Just as Tom Szaky turned an unlikely product, worm poop, into a saleable item, plant fertilizer, so he might be able to turn a threatening lawsuit into an advantage. TerraCycle, the three-year-old company that has yet to turn a profit, is being sued by a $2.2 billion company, Scotts Miracle-Gro.
With his unerring sense of how to make gold with straw, Szaky has put up a website, www.suedbyscotts.com, that plays up the David and Goliath angle with side-by-side comparisons. CEOs: The Scotts CEO, James Hagedorn, is a “51-year-old former jet pilot, son of multi-millionaire Miracle-Gro founder” and the TerraCycle CEO is “a 25-year-old Hungarian-born college drop-out.” CEO salaries: over $1 million and $130,000. CEO perks: personal use of $55,465 company aircraft and unlimited free worm poop. Annual sales: $2.6 billion and $1.5 million. Profits: $132.7 million and “not yet.”
Scotts objects to TerraCycle’s use of yellow and green labels (the same colors that Miracle-Gro uses) and to the claims that the TerraCycle product is better than “a leading synthetic plant food.”
Miracle-Gro has an estimated 59 percent of the market (according to a neutral source) or a possible 85 percent of the market (according to an obituary of the Hagedorn family).
The website quotes Hagedorn as saying his late father was “a huckster . . . one of these like carnival salesmen.” It has photos of all the other plant product labels that are yellow and green. It urges supporters to write letters to Scotts’ board members.
National ink (articles in the Wall Street Journal, Advertising Age, and Business Week) focus on this lawsuit. Using the theory that any publicity is good publicity as long as the name is spelled correctly, won’t the legal attack serve to increase TerraCycle’s profile and therefore its sales?
“I never think it’s a good thing to be sued,” says Rick Ober, TerraCycle’s general counsel. “I look forward to a federal court ruling confirming that TerraCycle’s all natural plant food is equal to or better than a leading synthetic plant food in virtually all aspects of plant growth.”
The Thanet Circle-based intellectual property firm, Mathews Shepard McKay Bruneau, is representing TerraCycle and must file a reply on May 2.
TerraCycle, 121 New York Avenue, Trenton 08638; 609-393-4252; fax, 609-393-4259. Tom Szaky, CEO. Home page: www.terracycle.net
Crime Watch: Nyce
Jonathan Nyce, who is in jail for the 2004 passion provocation manslaughter of his wife, is scheduled to appear before Judge Bill Mathesius on Tuesday, May 1. In 1995 Nyce had founded a biotech, Epigenesis, currently on Eastpark Boulevard. Nyce, 56, is appealing his conviction and wants to ditch his current attorney and represent himself.
Attorney Robin Lord, who represented Nyce in 2005, successfully focused on the least serious of the four charges made by the prosecution. The most serious, first degree murder, could have resulted in a 30-year sentence. Nyce’s current sentence is eight years (U.S. 1, July 20, 2005).
Nyce is unhappy with the appeal filed by his current lawyer, Paul Bergrin, saying that it superficially addresses or ignores major issues.
Ironically, Mathesius was the judge that heard Nyce’s case in 2005. Nyce says that Mathesius ignored important case law.
The trial was the subject of Jonathan Glatt’s book, “Never Leave Me,” and it was also the topic for a television series, Forensic Files.
Eight years ago federal marshals raided the Carnegie Center offices of Martin Armstrong, 57, an economic forecaster with Princeton Economics International and global commodities trader with Princeton Global International. He had 300 employees and offices on five continents. Armstrong made bail on charges of swindling Japanese investors of nearly $1 billion, but the following year a judge jailed him on civil contempt charges for failing to produce certain documents plus $14 million.
He has been at the Metropolitan Correctional Center in Lower Manhattan since January, 2000. On April 10 he was sentenced to the maximum allowable sentence, 60 months in prison, for his part in a $3 billion “Ponzi” scheme, and he is supposed to pay $80 million in restitution.
After co-conspirators William Rogers, Maria Toczlowski, and Harold Ludwig had pleaded guilty and testified against Armstrong, Armstrong pleaded guilty to one count of conspiracy to commit securities fraud. Though the bank associated with the fraud has repaid the victims in full, Armstrong has been ordered to repay $80 million plus one dollar.
Armstrong’s case preceded the CEO/Enron scandals. According to legal sources, Armstrong has spent more time behind bars, without a trial, than any other white collar criminal. Though Armstrong insisted he did not have the requested assets, Judge Richard Owen (who has finally been taken off the case) kept re-imposing the contempt sentence, which is supposed to expire after 18 months. Gretchen Morgenstern of the New York Times describes Armstrong as “the white collar defendant time forgot.”
The assets Armstrong was supposed to have turned over included gold and antiquities. By his own account he became a teen-age millionaire because of his stamp and coin collection. He later owned an art gallery and coin and stamp shop in Robbinsville that subsequently moved to Quakerbridge Mall. The coin trading apparently led to gold and silver investments and those led to the sophisticated investments being managed at the time of his arrest.
None of the published reports mention any college education. A charismatic iconoclast, Armstrong wrote passionately about his view that the stock market operates in predictable cycles (an 8.6-year cycle to be exact). He is said to have predicted the 1987 crash, the 1989 Nikkei crash, and the July 1998 high. By his model, there should have been a major turning point in February, 2007 (U.S. 1, September 22, 1999).
Opponents to this method of prediction prefer to pay attention to the fundamentals of a particular stock; to them, looking at cycles is like telling the future by tossing chicken bones.
Armstrong claimed he had been framed for uncovering political corruption in Japan. A press release issued in 1999 claimed that Armstrong never misrepresented his background: “After all Keynes, Ricardo, and even Adam Smith became important contributors to economics without any formal degree in the subject, relying instead upon unbiased experience and observation.” The Princeton Economic Institute, a sister company, defended Armstrong as “an outspoken opponent against government manipulations, interventions, and `the billionaires’ club.’”
Armstrong has a hearing in a civil case set for Friday, April 27. The sentence in the criminal case must run consecutive to, not concurrent with, any sentence in the civil case.
In 2002 Karen Azarchi began to distribute prescription drugs imported from Canada, and her Plainsboro-based business, Medications4Less, was the subject of an article by a reporter from the Associated Press. She claimed she could help cut from 30 to 85 percent from prescription costs.
Pharmaceutical trade groups cried foul, but the article quoted a state regulator as saying that the Food and Drug Administration requirement for an Internet pharmacy to have a license did not apply to Medications4Less because Azarchi was not actually dispensing the drugs, only importing them. She forwarded prescriptions to Canadian doctors, who rewrote the prescriptions and had medications shipped in sealed, original bottles from U.S. and Canadian manufacturers.
But on April 11, after a seven-month undercover investigation, the state Division of Consumer Affairs shut down Azarchi’s home-based Plainsboro business. Investigators posing as customers were able to obtain prescriptions written by fictitious physicians and prescription combinations that can be fatal.
“Many red flags that should have stopped orders from being filled were either ignored or disregarded by the defendants, at great risk to consumers in our state,” said state Attorney General Stuart Rabner in a press release. Azarchi’s defenders call the investigation an entrapment.
A Trenton native, Azarchi is an computer software specialist who at one point was acting director of Princeton’s animal shelter, SAVE. She has declined comment on the injunction or her business, but has posted a telephone number on her former website, 877-633-7453, which is being answered by a service.
Stock News: Interpool Goes Private
In a $2.4 billion deal, Interpool is being taken private by a private equity firm, Fortress Investment Group, a manager of hedge and buyout funds with assets of about $35 billion.
Martin Tuchman, chairman and CEO of the 39-year-old firm, had made an offer of $24 per share, but Fortress topped that on Friday, April 20, with an offer of $27.10 cash per share. Tuchman said, in a statement, that both he and the board supports the deal.
Based on 29.41 million shares outstanding, the price values Interpool at about $797 million and represents a 5.9 percent premium on Friday’s closing stock price, $25.59. Interpool trades on the New York Stock Exchange, as does Fortress.
Interpool leases transportation-related equipment worldwide and has about 238,000 chassis in its fleet and about 756,000 20-foot container units. Under the name PoolStat it provides chassis management services.
Interpool (IPX), 211 College Road East, Princeton 08540; 609-452-8900; fax, 609-452-8211. Martin Tuchman, CEO. www.interpool.com
Panera Bread/Fenwick Group LLC, 2 Tower Center, 14th Floor, East Brunswick 08816; 732-249-0900; fax, 732-828-0899. Jim Nawn, managing member. Home page: www.paneranj.com
Jim Nawn more than doubled the size of his corporate office of the Fenwick Group, a franchiser of Panera Bread, with a move from 3,400 square feet at 600 Alexander Park to the 7,900 square feet in Tower Center in East Brunswick. The group has 33 locations in central and northern New Jersey, employing 1,800 people.
“We were looking for a more centralized location to house a training center for the cafes we own and operate,” says a spokesperson. Tower Center is adjacent to Exit 9 of the New Jersey Turnpike. Over the next three years the group plans to open 10 more locations in the area from Bergen County to Mercer County.
A graduate of Holy Cross, Class of 1987, Nawn has an MBA from Hofstra. He worked in finance for a pharmaceutical firm before opening his first cafe.
Though the corporate headquarters is in St. Louis, this office handles all the functional support areas for its cafes — benefits, finance, accounting, marketing, IT and operations support, and facilities. The menus are the same across the country, but Fenwick Group sales in New Jersey reportedly run about 10 percent higher than the national average.
Cybercomp/Swiss Re, 3150 Brunswick Pike, Suite 330, Crossroads Corporate Center, Lawrenceville 08648; 866-535-6412. Home page: www.cybercomp.com.
The workers compensation division of Swiss Re closed its 10,000 square-foot office at Crossroads Corporate Center at the end of last year. “A vast majority of our people work out of their homes,” says Bill Marko, a Swiss Re spokesperson located in Overland Park, Kansas. Four of the employees in the Princeton office were sales managers who had backgrounds as underwriters. “The operation is still going, but we don’t have a physical office there.”
This Cybercomp division used to be part of GE Insurance Solutions, and it was sold to Swiss Re last June. Though Swiss Re is a re-insurer, the Cybercomp division — a primary insurance company — focuses on workers compensation business.
Meredith Realty Partners LLC, 81 Columbia Avenue, the Red Barn, Hopewell 08525. Edward B. Meredith Jr., principal. Home page: www.mrealtypartners.com.
After three years the commercial real estate advisory firm and brokerage has gone into hiatus.
When Edward and Gayle Meredith opened, as detailed by a cover story in U.S. 1 on April 6, 2005, they planned to take advantage of the privileges offered to women-owned businesses. That did not turn out to be a plus in commercial real estate (U.S. 1, December 20, 2006).
He is working full time for Grubb & Ellis in New York City. His wife, Gayle, had left the family real estate company to work for Grubb & Ellis in March, 2006.
Rosemarie LaPointe, 54, on April 11. She had been supervisor of housekeeping at the Nassau Inn.
Paul E. Honer, 43, on April 15. He was president and CEO of P.K. Edwards and Associates, an executive search firm at Research Park.
Ruth Wyatt, 53, on April 15, of brain cancer. She was administrative director of the Trenton Children’s Chorus.
Mark Scott, 50, on April 20. He worked for the state’s Office of Information Technology. A service is April 26, at 8:30 p.m., at Peppler Funeral Home, Allentown.
Russell Eric Dixon, 55, on April 22. He was an enforcement chief at the New Jersey Treasury Department. A service will be on April 26, at 10 a.m., at Princeton Alliance Church.