Under a federal plea agreement revealed in the District of Columbia on November 3, John Torkelsen would spend just 70 months in prison for one count of making false statements to the U.S. Small Business Administration. The maximum sentence for this criminal charge is 30 years.
Torkelsen and members of his family had been charged with the theft of $1.9 million of Acorn Technology Fund monies and the misapplication of $32 million in federal funds. Before starting the fund Torkelsen was an expert witness who did valuations of technology companies for plaintiff securities firms.
Missing from the plea agreement was any hint that Torkelsen had agreed to cooperate with the prosecutors who are trying to indict Torkelsen’s former clients from the securities law firm, Milburg Weiss.
"This is not the typical guilty plea agreement," says Jim Becker, a partner in the litigation department at Saul Ewing, which has an office on College Road. An alumnus of Swarthmore (Class of 1974) and George Washington University law school, Becker used to be an assistant U.S. attorney in the criminal division of the U.S. Attorney’s Office in Philadelphia, and he works at the Saul Ewing’s Philadelphia headquarters.
Becker refers to a rarely invoked rule used in this plea agreement, rule 11(c)(1)(c). "Under this rule, if the judge were to reject the proposed and agreed-upon sentence, then Mr. Torkelsen would be allowed to withdraw his guilty plea and proceed to trial," he says.
In the usual plea agreement, if the judge hands down a harsher sentence than anticipated, the defendant cannot withdraw the guilty plea but is stuck with the result. "The 11(c)(1)(c) deal is a significant feature, an added protection," says Becker.
Looking further at the plea agreement, it is based on an SBA loss of more than $2.5 million, not the $32 million figure originally used. This decreased Torkelsen’s sentence by three or four years.
"The jail term in a fraud case is driven by the dollar amount of the loss," says Becker. "In this case the jail term might reflect a lower loss amount than the $32 million than federal prosecutors originally estimated." If the loss were $32 million, then the resulting guideline would be 108 to 135 months instead to 70 to 87 months.
Becker confirms that the plea agreement does not call for Torkelsen to cooperate with prosecutors in other cases. "You can’t tell if there is cooperation or not. Certainly if there were cooperation you would expect there to be language specifying cooperation in that agreement," says Becker. If there were a side deal, the Department of Justice is not supposed to conceal it. "But you can’t rule out the possibility that Mr. Torkelsen has agreed to cooperate."
Taking Pictures on Orchard Road
Among Princeton’s office enclaves, the former American List Counsel headquarters on Orchard Road is one of the most eccentrically picturesque. It has a pre-Civil War building with an up-to-date addition, and the property also includes a pond, a swimming pool, an old barn, and lots of picture-perfect stone walls. Rob Lyszczarz spent nearly $2 million on the building if you count the restoration expenses, but it has been standing empty except for Lyszczarz’ Re/Max office (U.S. 1, September 29, 2004).
Now two companies, including a photography business and an executive search firm, are taking advantage of the Orchard Road ambience. Maureen Vaccaro moved Your Special Image, her 15-year-old photography business, from 25 East Broad Street in Hopewell to 1,900 square feet in the farmhouse. She occupies the first floor of the historic part of the building. To make room for her, landlord Lyszczarz moved his headquarters to the second floor. The executive search firm leases the second floor of the modern wing (see story below), and the first floor of the modern wing is vacant.
Vaccaro says she noticed the "for lease" sign on Mother’s Day. "I was walking around the property and thinking how nice this would be when Rob drove in. It is such a unique opportunity."
She is thrilled to have the opportunity to do photo shoots in an 1870s farmhouse with wide-beam pine floors, big working fireplaces, and post-and-beam ceilings. She also raves over the chance to photograph family groups and wedding parties outside on the beautiful grounds. "I can serve refreshments, and the grandparent can sit in the air conditioning until it is time to get wedding portraits taken," she says.
Maureen Vaccaro has been taking pictures since she was 17, when she worked for the Metuchen Review, and her 17-year-old son now works for Cliff Moore, a photographer who is also the editor and publisher of the Montgomery News. Her 23-year-old daughter, who is one of the few female employees on Best Buy’s Geek Squad, gets the credit for moving her mother’s business into the digital world.
Vaccaro grew up in South Plainfield, where her father commuted to the World Trade Center. She attended Middlesex County College, married and started a family, and worked at various professional labs and studios. She married again, to Louis Vaccaro, and managed Paramedical Services Inc., her husband’s corporation, which did physicals for insurance companies. On the side she did wedding photography and freelanced for studios in Highland Park.
When one of her former employers closed his business, she bought the equipment. "It sat in my garage until I turned 40," says Vaccaro. Encouraged by her friends, she decided to open the kind of "downtown hometown" photography studio that John Apai used to have. She lives in Belle Mead, opened her first studio in Hopewell, and now her former employer has joined her in the business. "We do everything from dance schools, to the gala dinner at Robert Wood Johnson hospital, to portraits of real estate agents," says Vaccaro, "and we outgrew the place in two years.
Service to the client, says Vaccaro, is what makes her successful. For instance she recently supplied prints for a wedding that she shot eight years ago. "I have every negative I ever shot."
Your Special Image YSI Photography, 88 Orchard Road, Skillman 08558; 609-466-7000. Maureen Vaccaro, owner. Home page: www.yourspecialimage.com.
Searchers on Orchard Road
Baby boomers retiring will bring good times to the executive search companies, says David Campeas, who owns one.
"We have demographics in our favor," says Campeas. "There will be a huge talent gap in the next two to five years. People in their late 20s or early 30s will move up faster than the previous generation because companies will have no choice."
His three year-old firm, Princeton Search Group LLC, is associated with Management Recruitment International, which bills itself as the largest executive search network in the world, with more than 1,000 offices in 30 companies. Princeton Search Group is the largest entity of MRI. It has 15 branch offices, coast to coast, with a total of 190 employees, and 10 people work here at the headquarters. Business is good, says Campeas. "When I purchased the company revenue was $15 million. This year it should be $25 million."
Campeas moved his firm from the Sovereign Bank building on Route 206 to the former American List Counsel property at 88 Orchard Road, where he rents from Rob Lyszczarz. He occupies the second floor of the "modern wing," about 3,500 or 4,000 square feet.
"My daughter was going to Orchard Hill School last year, and I saw the ‘for sale or lease’ sign," say Campeas. "Our lease was coming up, and I looked at the property and loved it."
An East Windsor native, his father was a salesman and his mother was an administrative assistant. After graduating from Rutgers in 1982, he worked for Citibank. In 1986 he purchased the Bridgewater franchise of Management Recruiters International, then sold it and moved to work at MRI’s headquarters in Cleveland. In 2002, when MRI spun off the executive search division he was running, he bought it to create Princeton Search. He is married to a writer, a columnist for Women’s Wear Daily, and they have one daughter.
For the executive search business, clients are in the middle market, the Fortune 1000 to 1,500 firms. But his firm is also involved with college recruiting, and it does human resources process management for Fortune 50 or Fortune 100 companies that need to outsource some of their recruiting and business processes.
As the outsource company on an annual or multi-year contract, Princeton Search works with all sources including the company’s internal referrals, Internet ads, and print ads and other recruiters, says Campeas. Like a general contractor he hires subcontractors, other recruiters, usually on a for-fee basis.
"Companies are realizing that there are parts of their businesses that others can do more efficiently," says Campeas. "With the volume of information available now, and the potential numbers of applicants, they open up a giant funnel when they need to expand or grow. They do not have a cost efficient way to interview, assess, and rank all these applicants with their own people."
Usually the outsourcing contract involves a spinoff division or a product launch. Campeas points to helping Cepracor build a 1,000-person sales force to launch Lunesta, a sleep aid. "It was the fourth most successful drug launch," says Campeas.
Princeton Search Group LLC, 88 Orchard Road, Skillman 08558; 908-281-6023; fax, 908-281-6052. David E. Campeas, president and CEO. Home page: www.princetonsearch.com.
Father Son Start-Up
A father-son team, Aaron Gold and David Gold are combining pharmaceutical experience and sales savvy to establish a new franchise for Management Recruiting International. Their executive search firm focuses on pharmaceuticals — regulatory affairs and quality control/quality assurance.
"We intend to capitalize on this area being the pharma capital of theworld," says David Gold, managing director. "We have been already contacted by so many companies that want to partner with MRI. We are doing a lot of face to face meetings."
Based in Cleveland, Management Recruiters International has 1,100 offices globally, including 900 in United States. Each franchise is independently owned and operated and is not confined to a particular geographic area.
The grandson of a Polish immigrant who owned a bicycle shop in the Bronx, David is the youngest of three children, and he grew up in East Windsor. He went to Mercer County Community College and the New School in New York. He has 15 years experience in marketing, sales, and training for companies like Strictly Rhythm Records and Ricoh Business Systems. He also hosted Live Saturday Night dance parties for WPST for eight years.
Aaron Gold, David’s father, has 30 years experience in pharmaceutical compliance. He went to Hunter College and worked for Carter Wallace.
"One of the things that differentiates MRI is our ability to partner with client companies and offer a single source staffing solution," says David Gold. "We place candidates and deal with clients on a global level because of our powerful internal referral system."
About one third of the searches are done on a retainer basis, the others on contingency, meaning the company gets paid if the candidate gets hired. Gold says his company also gets hired a third way, by being given a small engagement fee to start the search. On this plan the client pays another fee when presented with a short list, and the last payment when the candidate accepts the job.
Gold uses the "we feel their pain" adage to show that his firm has pharmaceutical experience. "For the most part we have sat in their chair and have a unique insight into the client company’s industry.We will never call on a client company and in that first session hand them a resume. Our intent is to introduce the client to a proven process that brings value to an organization."
Management Recruiters of Mercer, 3371 Route 1 South, Suite 102, Lawrenceville 08648. David Gold, managing director. 609-716-1616; fax, 609-716-0066. Home page: www.mrmercer.com
Michael Pappas declares it is good news that he has closed his laboratory at Princeton Corporate Plaza and is temporarily operating from a home office. That’s because his research on previous grants went well, and he expects other grant monies to come through soon. When they do, he will open another lab, either at Harold Kent’s Princeton Corporate Plaza, or in Hamilton, or at the Technology Center of New Jersey.
"We are in a hiatus period. Why spend so much money renting laboratory space when you have limited capabilities?" says Pappas. "Small biotech companies, I believe, need to concentrate on appropriate expenditures."
Pappas speaks at the New Jersey Entrepreneurs Forum on that topic — budget strategies for small biotech companies — on Thursday, November 10, at 3:30 p.m. at the EDA’s Technology Center of New Jersey, 675 Route 1 South. Cost: $30. Call 908-789-3424 for information. (See page 5).
MGP Biotech works on transient hybridization technology to detect mutations in human and animal DNA. "It is a rapid diagnostic, a fantastic easy-to-use facile technology that will allow us to detect genetic diseases as well as biological terror agents," says Pappas, "a whole new way of doing diagnostic, genomic, and genetic testing."
New Jersey awarded Pappas a Springboard grant for $125,000, which the company matched with its own money and in-kind contributions. "I’m very pleased. Not many people can say that in startup situations," says Pappas. "The Springboard grant facilitated more research that led to proof of principles for two genetic diseases — G6PD (glucose-6-phosphate dehydrogenase), a blood disease, and human hemachromatosis (HH) or iron overload disease."
Result: a second patent application for Pappas. He has other grant requests in the pipeline for other NIH Small Business Innovation Research grants and has been invited to apply for a follow-on grant of $100,000 from the state’s springboard program.
Pappas grew up in the Boston area, where his mother was a schoolteacher and his father a vendor. He had an ROTC scholarship to Northeastern University in Boston, Class of 1974, earned his master’s at the University of Lowell in Massachusetts and his PhD at New York University in immunoparasitology and immunodiagnostics. His Army service was at Walter Reed Hospital, where he developed rapid diagnostic technologies for diseases of military significance.
Formerly employed at PharmaSeq at Princeton Corporate Plaza, he wrote a book on how to get Small Business Innovation Research Grants and the second edition of the Biotech Entrepreneurs Glossary. He is married and has three children.
Pappas says his new technology, called selective hybridization, is even faster and more accurate than transient hybridization technology (THT). Its potential is to revolutionize treatment of disease through genetic studies and nutritional therapies.
MGP Biotech Inc., 2 Dayna Lane, Lawrenceville 08648; 609-620-1478; fax, 609-620-1479. Michael Pappas.
Starwood Capital sold its Forrestal Village hotel, the Westin, to Highland Hospitality Corporation for $53.5 million. Starwood had bought the business for $19.6 million in 1997; it reflagged the property in 2002, changing it from a Marriott to a Westin.
Highland, a real estate investment trust in Virginia, has chosen Crestline Hotels & Resorts to manage its new 294-room hotel. It owns 21 hotel properties in 11 states and Mexico (www.highlandhospitality.com).
Last month the owner of the Doral Forrestal on College Road, Virginia-based Interstate Hotels and Resorts, announced it would reflag that property to be a Marriott.
Westin Princeton at Forrestal Village, 201 Village Boulevard, Princeton Forrestal Village, Princeton 08540; 609-452-7900; fax, 609-452-1223. Thomas Healy, general manager. Home page: www.westin.com.
Ruth Rabstein Pellettieri, 92, died November 4. She was a founder of Pellettieri, Rabstein, and Altman at Nassau Park. See page 55.
Michael K. Fahey, 52, on November 4. A certified public accountant, he was a partner at MMR Associates on Route 206.
Robert E. Kuenne, 81, on November 5. He was an author and professor of economics at Princeton University.
John Dean Eler, 58, on November 6. An attorney, he was a partner at Maida and Eler on Parkway Avenue in Ewing and president of State Capital Title and Abstract Company.
Ronald Pagodin, 65, on November 6. He had been a machinist at David Sarnoff Research Center.
Judith Shaw, 63, on November 6. She worked at the New Jersey Department of Labor and Workforce Development.
Joseph Lawrence Greenberg on November 6. He was the University Registrar at Princeton University.
Al Sussman, 88, on November 7. He founded Al Sussman Realty.