Wednesday, March 4, 2015

POSTED: Wednesday, February 18, 2015, 2:15 PM

Last Friday Feb. 13, New York Superior Court Judge Joan Madden held a previously-delayed hearing, in Courtroom 351 of Manhattan's state courthouse way downtown, so she could grill lawyers for both sides on Vanguard Group Inc.'s motion to dismiss former Vanguard tax lawyer David Danon's whistleblower lawsuit, which challenges the legal and expense structure the Malvern investment giant has used over its 40-year history.

It was the first time the two sides have faced each other in court since Danon prepared his complaint while still working for Vanguard in 2013. The case was filed under seal; it became public last summer after New York State declined to prosecute it last year -- whether because the Attorney General considers it a weak case, or because the state is leaving an investigation of the facts to the federal government which Danon alleges is Vanguard's main victim, or for some other reason, New York officials wouldn't tell me.

Danon alleges the company has systematically underpaid more than $1 billion in U.S. and state income taxes. Danon has also complained to the IRS and SEC, detailing his claims that Vanguard charges its own mutual funds artificially low management fees so it appears to make little or no profit, reducing its tax liability; and that Vanguard has, separately, built up a $1.5 billion reserve without paying proper taxes or giving investors a share. If New York or the IRS decide Danon is right and oblige Vanguard to pay back taxes, Danon might be able to claim millions of dollars as whistleblower's compensation.

POSTED: Tuesday, February 17, 2015, 12:19 PM
A Philadelphia Saladworks location (Google Maps)

Saladworks, the Conshohocken-based franchised lunch restaurant chain, has filed for Chapter 11 bankruptcy reorganization in Delaware, and is searching for a buyer or new investments. The move is expected to resolve the long-running dispute between founder and chairman John Scardapane and investor Vernon Hill, the Marlton-based banker. Saladworks hired SSG Advisors, the West Conshohocken investment bank that specializes in selling troubled companies, to find buyers or investors.

Saladworks, founded in 1986. last year reported sales approaching $80 million/year at more than 100 stores in the U.S., Canada and Singapore, and plans to expand abroad. All locations remain open and unaffected by the bankruptcy filing, Saladworks spokeswoman Gail Scardapane, the chairman's wife, told me.

The bankruptcy filing, signed by John Scardapane and Saladworks President Paul Steck, lists Hill, who founded the former Commerce Bank and Metro Bank Plc of England, as Saladworks' lead unsecured creditor. Saladworks says it owes up to $8.9 million to Hill's JVSW LLC of Marlton, and up to $2.5 million to another Hill company, WS Financial LLC of Harrisburg.

POSTED: Tuesday, February 17, 2015, 10:59 AM

The DuPont Co. fired back at billionaire investor Nelson Peltz's attempt to load himself and allies of his Trian Fund Management LP onto DuPont's board, extract more cash for shareholders, cut costs and reconsider research spending by the Wilmington-based chemical, bioscience and materials manufacturer.

In a letter to shareholders today, DuPont blasted Peltz for "misrepresentations, inaccurate data, and flawed analyses" in Trian's past letters to shareholders, which claimed that DuPont CEO Ellen Kullman and her predecessors had delivered lower-than-average results compared to other companies. In a second shareholder letter today, DuPont laid out comparative one-year, three-year and five year shareholder returns against benchmarks showing DuPont outperformed its rivals and the S&P 500 in those years, and adds that most of the gains took place before Trian began and accelerated its campaign to restructure the company.

DuPont added that its own restructuring and expense cuts have boosted shareholder returns, and that the only other chemical company Trian has invested in, Chemtura Corp., filed for bankruptcy protection a year after Trian's investment, in 2009. DuPont denied its latest spinoff, of its Chemours titanium-dioxide business, including a plant in Edgemoor, Del., and others around the world, resulted from Trian activism. DuPont did not address the criticism by credit analysts of the company's plan to give $4 billion from the Chemours sale to shareholders, instead of using it to pay down debt as bond investors had expected.

POSTED: Saturday, February 21, 2015, 8:21 AM
File: Developer Bart Blatstein in 2010 at the Piazza at Schmidts, which has become a sort of town square for Northern Liberties.(File Photo: Akira Suwa / Staff Photographer)

SATURDAY: Tower said it paid the $2.7 million it promised for Casesars Pier. The pier's operators say they haven't received that money. There are intermediaries, and other, possibly offsetting, claims. The lawyers are working on a resolution, which is not expected to happen by next week.

LATE FRIDAY: Atlantic City Press has more on the story: Caesars and Bally's Atlantic City challenges Blatstein's right to redevelop the pier:

"Kevin Ortzman, president of Caesars and Bally's Atlantic City, has accused Philadelphia developer Bart Blatstein and his company, Tower Investments LLC, of operating “illegally as trespassers” on the Pier Shops property, according to a document filed in Atlantic County Superior Court and obtained by the Press late Friday."

POSTED: Monday, February 16, 2015, 12:37 PM
Urban Outfitters. (Bloomberg News)

Urban Outfitters will use the 500-worker, 1 million-square-foot warehouse that has been rising over the past year near Gap, Lancaster County, close to its earlier Brackbill Rd. distribution center, to replace its ten-year-old "Ecommerce Fulfillment Center" in Trenton, South Carolina, when the Gap center opens in July, the South Philly-based retail chain said in this statement today.

The partly automated warehouse, in a Keystone state tax break zone, will speed Urban Outfitters deliveries "for many years to come," the company said in a statement, adding it hoped some of its South Carolina workers will move to Lancaster County to work in Lancaster County. Founder Richard Hayne lives nearby on his estate in central Chester County. Neighbors are split on the center, with businesspeople saying it's good for local economic growth, while Mennonite farmers say it's an eyesore, the Lancaster daily newspapers' Web site reported here.

The decision appears to reverse Urban Outfitters' 2005 move to relocate 200 Pennsylvania jobs to the South Carolina site, a former warehouse for Vanity Fair, the formerly Reading-based clothing maker. Urban Outfitters operates 238 stores under its flagship brand in North America and Europe; 204 Anthropologie stores; 102 under the Free People brand name targeted to younger women, plus an extensive Free Peope wholesale business; and two Terrain garden centers. Like other retailers Urban Outfitters increasingly relies on online orders and has been trying to speed up delivery times to compete with 

POSTED: Monday, February 16, 2015, 10:19 AM

At its Feb. 17 monthly meeting (typically 1 pm, upstairs at 1515 Arch St.) the Philadelphia City Planning Commission expects to review these 12 scheduled items. Highlights: 

- The University of Pennsylvania: 1) plans to demolish the former Penn Tower hotel building between its museum, med school and parking garage, with a complex to be designed by British architect Norman Foster (who's also planned the second Comcast tower); as an early step, Penn wants to replace the current enclosed second-story footbridge linking the Tower to the Perelman Center for Advanced Medicine, with a "temporary" five-year span. 2) In other Perelman upgrades, Penn plans to add two 7-story, 52,000 square foot expansions to what's now the "Ronald O. Perelman Center for Political Science and Economics" (the former Mellon Bank building) at 133 S. 36th St. 

- Temple spreads: The university plans to add the former William Penn High School property to its master plan for the neighborhood. Current plans call for athletic facilities on the school site as Temple continues to grow south along Broad St. toward Center City. Temple also seeks planners' blessing on its new library at the college center (instead of an earlier Broad St. plan), and additions to the Engineering school and Weiss Hall.

POSTED: Friday, February 13, 2015, 5:22 PM

New York Superior Court Judge Joan Madden grilled lawyers for Vanguard Group and for former Vanguard tax attorney turned whistleblower David Danon this afternoon before promising to consider Vanguard's request to throw the case out.

Judge Madden pressed Vanguard's lawyer, former federal prosecutor Heidi Wendel, who headed a team of attorneys from the big New York corporate law firm Jones Day, about the apparent contradiction between Vanguard's claim that Danon stole valuable company documents -- and its contention that Danon isn't saying anything that wasn't already publicly known when he accused the company of artifically undercharging its own mutual funds for management services so it wouldn't have to pay federal income taxes, in violation of Internal Revenue Service corporate tax rules.

The judge also queried Danon's lawyer, Steve Sorensen, on whether New York law goes beyond the federal whistleblower statute in protecting lawyers who allege illegal activity by their clients, even if the corporate behavior isn't necessarily criminal. Danon contends Vanguard has underpaid federal and state income taxes by more than $1 billion; Vanguard says that's for the IRS and state tax officials to decide.

POSTED: Thursday, February 12, 2015, 5:19 PM

Since 2012, when Philadelphia Archbishop Charles Chaput rescinded the threatened closing of four Catholic high schools after a group of developers, executives and foundations promised to raise money and take a more active role supporting the schools, a private group that helps families pay tuition has more than tripled its yearly scholarship grants through Pennsylvania’s Educational Improvement Tax Credit Program and related grants,

The program allows companies to redirect part of their state taxes to private, independent and parochial schools, so they can provide tuition assistance to any student who applies, until the money runs out.

The group Business Leaders Organized for Catholic Schools started as an Archdiocese-controlled, lay- and ecumenically-led, corporate-backed effort in 1980. After separating from the Archdiocese in 2010, BLOCS raised an average $3 million a year in each of the next three years through corporate grants of the state tax program. In 2012-13 the total more than doubled, to $7.7 million; in 2013-14, the total reached $10.1 million; the group is on track to raise $15 million or more this year, says executive chairman Bill O’Brien.

O’Brien says the increase is a result, not of an increase in state tax break availability, but of “a better-educated business community” that has increasingly signed up for the program.The money has been collected through more than 100 employers, listed at .

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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