SYRACUSE — Fraud is a human being stealing from a business, defrauding the organization in some way. Fraud is not a computer program or an accounting function.

 

That’s the view of David E. (Daven) Morrison, III, M.D., an organizational psychiatrist who has spent his career working with senior executives. [Daven is a combination of David and his middle name, Evan, and rhymes with “raven,” Morrison says, explaining the name he goes by.]

 

Morrison’s company is Chicago–area-based Morrison Associates, Ltd., described on its website as a “business-consulting firm helping organizations to become more effective by turning resistance into motivation into performance.” 

 

Morrison spoke on the topic “Fraud and the Family-Owned Business: Trust But Verify” in an event held April 7 at Le Moyne College in Syracuse. The Family Business Center at Le Moyne’s Madden School of Business organized it.

 

In an April 17 phone interview with CNYBJ, Morrison discussed his assertion that fraud “is not an invention of computers; fraud is a human act.”

 

He noted that “it’s basically a point of view, a starting point for why a person ought to be listening to a psychiatrist talk about fraud versus an accountant.” 

 

Morrison is a co-author of the book, “A.B.C.s of Behavioral Forensics,” described as “an introductory text on the psychology of white-collar crime,” according to the Family Business Center web page announcing the event.

 

The book’s cover includes “applying psychology to financial fraud prevention and detection,” according to an Amazon web page that’s selling the book.

 

Lecture title

Morrison said that in his Le Moyne lecture he was trying to highlight the challenge for a family business.

 

Employees in high-level jobs reach those positions either through hard work, or simply because they are a member of the family that owns the business, says Morrison.

 

And sometimes the individuals in those jobs “can take advantage of that,” either due to human nature or the way they feel about the business.

 

The phrase, “Trust but verify” has been credited to the late President Ronald Reagan who used it while negotiating Cold War-era nuclear deals, but it’s also a “central premise” of accounting, says Morrison.

 

“Just because you’re family or you’ve worked here a long time doesn’t mean I can trust you. I trust the processes, and as I trust the processes, then we can all trust each other,” he adds, explaining the rationale behind the lecture title and his philosophy.

 

Studying fraud

The people who study fraud are called forensic accountants. As Morrison describes their profession, forensic accountants are the professionals who “come in and check out what happened, how did it work, who did it.”

 

In studying those committing fraud, they find there’s no particular profile, no particular race or ethnicity, and it’s both genders in the U.S. and Canada equally, he notes. 

 

“But it is at a certain point in life, which is mid-life, and it’s often long-standing employees with no criminal record,” says Morrison.

 

Those with expertise in behavioral conditions would call them “psychopaths or sociopaths,” he adds.

 

But Morrison communicates regularly with investigators in the FBI and other agencies who say fraudsters are “just every day Joes.” 

 

Then, the question becomes why?, and it’s an issue Morrison’s book examines.

 

Someone committing fraud might be an “accidental fraudster,” or a person who “finds a hole in the system and, for whatever reason, takes advantage of it,” he says.

 

A fraudster may be greedy — an explanation that Morrison says is “probably five or six-thousand years old.”

 

In his book, Morrison theorizes that perhaps people commit fraud for reasons that stretch beyond just simple greed.

 

“They may be angry at the organization and be seeking revenge. They may have a personal financial need and they tell themselves, ‘I’ll pay it back,’ ” he says.

 

The motivation isn’t always greed, but it eventually progresses, Morrison notes. The person committing fraud might not remember it and won’t pay it back. The fraudster’s problem might be a gambling or substance-abuse addiction.

 

In the interview with CNYBJ, Morrison also talked about subclinical psychopathy, noting it was something that he didn’t discuss during the lecture at Le Moyne College.

 

In describing subclinical psychopathy, Morrison said Joseph Koletar, one of the book’s co-authors, noted the public “can’t be too judgmental” about fraudsters because “we all break the law.”

 

Koletar is a retired senior executive with the FBI who supervised the white-collar crime division in New York City, according to Morrison. 

 

He uses speed limits as an example, says Morrison.

 

“The minute you go one mile over the speed limit, you’re breaking the law … We’re all kind of guilty in that way,” says Morrison, referencing the idea behind subclinical psychopathy. 

 

So, why are these “every day Joes” or fraudsters breaking the law? In their book, Morrison and Koletar break it down into eight different possible motivations.

 

“Am I playing a game, or is this a task? Do I follow the rules, or do I break the rules? Do I do it for myself, do I do it for other people?” says Morrison, noting a few of the possible motivations at play.

 

In offering advice to family businesses, Morrison suggests that business owners shouldn’t get too dependent on any one person and they need to make sure their employees take vacations.

 

He also shared a piece of advice from Koletar, the retired FBI executive.

 

“Make sure you have your bank records sent home. You can double check [them] at home,” says Morrison.         

 

 

AUBURN — Communication just might be the most crucial factor in the success of a family business in transition, says an Auburn florist who helps run a business started by her grandparents.

 

Communication was vital to the process of turning Cosentino’s Florist into Cosentino’s Florist, LLC, says Jessica Cosentino, who co-owns the business with her father Carmen. Not only was it important that she and her father communicate, but it was also vital that they both communicate with her two brothers, Guy and Russell, who did not wish to join the family business. Keeping everyone in the loop helped make sure no one was left out and no one’s feelings were hurt, she says.

 

Nine years ago, Jessica Cosentino was working in Syracuse, but wasn’t especially happy with her job. “I worked for an insurance company, and I was getting a little burnt out,” she recalls. After growing up in the family florist business, Cosentino initially had been eager to get away from it. But after spending time working elsewhere, she realized that what she actually wanted was to be a part of it.

 

Cosentino says her parents asked her to consider coming back to Cosentino’s Florist and told her to give it two years. If she was still happy, she could turn her eye toward ownership. 

 

This is where communication once again comes into play, Cosentino says. She began working at Cosentino’s Florist, located at 141 Dunning Ave. in Auburn, with the thought that she was going to own the business in two years and her parents would retire. Things haven’t exactly worked out that way.

 

Her father isn’t ready to retire yet and, in July 2011, Cosentino’s mother Anne Marie unexpectedly died from leukemia. “Everything changes,” Jessica Cosentino says. Suddenly, she and her father needed to handle paperwork associated with Anne Marie’s passing, such as removing her from business bank accounts. “We had to change things for the business,” Cosentino says. “She’s no longer an owner.”

 

It was through that process that Cosentino and her father decided to form an LLC so that she and her father could share ownership of the business and make the ownership transition an easier process. The daughter currently owns 49 percent of the business while her father owns 51 percent and her two brothers are officers of the LLC. “It was the best option so we all have a say,” Jessica Cosentino notes.

 

Through the process, the business had guidance from Paul Goodman a CPA who operates Floral Finance Business Services in Tulsa, Oklahoma, and writes a monthly financial newsletter for Teleflora. Cosentino says Goodman was the best person to help her family with their business because he knows the industry. “Every industry is different,” she says. “We’re way different than a restaurant.” 

 

After working out the industry specifics, she says, the Cosentinos were then able to work with their accountant and lawyer to complete and file the appropriate paperwork.

 

In the years since her mother’s passing, Cosentino says the business has remained strong through its direct mail program, quality customer service, and involvement in the community. “That’s how you build a business and how you keep business,” she says.

 

Cosentino has been spending time learning the wedding flower business, taking over a role once filled by her mother. “I’m learning to be a wedding master,” she quips, adding that a portion of the shop is now a dedicated wedding consulting room. In addition to the shop’s main website at www.cosentinosflorist.com, the business has an additional website, www.auburnweddingflowersbycosentinosflorist.com, to showcase its wedding work and services. The heading at the top of the site says, “Weddings By Jessica.”

 

Wedding flowers has been a growing area of business for Cosentino’s Florist as the Finger Lakes region has increased in popularity for destination weddings at venues such as wineries, Cosentino says. That increased popularity combined with the quality of their work has tripled the number of bridal customers for 

Cosentino’s Florist over the past four years, she says.

 

Cosentino’s Florist has seven employees and adds five additional employees during holidays such as Christmas, Valentine’s Day, Mother’s Day, and prom season. Carmine and Phyllis Cosentino started the business in 1934, and their son Carmen and his wife Anne Marie took over the business in 1962.

 

 

SYRACUSE — Succession planning in a family business could take several years with plenty of factors to consider on the emotion and economics of the leadership change.

 

That’s according to Anthony (Tony) Marshall, an attorney in the Syracuse office of law firm Harris Beach, PLLC. Harris Beach is headquartered in Rochester. 

Marshall spoke with CNYBJ on April 17.

 

His practice focuses on corporate tax and trust and estate areas. Most of his clients are closely held, family businesses in upstate New York. Marshall is also licensed as a certified public accountant, he says.

 

A family business can’t wait until the owners provide an eight-month notice of their intention to retire to determine the next-generation leadership and direction the company will pursue, says Marshall.

 

The business owners need to think “through the succession-plan process, who’s going to take over what role [in company leadership],” he adds.

 

If the company doesn’t have family members who are in line to take over the leadership role, the owner will either target other “key employees” or work to sell the business.

 

“That’s going to be your exit strategy … but the bottom line is we need an exit strategy,” says Marshall.

 

Develop a plan

A family business needs to develop a plan that allows the shareholders who want to retire to leave the company. The plan should also enable the family members or key employees with the “core competencies” to assume the leadership role.

 

Any succession plan should also align the needs of both the outgoing owners and the incoming leaders, says Marshall.

 

The departing shareholders will want to realize the value of their stock for retirement income and preserve the business so it can remain profitable and grow, he adds.

 

The new company leaders will have to determine if they’ll need additional compensation for a more leadership-specific role, while also understanding that the business may need to continue providing payments to the retiring shareholders for a while. 

 

“So is there enough cash flow that’s going to align everybody’s needs and wants, and make sure that the company doesn’t go bankrupt in the process,” says Marshall.

 

The process doesn’t happen “overnight,” he notes.

 

Start talking

A typical family business should have a strategy to “just start talking about it” when the primary business owner reaches the age of about 50, says Marshall. 

 

Sometimes a family’s children won’t want to assume control of the business, and sometimes they want be the next generation of ownership. For those interested in leading the business, the parents have to determine if the children have the necessary “core competencies.”

 

“What skill set do they need,” Marshall says, referring to a company’s need for operations, administration, and back-office functions.

 

The decisions become even more important if a family has multiple children in line for leadership roles, he says.

 

“Ultimately, part of that strategy would be … having whom you feel is going to run the organization have the controlling vote,” says Marshall.

 

The owners also have to determine how to handle the company’s shares, including whether to gift them or to sell them and whether to structure the stock into voting and non-voting shares, he adds.

 

If a family has three siblings in line for consideration, who will get the controlling shares and when do the parents or owners provide the shares?

 

“What do Mom and Dad want? What kids want to be involved? You start early enough, the economics can be worked out. The skill sets can be addressed,” says Marshall. 

 

The thought process on succession planning can last as long as 15 years, Marshall notes.

 

A family business will want the benefit of hind sight “as much as possible,” which means it should start early and allow the process to evolve. 

 

If they don’t start early enough and express to children or key employees that an ownership opportunity is available, then the family owners could start feeling pressure. 

 

At that point, the effort for a succession plan “tends to fail,” Marshall says, leading to the eventual sale of the business.

 

 

Wanted: 500 Hop Pickers wanted at my yard, Monday, September 5th… Positively no children allowed in the yard. — John Greenway

During most of the 1800s, these advertisements ran annually in August and September as Central New York was one of the top growers of hops in the country. 

Local trains filled with newly hired men and women of all ages, nationalities, and from all walks of life, who traveled to the many area hop yards to help bring in the harvest. In some cases, the hop yards were located far from the nearest train stations. This would necessitate further long, crowded wagon rides to the hop yards. Preparations for the pickers’ arrival and subsequent month-long stays were very involved as they all boarded with their employers.

 

The farmer’s wife thoroughly cleaned the farmhouse and barns in anticipation of the hop workers’ arrival. She took up her best furniture and rugs, put them under temporary lock and key, and replaced them with cots and bedding while also supplying linens and toiletries. Food preparations were massive and extra supplies of tea, coffee, sugar, and baked goods were purchased and produced. It was understood that good food helped to insure that pickers returned year after year.

 

Central New York was a prime hops growing area due to its location (between 35 and 55 degrees latitude) and the length of the growing day. These vigorous, pleasantly fragrant vines grew as much as 6 inches in one day and required sturdy trellises in order to grow properly. The tiny barbs on the vine, that could grow up to 25 feet in length, adhered themselves to the wires strung between the trellises. Farmers could only use ‘female’ hop vines and subsequently dedicated their energy during the growing season to evicting any ‘male’ plants from the growing field. A mature female hop vine yields cones (a grouping of flowers) containing yellow glands that secrete lupulin. This substance is necessary to make beer foamy, give it its distinctive flavor and help to extend shelf life. The vines usually came to maturation at the end of August or beginning of September. Hops are sensitive and therefore susceptible to grubs, mildew, and pests — making them a difficult crop to manage.

 

At the onset of the harvest, pickers were arranged in groups of four around a large wooden box divided into quarters. This box was covered by an awning to help protect the workers from the sun. Each box was located in a “set” that is eight rows of hops in each direction. Men known as “box tenders” brought the vines to the pickers and carried away the discarded vines. Workers were required to remove only the cones of flowers from the vines. Both men and women wore gloves as the bristles on the cones caused painful welts. Women covered their forearms with cut-off stockings as added protection. When each worker’s box was full, he/she shouted “hop sack” and the yard boss would empty the hops into a sack that was then taken to the kiln for drying. The pickers received a ticket every time they filled their section of the box. The completed tickets would then be submitted at the end of the season for compensation. Workers’ picking speeds varied, causing numerous rivalries. An average worker filled two boxes per day with others filling up to eight. Wages were based on the season’s yield. 

 

Once the sacks of hops reached the grower’s kiln, they were spread out on the slatted floor that was covered by a large burlap tarp. The farmer then went below, where a large woodstove had been installed. The stovepipe was divided into two pipes that split to frame the room spreading heat below the hops. Brimstone (chunks of unrefined sulphur) was placed on the top of the stove and the resulting fumes bleached the hops. The process generally took from 12 to 16 hours to complete. Once thoroughly dried, the hops were slid into another room where they were baled and then transported to the buyers. These bales were highly flammable and frequent warehouse fires occurred. Today, the dried hops are pressed into pellet shapes and stored in vacuum packages to avoid this hazard.

Although the pickers worked extremely long days from pre-dawn to dusk, evenings were reserved for dancing. The dances were usually held in the employer’s barn. This allowed the farmer to better control where and when the pickers socialized while still making sure everyone was rested properly for the next day’s work. Occasionally, a more formal affair was arranged at the local hotel or dancehall, providing the ladies with a more dressed-up occasion. Sundays were reserved for clothes washing and church going.

 

At the end of the approximately month-long season, workers were transported back to the train stations to return home. Hop picking was unique in that it served to bring people from all walks of life together to work and socialize in a close-knit community for a short period of time. It was viewed as a mostly pleasant change of pace, resulting in many workers returning annually. 

 

Unfortunately, the hops-growing industry in this area disappeared in the early 20th Century due presumably to a mold epidemic and a drop in profits. Major North American hops growers now mostly reside on the West Coast. There has, however, been a recent upsurge in the number of hops growers in Central New York with the interest in micro brews and improvements in growing practices.           

 

Karen Y. Cooney is support services administrator at the Onondaga Historical Association, or OHA, in Syracuse.

 

GEDDES — The Syracuse Chargers Rowing Club will host the 2nd annual USRowing Northeast/Mid-Atlantic (NEMA) Masters regional championships on June 28 on Onondaga Lake.

 

In support of the event, Onondaga County has committed to purchasing a new, seven-lane, 2,000-meter course it hopes will also attract future rowing competitions to the area.

 

The Syracuse Chargers Rowing Club joined Visit Syracuse and Onondaga County officials to announce the event in early March.

 

The regional championships will provide a “full slate of racing opportunities” for competitors in all boat classes on a new, seven-lane, 2,000-meter course, according to a news release posted at the website of VisitSyracuse.

 

“We applied for the regatta,” says Joe Bufano, president of the Syracuse Chargers Rowing Club. 

 

Bufano spoke with CNYBJ on April 20.

 

Beyond his role as president of the rowing club, Bufano is also an attorney with the DeWitt law firm of Ferrara, Fiorenza, Larrison, Barrett & Reitz, P.C.

 

The Onondaga Lake venue is a “great fit” for the event, A.J. Dominique, events manager for USRowing, said in the news release.

 

“Its central location in the region makes it easy to get to from the New England states, New York, and New Jersey,” said Dominique.

 

The competition

The Masters competitions are broken up by age groups from “age 23 and beyond,” according to Bufano. 

 

“There’s a boat average that’s calculated and that determines what particular class you’re competing in,” he adds.

 

The competitors are generally members of USRowing, Bufano notes.

 

Participants will compete in the new course that Onondaga County lawmakers have committed to purchase.

 

“The course itself is approximately $60,000,” says Bufano. “That’s a prerequisite for any regatta that you’re going to apply for … that you have that course.”

 

The Chargers will locate the course on the eastern shore of Onondaga Lake with the anticipated starting line located in Willow Bay.

 

It’s possible to break the course into varying lengths, according to Bufano. 

 

International, collegiate, and junior-national competitions use the entire 2,000-meter length. High-school races use a 1,500-meter course, and masters races are 1,000 meters, he says.

 

“We’re buying a 2,000-meter course so that we have the ability, long term, to attract multiple types of regattas,” Bufano adds. 

 

The course, which has seven lanes, includes anchors, wires, and bouys.

 

Economic impact

The Masters event has the “potential to distribute millions of dollars” into the Syracuse economy, Nikita Jankowski, communications manager for VisitSyracuse, said.

 

In 2014, the Masters National Championships brought an estimated $2.2 million to the city of Grand Rapids, Michigan over four days (300 competing crews and 500 competitors). 

 

In addition, the Northeast Junior District Championships brought in more than $550,000 to the Lowell, Massachusetts area, Jankowski added.

 

VisitSyracuse is an affiliate of CenterState CEO and “Onondaga County’s official marketing organization for tourism-related economic development.”

 

VisitSyracuse was formerly known as the Syracuse Convention & Visitors Bureau.

 

History, partners

Rowing on Onondaga Lake dates back to the 1870s, when the Boating Association of Syracuse University was founded and began hosting collegiate races, according to the March 6 news release from VisitSyracuse. 

 

It served as the site of the Intercollegiate Rowing Association National Championships from 1952 to 1992, as well as 1994. 

 

From 1995 to 2000, the Syracuse Chargers hosted the USRowing Club National Championships, as well as the 1996 USRowing Masters National Championships.

 

“Syracuse has a rich history of hosting regattas,” Bufano notes.

 

In addition to the Syracuse Chargers Rowing Club, Onondaga Lake is home to Syracuse University men’s and women’s varsity rowing programs and Liverpool High School crew. Each spring, the Syracuse Chargers Junior Invitational Regatta consistently draws more than 1,000 New York state high-school athletes and their families to the area.

 

The Syracuse Chargers Rowing Club is a nonprofit organization that Bill Sanford, former Syracuse University men’s rowing coach and Onondaga County legislator, formed in 1972.

 

USRowing is a Princeton, N.J.–based nonprofit organization that the U.S. Olympic Committee recognizes as the governing body for the sport of rowing in the U.S. 

USRowing has 75,000 individual members and 1,200 member organizations, offering rowing programs for all, according to its website.

 

Onondaga County Parks, which is among the partners that helped secure the rowing event, maintains more than 6,500 acres of park land, including a zoo, nature center, trails, beaches, shelters/lodges, museums, and special events.                         

 

 

 

 

AUBURN — The Auburn Doubledays minor-league baseball team on April 17 announced it has forged a radio broadcast agreement to air 38 of its games on WAUB 98.1 FM / 1590 AM (Finger Lakes News Radio) this upcoming season.

 

Financial terms were not disclosed.

 

This year, all Thursday, Friday, and Saturday Doubledays games — home and away — will be broadcast live on WAUB, according to a news release from the baseball club. Home games on July 20 and Sept. 6 and 7 will also be carried live on WAUB — for a total of 38 radio broadcasts.

 

Each of those broadcasts will also be available on the WAUB app and online at FingerLakesDailyNews.com.

 

The other 38 regular-season Doubledays games played from Sunday through Wednesday will be available live on AuburnDoubledays.com, the MiLB First Pitch app, Tunein.com, and the TuneIn app. The 38 games that air on WAUB will also be available on those digital venues. 

 

 “We’re very excited about this new agreement and what it means for our fans,” Mike Voutsinas, Auburn Doubledays general manager, said in the release. “Now that live audio will be available for all 76 of our games, it will be easier for us to promote our brand.”

 

The Auburn team starts its baseball season on Friday, June 19, at Batavia. It will play its first home game at Falcon Park in Auburn on June 25 against the West Virginia Black Bears.

 

David Lauterbach, a Syracuse University broadcast and digital journalism major, will call the games as the Doubledays play-by-play broadcaster this season.

 

The Auburn Doubledays club is a Single-A short-season affiliate of Major League Baseball’s Washington Nationals. The team is part of the New York-Penn League.

 

 

SYRACUSE — For the Health of It Foods, LLC of Syracuse, which does business as Avocadough, and Daughter for Hire, LLC of Whitesboro are the local winners of a U.S. Small Business Administration (SBA) entrepreneur competition.

 

The SBA’s InnovateHER: 2015 Innovating for Women Business Challenge is a nationwide competition for entrepreneurs who are developing products and services that will “enhance” the lives of women and their families, according to an SBA news release.

 

Tracie Long, president of Avocadough, won the Syracuse competition that the WISE Women’s Business Center hosted on March 26.

 

WISE is short for Women Igniting the Spirit of Entrepreneurship.

 

Avocadough creates and sells baked goods and ready-to-bake frozen dough that uses natural and healthier ingredients such as avocados and whole grains. 

 

The company seeks to offer an “alternative that is lower in saturated fats and cholesterol and higher in fiber and healthy fats,” according to the SBA release.

 

Kathleen Rutishauser and Denise Flihan, co-owners of Daughter for Hire, won the Utica competition that the Women’s Business Center of New York State hosted on March 30.

 

Daughter for Hire provides “caring, compassionate and dependable non-medical assistance to seniors … allowing them to remain independent for as long as they are able,” the SBA said.

 

The SBA has forwarded the local winners for consideration in the semi-final round. 

 

An executive committee comprised of SBA officials will review the semi-final nomination packages and select no more than 10 finalists, according to the organization’s news release. 

 

The finalists will compete for a total of $30,000 in prize money provided by Microsoft Corp. 

 

The 10 finalists will travel to Washington, D.C. on May 8 where they will pitch their products and ideas to a panel of expert judges during SBA’s National Small Business Week, the agency said.                      

 

 

CLINTON — The Andrew W. Mellon Foundation has awarded Hamilton College’s Ruth and Elmer Wellin Museum of Art a two-year, $100,000 grant to study the museum’s educational programs for local public schools.

 

The study will help the Wellin Museum work more effectively with public-school educators to supplement school curricula within the structure of the Common Core requirements, according to a news release from Hamilton College. Study results will be used to create new programming for the museum. The results of the study and an assessment of the pilot programs will be widely disseminated so that peer institutions, locally and across the country, may benefit from the Wellin’s work, the release explained. 

 

“Locally, arts programs are frequently the first to be cut, leaving huge holes in the educational experience for students,” Megan C. Austin, manager of educational programming and outreach at the museum, said in the release. “The Wellin seeks to address this gap by becoming a primary source for arts programming for K-12 students in the Mohawk Valley. This grant also allows us to further develop our educational outreach program and launch new initiatives to serve students in the region and at Hamilton.”

 

More than 1,500 public-school students from nine area school districts have visited the museum since it opened in the fall of 2012.