Saturday, July 26, 2014
Inquirer Daily News

POSTED: Saturday, July 26, 2014, 10:49 AM

Vanguard Group has become the largest mutual fund group, with more than $2 trillion in investments and close to one-fifth of the market, thanks to its low costs and fees. But in a New York whistleblower's lawsuit, David Danon, a former tax lawyer at Vanguard (2008-13), says the company has never received proper Securities and Exchange Commission or Internal Revenue Service approval for the way it moves money between Vanguard's management company and its funds, and challenges: the way Vanguard reduces tax liability by charging only "at cost" not full market prices for services between affiliates; and the tax practices of Vanguard's large cash Contingency Reserve. Danon says Vanguard has used its "illegal" tax advantage to cut fees and boost market share. 

Vanguard spokesman John Woerth in a statement says the company denies wrongdoing, affirms the legality of its practices and says it will defend against the suit vigorously. The company is the largest private employer in Chester County, where its Malvern complex houses around 10,000 workers. More about the case in my Philadelphia Inquirer story here.

Danon put his accusations into the lawsuit and filed it under seal before he was obliged to leave Vanguard last year. Danon had his lawyer, Brian Mahany, unseal the case last week after the New York attorney general's office declined to prosecute.  Danon stands to get paid if the New York court ever endorses his charges and finds Vanguard liable for not paying taxes in New York.

POSTED: Friday, July 25, 2014, 12:37 PM

Amos Glick is founder and boss at Compass Iron Works, in western Chester County. He and his crew of seven forge, hammer, repair and hang iron bars into ornate balconies and banisters, swooping sculpture and lantern casings, and durable fences, at big homes and businesses along the East Coast.

It's an old trade, but Compass also innovates: A 55-gallon clear-topped drum is a salt-water spray chamber testing magnesium alloys for Shore jobs; a compressed-air swing relentlessly tests Glick's own-make hinges to turn easily and wear hard.

Compass serves fancy customers, but the owner and most of his workers are members of a plain-living Amish community, a German-descended Christian group that avoids the electric grid, car-driving and some other worldly distractions. They have reworked small forges to rely on liquid fuel and battery power; their self-reliance and sustainability has raised their profile among green-focused building designers and clients, and Glick has begun presenting his designs and methods to national architects' and builders' groups.  Two "English" workers handle email, computer-aided design and driving chores. 

POSTED: Friday, July 25, 2014, 9:21 AM
Rochester, N.Y.-based Wegmans has several stores in the Philadelphia area, including this one in King of Prussia. (David Maialetti / Staff Photographer)

At 140,000 sq ft -- more than triple the size of the nearby Whole Foods Market -- the new Wegmans starting to rise in the southeast corner of US 202 (Wilmington-West Chester Pike) and US 1 (Baltimore Pike) in Chadds Ford and Concord townships (Glen Mills), Delware County, will draw shoppers from Chester County and north Wilmington as well as Delco's rich western suburbs, commercial real estate broker Marshall J. Soss tells me.

Which does't sound good for the nearby Giant, ShopRite and other chain grocers; though Soss says hopefully this and other retail, office and residential development will create more shoppers for the 202 strip. Already Acme has closed Chester County stores in the area in the face of the family-owned, nonunion Wegman megastore invasion. People who like Wegmans praise the stores' vast inventories and ready-cooked meals.

Soss's KarMar Realty Group brokered the property's purchase by a group of local buyers, Chadds Ford Investors LP, from DOH Family LP (the Hinemans). Wegman's isn't the only tenant; Soss notes the vacant former Sovereign Bank branch on 202 and a small strip center adjoining will be replaced by an access road linking 202 and 1, plus 40,000 sq. ft of new stores by Peter Miller of Carlino Development, before you get to the Wegmans. 

POSTED: Thursday, July 24, 2014, 6:03 PM

A classic University City tale (or any Collegetown USA): Four Penn grads (Class of 2010) are collecting alumni siguatures asking Penn President Amy Gutmann to intervene against proposed land use changes at neighboring Drexel. Some of the Penn gardeners have also founded a Facebook group: "UCHS Garden is Sacred, Parking Lots are not." They say Drexel wants to replace the mini-farm adjoining the former University City High School with "a parking lot."

Drexel, which paid the School DIstrict $15 million for the larger school property, has high-rise ambitions for the site and its whole neighborhood as President John Fry seeks to boost enrollment by one-third and lure corporate employers. The plans, the college says, don't include paving over the gardens. But Drexel also says "it will no longer be safe to have a garden," at least during planned construction. Read from the grads' letter to Gutmann, then Drexel's response; emphases added: 

As Penn alumni involved with the Agatston Urban Nutrition Initiative (AUNI) and the Netter Center for Community Partnerships, we are concerned about Drexel University’s redevelopment plans for University City High School (UCHS). We are dismayed to learn that AUNI’s UCHS garden, an award-winning urban farm located on the UCHS campus, will soon be demolished. This garden symbolizes so much that we love about Penn and the time that we spent in West Philadelphia...

POSTED: Tuesday, July 22, 2014, 4:00 PM
Norman Bay is currently the director of the Office of Enforcement at the Federal Energy Regulatory Commission and is President Obama's nominee to fill the vacant top post there. (Photo from

On July 15, U.S. Sen. Robert Casey, D-Pa., voted with most of his Democratic colleagues and against most of the Republican minority to confirm Norman Bay, head of enforcement for the Federal Energy Regulatory Commission, as the agency's next chairman. 

On July 18, Casey sent a letter to Energy Department inspector general Gregory H. Friedman asking for a seven-point review of FERC enforcement -- the group Bay heads.

Casey wants FERC to ensure Bay's unit has been investigating "fairly," providing "efficient" oversight of its investigations, not conducting "unnecessarily prolonged investigations," not "violat(ing) its requirements for confidentiality" in investigations, "allocating its limited resources" to prioritize important investigations, and questioning whether FERC, on Bay's watch, had investigated "alleged market manipulation" or "pursued enforcement actions" in cases where the alleged behaviors were not illegal "at the time they occurred."

POSTED: Tuesday, July 22, 2014, 3:09 PM
A screen grab from Reed Tech's website,

Reed Tech, the 1,000-worker, Horsham-based intellectual-property (IP) company that manages what the U.S. Patent and Trademark Office calls its "data-capture process" and advises inventors, engineers and lawyers on how best to apply, has completed its first-ever acquisition in its 48-year history, buying Minnesota-based PatentCore and its platform, PatentAdvisor, for a sum neither party will disclose.

What's PatentAdvisor? "Think of us like in Moneyball," the book and movie about baseball strategies based on probability, says PatentCore founder Chris Holt. "We bring statistics to the patent application process," and advise Big Tech and start-up clients on which patent applications are most likely to be approved, based on prior patents and the record of the arm of the patent office that's reviewing each proposal.

Reed Tech is part of LexisNexis, the law and news archive, which is in turn owned by Anglo-Dutch publishing cooperative Reed Elsevier. Besides easing applications for USPTO, Reed Tech has "a nice business in the life-sciences industry," vice president Ethan Eisner told me. "We do a lot of work with pharmaceutical companies and medical-device companies, and with FDA directly, helping the companies meet regulatory requirements around product labels and unique identifying information."  

POSTED: Tuesday, July 22, 2014, 11:50 AM

FRIDAY UPDATE: PennDOT officials say the bridge funding program will rely on tax-exempt federal Private Action Bonds (PABs), which are typically less expensive than private funding, though more expensive than direct state general-obligation bonds. I'll write more about that soon.

TUESDAY: A highway contractor active in Pennsylvania gives me this view of the "public-private partnerships" that President Obama and Gov. Corbett (with his Rapid Bridge Replacement Program) assure us will change the way our governments fund highway and bridge repairs: "As a highway bill, this is a boondoggle. I can assure you that the money involved will be far in excess of what would have been spent utilizing PennDOT’s current procurement process."

But won't PennDOT's scheme get 560 much-needed bridges (most far from Philly) repaired and maintained more quickly? I asked. Maybe, maybe not, the contractor said. But this isn't really about completion dates, he added: "It is the difference of paying as you go with current taxes and fees or having the private sector provide the up-front money and then take 'availability payments' over 30-35 years once the work has been completed."

POSTED: Monday, July 21, 2014, 6:00 PM
Comcast Cable's operations chief David N. Watson posted an employee memo where he admitted, "The agent on this call did a lot of what we trained him and paid him -- and thousands of other Retention agents --to do." (Joe Raedle, Getty Images, file)

MONDAY: Re the infamous Ryan Block customer service call (see below): Comcast Cable's operations chief David N. Watson has posted an employee memo, reproduced here by Consumer Reports' Consumerist site, admitting the company is "embarrassed by the tone of the call and the lack of sensitivity to the customer’s desire to discontinue service."

Watson wrote of his "regret" it all happened, but maintains it's "not representative of the good work that our employees are doing," and that most Comcast employees are "respectful, courteous and resourceful." Still, "it was painful to listen to this call, and I am not surprised that we have been criticized for it. Respecting our customers is fundamental, and we fell short in this instance.

"I know these Retention calls are tough, and I have tremendous admiration for our Retention professionals, who make it easy for customers to choose to stay with Comcast. We have a Retention queue because we believe in our products, and because we offer a great value when customers have the right facts... If a customer is not fully aware of what the product offers, we ask the Retention agent to educate the customer...

About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at or 215 854 5194.

Joseph N. DiStefano
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