IOS FRAUD COOPERATION AGREEMENT INTERPRETATION / THE IMPACT OF THE SCANDAL
COOPERATION AGREEMENT INTERPRETATION
THE IMPACT OF THE SCANDAL
The IOS (International Outsourcing Services LLC,) fraud has many implications in the world business community. It has been determined that Supervalu, a publicly traded $44 billion corporation, based in Eden Prairie, Minnesota, is the third largest grocery chain, and is a 25%, (one quarter) owner of International Outsourcing Services, LLC.
Michael Horne of www.Milwaukeeworld.com tells us that the 25% ownership by Supervalu puts an “interesting twist” in the May 21, 2007, cooperation agreement by U.S. Attorney Steven M. Biskupic to DROP criminal charges against IOS for its involvement in a $250 million dollar coupon fraud scheme.
This agreement removes IOS from criminal culpability in the wire fraud charges that remain pending against eleven individuals charged in the March coupon fraud scheme. Of the eleven, two individuals own 75% of IOS. As [part of the agreement IOS is required to “installing a new management team and removing the indicted individuals from their roles with the company”. The agreement also; places “all putative distributions to shareholders, including any potential proceeds available for shareholders if the company were ever sold, in escrow pending resolution of the criminal cases.”
This provision was put into place to assure that Bruce Furr, 70, who owns approximately 51% of IOS and Thomas “Chris” Balsiger, 53, who owns 49% in his partnership with Supervalu, do not reap the financial rewards of their conduct, if found guilty. ie: Michael Horne, Milwaukeeworld.com
This leads us to evaluating the Dismissal Agreement against IOS. First, and most importantly; how does it affect the shareholders of Supervalu? It is obvious that the shareholders may not benefit from the profits of IOS, and may in fact have a chilling effect on the value of their shares. If Supervalu is implicated in any form with the coupon fraud, shareholders may suffer. What was the role of Supervalu in the management of IOS? Who sits on the Board of IOS that is an Executive of Supervalu?
We at www.CrimeTalkAmerica.com believe that the agreement by the U.S. attorney’s office took into consideration the fact the IOS business position in the coupon redemption industry can have a tremendous financial impact on the grocery manufacturers and consumers. By allowing IOS to continue operations with new management, keeping the ship afloat, as one would say, is a savvy business decision, not only for IOS, but to the entire coupon and grocery retail industry.
Dismantling IOS would not only impact the thousands of workers of IOS, those that depend on a weekly or monthly paycheck, but it would have an impact on the entire grocery distribution network; advertising, marketing, clearinghouses and possibly even NUWORLD NCH, the leader in the coupon industry. IOS has a majority of the market share in clearing coupons for grocery manufacturer’s, but was insulated by their own national and international business development. It wasn’t until a coupon fraud in New Jersey uncovered by FBI and the U.S. attorney’s office took a look at the excessive coupon submissions from this group of Middle Eastern grocery store owners.
I will say that until the testimony of Ben Jacobson (myself) before the Senate Judiciary Committee Hearings on “Terrorism and Technology” in 1998 exposed the probability connecting terror financing in the United States by Coupon Fraud, the subject of coupon fraud received little attention from law enforcement. Since 9/11 the FBI, Postal Inspectors and other law enforcement agencies now understand the impact that coupon fraud and its relationship to financing terrorism has in the big scheme of things.
The other implication in the Federal Dismissal Agreement with IOS stands at the doorway of legal hypocrisy. Understanding the implications of an indictment of the individuals and a corporation that aided, solicited and agreed to conduct itself in a criminal manner should not release the entity of its criminal liability. IOS books, records, transactions and employees all have a story to tell. It’s a story of greed, financial crimes, and possibly aiding and abetting criminal enterprises, allowing such networks as the New Jersey Coupon Fraud ring to operate with impunity and free reign on American business values. How many more rings will be identified now?
What profits did Supervalu take out of IOS? If IOS is an LLC, the implications are that of individuals, not a corporate entity. Shareholders are not part of an LLC, but rather a corporate entity. LLC ownership is generally a percentage partnership by individuals. An LLC protects individuals from certain corporate tax liabilities, and a protection from personal liability, except when the principles are acting in a criminal manner. While it has not yet been proven in a Criminal Court that all those charged are criminally liable, this would only happen after trial or pleadings of guilty to charges, then we can find that the LLC and it’s partners are all criminally liable.
Keeping IOS operating allows the investigators, FBI, U.S. Attorney and other law enforcement entities the opportunity to review documents, collect information, survey the extent of the fraud and determine if any other entities, like the New Jersey group reaped the rewards of coupon fraud while IOS management looked the other way, while their hands were allegedly in the cookie jar.
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Today, May 23, 2007 IOS announced the anticipated resignation of Bruce Furr as Chairman and of Chris Balsiger as CEO of IOS. Willaim L. Babler, CFO also reigned.
Furr and Balsiger were replaced by Greg Rayburn, CEO, the new CFO is Sean Gumbs of FIT Palladiun Partners of New York. Furr and Balsiger remain the 75% ownership of the company.
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Labels: 2007, Coupon Fraud, Crime, IOS



