ice cream.

I finished my undergraduate degree and started Burrito Joint in Ann Arbor. I was motivated to start Own because restaurant owners are suffering. They're disconnected from their businesses because their technology forces them to be, through difficulty of use, lack of remote access and other reasons. This can't go on like this any longer.

As patrons, we deserve better. We deserve owners who love running their businesses. That initial spark when everything is easy, we need to recreate that spark when everything is hard.

Own will give back to our customers the joy of running their business again.


Anything else I haven't asked you about that you’d like to share?

For more information, people can visit our website
www.OwnPos.com or e-mail me personally at v@ownpos.com.

Share your Ann Arbor area business news tips by e-mailing them to me at achapelle@crain.com or by calling (313) 446-0402.

Now that Ann Arbor has a horse in the governor’s race, Michigan politics are a lot more interesting.

When Rick Snyder squares off against Lansing Mayor Virg Bernero this fall - Snyder has called for three debates, Bernero eight - it will bring a new form of entertainment to Tree Town.

And it could wind up being more fun than watching Coach Rich Rod’s Michigan Men sprint to another 1-7 Big Ten Conference record, even in a newly remodeled venue.

This Snyder nerd is a lot more unpredictable - maybe even tougher - than the Wolverine offense.

How else can you explain an untested political neophyte that winds up leaving a veteran Republican field gasping for air?

Snyder did put a political whupping on some of the Michigan GOP’s most battle-hardened infighters.

With 99 percent of precincts reporting today, the Associated Press said Snyder had 36 percent of the vote, to 27 percent for U.S. Rep. Pete Hoekstra, and 23 percent for Attorney General Mike Cox.

Oakland County Sheriff Mike Bouchard and state Sen. Tom George didn’t even make the cut.

Snyder’s win is sure to generate excitement in A2.

Longtime Ann Arbor banker Peter Schork summed up Snyder’s appeal today in an e-mail.

“It is great to see the people of Michigan value business expertise while understanding the importance of having leadership dedicated to making Michigan’s future focused on employment and businesses that will return the state to national prominence,” said Schork.

Schork is founder, president and chief operating officer of Ann Arbor State Bank.

And, if Snyder does eventually pull off a win in the fall campaign, its been a long time since we had an Ann Arborite running the show in Lansing.

In my lifetime, I can’t recall any Ann Arborite serving as governor.

I suppose we could try to claim John Swainson, Michigan’s 42nd governor who served from January 1961 to 1963.

But Swainson, who lost both legs in a land mine explosion in France in World War II, lived in Manchester, off Austin Road, not actually Ann Arbor.

Local historian Wystan Stevens says you have to go all the way back to 1846 to find a bona fide governor from Ann Arbor.

“I am astonished and chagrined that you don’t remember old Alpheus Felch, 1804-1896, the fifth governor of Michigan. He was also a U.S. senator (when senators were elected by state legislatures), and Tappan Professor of Law at the University of Michigan,” Stevens wrote in an e-mail.

“He was the “grand old man” of Ann Arbor when the original municipal graveyard - now the front lawn of the Power Center for the Performing Arts - was closed, and transformed into Felch Park in his honor,” Stevens wrote in an e-mail.

Felch’s papers are at the Bentley Historical Library.

His bones, Stevens said, now lie in Forest Hill Cemetery, where they have been since his death in 1896 at the age of 92.

The only other former resident of Ann Arbor to be elected Michigan’s governor was Andrew Parsons, Stevens said.

But he was no longer living here when he held office.

Parsons lived briefly in the Lower Town neighborhood of Ann Arbor starting in 1835. He was 17 when he arrived in town and taught school in Lower Town, the historian said.

Share your Ann Arbor area business news tips by e-mailing them to me at achapelle@crain.com or by calling (313) 446-0402.

Ann Arbor native Craig Hall, now a successful real estate developer in Dallas, raised some eyebrows in Texas earlier this month with U.S. Securities and Exchange Commission filings that his companies intend to raise more than $100 million in investment capital.

Hall is well known around the Ann Arbor area.

He began his real estate career in 1968 as a 17-year-old with $4,000 to invest.  He was too young to qualify for a bank loan and wound up buying a rooming house at 427 Hamilton Place in Ann Arbor for $27,250.

Hall parlayed that original investment into an impressive portfolio that included thousands of apartment units — including the Spice Tree, Lemon Tree, Apple Tree complexes — and commercial properties throughout Southeast Michigan.

One of his best known deals was acquiring the old American Motors Corp. headquarters in Southfield after the automaker’s sale to Chrysler Corp.

Hall’s company took a hit when the Michigan real estate market went bust in the 1990’s.

But he’s been doing well in north Texas.

His Hall Financial Group is based in Frisco, Texas.

A story this week by reporter Bill Hethcock in the Dallas Business Journal says Hall’s companies have filed SEC documents to raise $100 million. Hall has declined to discuss what the money will be used for.

But the report said Hall is planning projects in Dallas and in Richardson.

In the SEC filings, three companies that Hall controls have divulged their intent to raise capital:

n Hall Funding LLC said July 17 it aims to raise up to $60 million.
n Hall Structured Finance Inc. said July 13 it plans to raise up to $15 million.
n Hall Wines of Napa said July 2 it will raise up to $25 million.

Hall’s other investments include oil, natural gas, technology and venture capital.

As previously reported by Crain’s Detroit Business, Hall is married to Kathryn Walt, the former U.S. ambassador to Austria from 1997-2001.

He also was previously a part-owner of the Dallas Cowboys.


Share your Ann Arbor area business news tips by e-mailing them to me at
achapelle@crain.com or by calling (313) 446-0402.


In case you've been on vacation, there’s an update to a local Ponzi scam.

John S. Chapman & Associates LLC, a securities litigation law firm based in Cleveland, is now representing local investors allegedly bilked in a $5 million Ponzi scheme.

The scheme was discovered in March by Ken Ross, commissioner of the state’s Office of Financial and Insurance Regulation.

OFIR alleges that stockbroker Mark Carpenter perpetrated the scam while employed by CUSO Financial Services LP and working at MidWest Financial Credit Union in Ann Arbor.

Ross says Carpenter ran a $5 million scam from June 2007 through October 2008 while employed with CUSO and registered with the state as a securities agent.

John Chapman, an attorney with John S. Chapman & Associates, says Carpenter’s clients were in large part physicians and medical personnel from the University of Michigan Medical Center.

“He assured his victims their money would be placed in safe, high-return investments, such as oil and gas, and gold bullion. In reality, he used funds from later investors to pay earlier investors, in typical Ponzi scheme fashion,” Chapman stated on his firm’s website.

Chapman also says CUSO had an obligation to monitor Carpenter.

His Ohio firm has filed securities arbitration claims on behalf of Carpenter’s investors against CUSO which is based in San Diego, Calif.

“As a licensed brokerage firm, CUSO has a duty to adequately supervise its stockbrokers, and make sure they are not selling unapproved, fraudulent securities to its customers,” Chapman said in a statement from his firm.

Chapman says victims can contact his office for a free evaluation by calling (216) 241-8172 or (866) 220-3300.  His firm even has a website devoted to the case at
www.markcarpenterfraud.com.

Meanwhile, Amy Beattie, co-founder and COO of CUSO, says Carpenter was acting as an independent contractor when he allegedly perpetrated the fraud. He was selling fraudulent investments through his own firm, TGBG, she says.

“None of the investments described by OFIR were authorized, reviewed or approved by CFS or MidWest…Neither CFS nor MidWest was involved in any of Carpenter’s fraudulent activities as described in the OFIR report, most of which occurred after Carpenter resigned,” Beattie said in an e-mailed statement.

“None of the fraudulent investments were held in accounts at CFS or MidWest. Carpenter did not disclose any of these outside business activities to CFS or MidWest, including his formation of an independent third party business, TGBG, through which he allegedly ran these activities,” Beattie said.

In fact, Beattie says that when Carpenter resigned and CUSO learned he might have done unauthorized outside business in violation of company policies, CUSO alerted its customers and OFIR.

“CFS and MidWest remain committed to promoting the interests of our customers and we are cooperating with the regulatory authorities in their ongoing investigation of Carpenter,” Beattie said.

Beattie encourages investors to contact OFIR at (877) 999-6442 or at
www.michigan.gov/ofir.

Share your Ann Arbor area business news tips by e-mailing them to me at achapelle@crain.com or by calling (313) 446-0402.

A New York Times blog posted this week by Duff Wilson questioned University of Michigan President Mary Sue Coleman’s involvement as a member of the board of directors for pharmaceutical giant Johnson & Johnson

The blog posting sparked some local buzz over potential conflicts of interest and participation on corporate boards.

Coleman, who has a doctoral degree in biochemistry, was invited to be a director on the board of the New Jersey-based pharmaceutical giant.

In return for her expertise and attendance at corporate meetings, the company pays her $229,978 in stock and cash, Securities and Exchange Commission filings show.

But The Times blog called into question Coleman’s participation on the Johnson & Johnson board after the UM’s recent announcement that it would not be taking money from drug companies for medical education so it could be free from potential bias.

Is there a conflict?

I don’t think so.

Coleman has publicly disclosed her membership on the board and says she would recuse herself from making any decisions that hint of a conflict of interest in her job at UM.

I believe her.

And I think it’s to UM’s advantage to have its top executive actively engaged in the corporate community.

Others on the 11-member Johnson & Johnson board include the likes of James Cullen, retired president and CEO of Bell Atlantic; Anne Mulcahy, retired chairman and CEO of the Xerox Corp.; and Leo Mullen, retired chairman and CEO of Delta Airlines.

Serving on corporate boards is nothing new for UM administrators.

Just last month, UM athletic director David Brandon joined the board of directors of Detroit-based DTE Energy Co.

And DTE is happy to have someone with his skills advising the utility company.

DTE’s CEO Anthony Earley Jr. said in a press release that Brandon will be “a valuable addition to our board because of his proven track record with successful corporations, board experience, leadership in the southeastern Michigan business community and his long history with one of our nation’s most respected universities.”

Make no mistake, the utility company is paying for Brandon’s time and advice.

According to SEC filings, DTE’s board members earn a cash retainer of $60,000 annually and 1,000 shares of DTE common restricted stock when they join the board.

Directors also get 2,000 “phantom shares” of DTE common stock annually that are credited to their accounts and can be re-invested into other phantom shares. Stock payouts are made three years after the date shares are granted, unless otherwise deferred by the individual director.

And that’s not all.

Brandon also serves as non-executive chairman of Domino’s Pizza Inc. in Ann Arbor where he continues to serve as a special advisor to new CEO Patrick Doyle for a monthly salary of $25,000.

And, he gets 35 hours a year of time on Domino’s corporate aircraft through 2011.

Like Coleman, Brandon’s activities as a member of the DTE Energy Co.’s board and his continuing involvement in the leadership transition at Domino’s Pizza Inc. have been made transparently and reported publicly in SEC filings.

Are there inherent conflicts for him in being a board member at DTE and continuing in an advisory role at Domino’s?

Maybe.

But like Mary Sue Coleman, I’m willing to bet that if Brandon senses a potential conflict, he’s going to recuse himself from decision-making.

I think the real lesson to be learned from membership on corporate boards is businesses seek top talent for advice and are willing to pay for it.

Serving on corporate boards is a good thing.

UM will reap benefits from the visibility it gets having Coleman and Brandon active in the corporate world.

Share your Ann Arbor area business news tips by e-mailing them to me at achapelle@crain.com or by calling (313) 446-0402.

What role should a university play in job creation and economic development of a region? 

Select members of the Southeast Michigan business community will gather with top officials of the U.S. Commerce Department at a forum on innovation to address that question Tuesday, July 13, at the Michigan League. The event is by invitation only.

It’s being convened by the Commerce Department and hosted by the University of Michigan. It’s one of four forums the Commerce Department is conducting this summer at UM, the University of Massachusetts-Boston, the University of Southern California and the Georgia Institute of Technology.

The purpose of the meeting is to explore the role of universities in creating jobs, innovation, economic development and commercializing research projects funded with federal dollars.

Speakers will include some of the top officials in the Obama administration.
They include Secretary of Commerce Gary Locke; David Kappos, undersecretary for intellectual property and director of the U.S. Patent and Trademark Office; Travis Sullivan, director of the Office of Policy and Strategic Planning; and Aneesh Chopra, chief technology officer and associate director for technology at the White House Office of Science and Technology Policy.

The discussion will focus on capital needed to move an idea from the lab to the marketplace, university strategies to support commercialization and regional economic development, and entrepreneurship education, the UM said in a press release.

 “U-M is privileged to be a host for this critical discussion, and our involvement reflects the increased role we are playing in galvanizing the regional economy,” Marvin Parnes, U-M associate vice president for research, said in the university’s statement.

///


Crain’s Reporter Tom Henderson reported some good news earlier this week from Ann Arbor-based Aastrom Biosciences Inc. (Nasdaq: ASTM) on its clinical trials to develop a stem cell-based therapy for treating patients suffering critical limb ischemia.

Aastrom President and CEO Tim Mayleben said his company has gotten a thumbs-up from the U.S. Food and Drug Administration to move on to Phase 3 trials.

 “Our recent discussion with the FDA was very productive and identified a path for pursuing Phase 3 testing of our autologous cell technology in patients with critical limb ischemia,” said Mayleben in a company press release.

“We now plan to proceed through the agency’s special protocol assessment process which will ensure that we and FDA agree on the Phase 3 clinical program.”

Phase 3 trials will allow Aastrom to treat an even larger patient population, Henderson reported in his story for www.crainsdetroit.com

Share your Ann Arbor area business news tips by e-mailing them to me at achapelle@crain.com or by calling (313) 446-0402.

There’s nothing like a couple of high profile embezzlements to get accountants scrambling to review their company’s internal financial controls. 

The most recent report involves a former business administrator at the University of Michigan’s Center for AfroAmerican and African Studies who allegedly embezzled more than $85,000 from the university using a UM issued credit card.

He allegedly bought computers which he then sold for personal gain, the UM reported.

And that comes on the heels of the nearly $1 million embezzlement from the Ann Arbor Amateur Hockey Association by Chelsea resident Kimberly Knight, who formerly served as treasurer of the nonprofit.

The AAAHA heist generated a lot of buzz at my house and with friends who had kids that grew up playing hockey in Ann Arbor.

After all, our annual holiday poinsettia sales were supposed to defray the expense of renting ice at the rink, not to be used as a down payment on expensive bling for the association’s bookkeeper.

There have been other local embezzlements in the news recently, but these two stand out locally.

And they were both preventable.

Any system of internal controls should have caught the thieves before their hands got deeper in the cookie jar.

Fact is UM accountants and the board of directors at AAAHA were not tightly administering or auditing a built-in system that would have caught discrepancies and would have exposed the crimes sooner.

For a compelling look at fraud in youth sports programs across Michigan, see Reporter Sherri Welch's story "Be more of a business and less like a family" published Feb. 1 in Crain's Detroit Business.

I’m no CPA, but I know any system should have internal controls that safeguard your assets.

Christine Galli, executive director of Technology In A Box Learning Services LLC in Detroit, outlined tips she published in an article “Spotting Fraud in Your Financials” on the Small Business Association of Michigan’s website.

Galli listed these signs of potential fraud that employers should watch for in financial reporting:

n Irregularities in time, frequency or amount.
n Transactions not entered timely, in wrong period or wrong accounts.
n Lack of original documentation for transactions.
n Missing inventory, physical assets or office supplies.
n Excessive credit memos or adjustments to accounts receivable.
n Common or insider names on customer or vendor lists.
n Duplicate payments or invoices.
n Increases in expenses —  small tools, supplies or cost of goods sold.

There are all kinds of reliable internal accounting guidelines posted on the internet. And any CPA can help you review your company’s safeguards.

///

Two Ann Arborites were elected to statewide office this week:

n
Yan Ness, CEO of Ann Arbor-based Online Technologies Corp., was elected first vice chair of the Small Business Association of Michigan at SBAM’s board meeting June 24 in East Lansing.

n Bill Milliken, founder of Milliken Realty Company, was elected treasurer of the Michigan Association of Realtors and will take office Jan. 1, 2011. The association has 21,000 members and 43 local associations across Michigan. Milliken began working in real estate in Ann Arbor in 1987 and previously served as a director of Republic Bancorp. He founded Milliken Realty in 1996.


Share your Ann Arbor area business news tips by e-mailing them to me at
achapelle@crain.com or by calling (313) 446-0402.

 1 2 3 4 5 6 >> Last
Archives

About Me: I am the Managing Editor of Crain's Detroit Business.... more »