Direct Mail Buyer Pleads Guilty; Accepted More Than $1.8 Million in Kickbacks
November 23, 2010
WASHINGTON, DC—Nov. 23, 2010—A former employee of two Massachusetts-based customer relationship management agencies who purchased direct mail advertising has agreed to plead guilty to charges relating to his receipt of more than $1.8 million in kickbacks, the Department of Justice announced.

According to the charges filed today in U.S. District Court in Boston, Reed A. Richard conspired with others to defraud two of his employers by accepting kickbacks from two direct mail advertising printing brokers in exchange for awarding printing work to companies the brokers represented. The conspiracy took place from approximately January 2000 through at least February 2006.

According to the court documents, Richard, a former director of production at PreVision Marketing LLC who resided in Carlisle, MA during the conspiracy, took the kickbacks during different periods of employment with two separate customer relationship management agencies, which he defrauded as part of the schemes. Richard is also charged with tax evasion for tax years 2004 and 2005 by falsely claiming substantial personal expenses as business expenses on tax returns.

Richard was responsible for procuring direct mail printing services by obtaining competitive bids from printing companies, awarding contracts, reviewing invoices and authorizing payment. According to the charges, he approved invoices knowing that they were fraudulently inflated to include the kickbacks he was to receive. A portion of the inflations were passed from the brokers to Richard as kickback payments.

In order to conceal his role in the scheme, Richard purported to provide consulting services to the printing brokers through a shell company he owned. Richard claimed substantial illegitimate business deductions on his corporation’s federal income tax returns. As a result, he under-reported his corporate and personal taxable income, resulting in a total tax loss of approximately $170,000.

The plea agreement is subject to court approval.

Today’s charge arose from an ongoing investigation into the direct mail printing industry being conducted by the Antitrust Division’s New York Field Office, with the assistance of the Internal Revenue Service (IRS) Criminal Investigation, in Springfield, MA. Anyone with information concerning fraud or tax offenses relating to the direct mail printing industry should contact the Antitrust Division’s New York Field Office at 212-264-9308, visit www.justice.gov/atr/contact/newcase.htm or contact the IRS Criminal Investigation’s Springfield Office at 413-785-0090.
Source: Press Release

November 22, 2010
SAN FRANCISCO—Nov. 22, 2010— ForestEthics has released a report said to uncover the Sustainable Forestry initiative’s (SFI) industry-sponsored greenwashing in marketing wood and paper products. Titled “SFI: Certified Greenwash”, the report asserts that the SFI label primarily serves the interests of the timber, paper and forest products industries. Its centerpiece is a two-page infographic depicting the web of influence through which those industry interests dominate SFI.

“Greenwash is deception pure and simple,” said Aaron Sanger of ForestEthics. “Our report exposes SFI’s greenwash, an industry-sponsored scam that threatens our forests, communities, fresh water and wildlife.”

Among the report’s findings:

• Virtually all of SFI’s funding comes from the paper and timber industries.

• SFI’s most commonly used label, the Fiber Sourcing label, requires no chain-of-custody tracking of a product’s content or origins.

• Out of 543 audits of SFI-certified companies since 2004, not one acknowledges any major problem on issues—such as soil erosion, clearcutting, water quality, or chemical usage—that should be the focus of a ‘sustainable forestry’ program.

• In one case, the SFI audit team—which included only two auditors—spent just five days assessing an area larger than the entire state of Pennsylvania. They reported no violations of SFI standards and didn’t identify so much as a single opportunity for improvement.

• Board members representing SFI’s environmental and social sectors include Mike Zagata, former NY Gov. Pataki’s “most controversial agency head”, and Marvin Brown, who this October resigned as Oregon state forester amid accusations that his department conducted and tolerated environmentally-harmful forestry practices.

In March, ForestEthics mailed letters to Fortune 500 companies that rely heavily on direct mail to market their products and services, including companies from the insurance, financial services and telecommunications sectors. Citing public controversy about SFI’s deceptive “green” marketing practices, the letters offer ForestEthics’ expertise to help companies find legitimate ways to improve and promote the environmental attributes of their products.

Source: Press release.

Given the way in which the world economy is restructuring and the general uneasiness about the future, price has become the issue that continues to plague some salespersons. They have a hard time overcoming price objections because that is the only thing they offer to the client.
As a print Salesperson, if price is always the determining factor in whether you land a sale, look for another career. You have to bring VALUE that has worth to the table for your clients and the company you work for. If you won’t/can’t then you are either lazy or do not possess the skill sets needed for success.

Some of the common pitfalls of Salespeople who
only offer “the lowest price”:

1. They submit price quotes and NOT proposals. Proposals offer client solutions to their problems. Price quotes can be obtained on the Internet and there is no need for a Salesperson if all they do is submit price quotes.

2. They do not ask the right questions of their prospects: ie. “what factors determine who you use as a printer? If it is only price, then have you ever thought about the possibilities of getting some good input from your print salesperson to make more money for your business? After all, we have 5 other clients in your market and we have helped them just as we can help you…let me explain how…”

3. They are afraid of having a higher price than their competitor. Frankly, there is “always a lower price”. Over 5-8,000 printers go bankrupt per year. That means the market is full of “survival pricing” that benefits no one. If a Salesperson does not see value and believe they are worth more than someone else, then look for a new career (again). Salespeople have to have certain innate character attributes, one of which is self-confidence in their ability to be a valuable asset to customers. Some salespeople are too arrogant, which can turn off clients. But, if given a choice in hiring a salesperson, I’ll take the “arrogant cocky personality type” (which you can tone down with some frank discussion) versus the “chicken-little timid type” who has no confidence in their ability to be worth more to a client than their competitor salespersons.

September 21, 2010 WASHINGTON, DC—Sept. 21, 2010—Appleton Coated LLC, NewPage Corp. and Sappi Fine Paper North America, together with the United Steelworkers (USW), welcomed the Department of Commerce’s announcement of final antidumping and countervailing duty margins on coated paper imports from China and Indonesia.
Today’s announcement of final antidumping and countervailing duty margins sets out the tariffs that will be applied to unfairly traded imports of coated paper from China and Indonesia that benefited from subsidies or were dumped in the U.S. market. The Department of Commerce’s action updates the preliminary margins that were announced earlier in the consideration of the case which was filed jointly by the USW and the three companies.

The antidumping margins announced by DOC on imports from Indonesia were 20.13 percent and ranged from 7.6 to 135.83 percent on imports from China. Countervailing duties on products from Indonesia will be subject to tariffs of 17.94 percent and on Chinese imports range from 17.64 to 178.03 percent. If the ITC votes affirmatively in their upcoming injury determination, these rates will apply for the term of the relief. The ITC will vote on October 19 and the transmittal of its views to DOC will occur on November 4.

The companies and the USW filed unfair trade cases on September 23, 2009 with the U.S. Department of Commerce (DOC) and the U.S. International Trade Commission (ITC) alleging that certain coated paper from China and Indonesia had been dumped and subsidized resulting in injury to the domestic industry and its employees. The paper products covered by the petitions include coated paper in sheet form used in high-quality writing, printing and other graphic applications, with a GE brightness rating of 80 or higher and weighing up to 340 grams per square meter.

“Today’s announcement validates the allegations the industry made almost a year ago as to how Chinese and Indonesian coated paper exporters were engaged in unfair trade practices. Correction of the dumping and subsidization by the imposition of duties to offset the margins announced today will help provide some more certainty that a competitive market will exist in these products,” said Sandra Van Ert, president and chief executive officer of Appleton Coated LLC.

Leo Gerard, International President of the USW said, “Last week the International Trade Commission heard from the companies and their customers, the union and elected officials from around the country of the injury that has been inflicted by Chinese and Indonesian coated paper producers who are, to put it simply, cheating. They’ve engaged in unfair trade practices to advance their interests at the cost of production and jobs here in the U.S. Commerce’s decision today further validates their unfair pricing and sets the stage for final action to restore a competitive market.”

“Working together, the companies and the Steelworkers have fought for a fair and level playing field,” stated George Martin, president and chief executive officer of NewPage Corporation. “Today’s action is welcome news for the industry and its employees as they look to a future where they can compete fairly based on the quality of the products they produce, the investments that have been made in new technology, and sustainable forestry practices.”

Mark Gardner, president and chief executive officer of Sappi Fine Paper North America said, “Commerce’s recognition of the impact of dumped and subsidized products sends a message that our government is interested in restoring a competitive market in coated paper. We have presented before the International Trade Commission a clear and compelling case that these dumped and subsidized products have in fact injured our businesses, depriving our employees of enriching jobs. We are hopeful the Commission will recognize that injury in its final determination next month.”

“Our members work hard and play by the rules,” said Jon Geenen, USW International Vice President. “All they want is a fair chance to compete. This decision shows clearly what they’ve been up against in terms of unfair trade practices of the producers they have to compete against.”

“It’s time, once and for all, for us to have the rules of fair trade enforced and the government to stand up for their interests. The domestic industry has experienced capacity reductions and under-utilization resulting in the loss of jobs in communities all across the country. The petitions show that unfairly traded imports from China and Indonesia are a significant contributor to that underutilization of capacity, mill closures and resultant job loss,” said Geenen.

The three companies employ about 6,000 production workers represented by the USW at 20 paper mills operating in seven states.

About Appleton Coated
Appleton Coated, headquartered in Kimberly, WI, provides focused market leadership in premium coated and specialty paper products. The Appleton Coated product portfolio includes a range of commercial printing and book publishing papers marketed under the Utopia® brand as well as specialty and private label products. Known for their performance, aesthetics, and environmental attributes, Appleton Coated manufactures their products in a state-of-the-art facility in Combined Locks, Wisconsin, hosting the newest papermaking machine of its type in North America. For more information please visit our website at www.appletoncoated.com/.

About NewPage Corp.
Headquartered in Miamisburg, OH, NewPage Corp. is the largest coated paper manufacturer in North America, based on production capacity, with $3.1 billion in net sales for the year ended December 31, 2009. The company’s product portfolio is the broadest in North America and includes coated freesheet, coated groundwood, supercalendered, newsprint and specialty papers. These papers are used for corporate collateral, commercial printing, magazines, catalogs, books, coupons, inserts, newspapers, packaging applications and direct mail advertising.

NewPage owns paper mills in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia, Canada. These mills have a total annual production capacity of approximately 4.4 million tons of paper, including approximately 3.2 million tons of coated paper, approximately 1.0 million tons of uncoated paper and approximately 200,000 tons of specialty paper. For more information, visit www.NewPageCorp.com.

About Sappi Fine Paper North America
Sappi Fine Paper North America (SFPNA) is a leading North American producer of coated fine paper used in premium magazines, catalogues, books and high-end print advertising. Headquartered in Boston, MA, Sappi Fine Paper North America is known for innovation and quality. Its brand names, including McCoy, Opus, Somerset and Flo, are some of the industry’s most widely recognized and specified. SFPNA is a division of Sappi Limited (NYSE, JSE), a global company headquartered in Johannesburg, South Africa, with manufacturing operations on four continents in 10 countries, sales offices in 50 countries, and customers in over 100 countries around the world. Learn more about Sappi Fine Paper North America at: www.sappi.com/na/.

About the United Steelworkers
The United Steelworkers (USW) is a North American union headquartered in Pittsburgh that negotiates labor agreements representing 850,000 active workers employed in metals, mining, pulp, paper, timber, rubber, chemicals, glass, auto supply, energy producing industries, plus the service and professional sectors to include healthcare, municipalities and pharmaceuticals. For more information: www.usw.org/.

Source: Press release.

According to an article on MSNBC (http://lifeinc.msnbc.msn.com/_news/2010/09/14/5103056-coupon-clipping-craze-may-be-slowing)
“…Call us recessionistas, frugalistas or just plain cheap: The weak economy has forced American shoppers to look hard for good deals.
Coupon clipping faded during the early 2000s but enjoyed a huge resurgence in 2009. Americans redeemed 3.3 billion coupons for consumer goods that year, a 27 percent increase over the 2.6 billion redeemed in 2008. That may partly have been because there were more coupons available. Inmar says 367 billion coupons were distributed in 2009, the most in at least 20 years.When it comes to coupon use, consumers seem more interested in deals on bread and cheese rather than paper goods or sandwich bags….”

This presents an opportunity for web and sheet-fed printers to cash in on the coupon resurgence. Work with your clients to design products that can be used to sell the maximum number of coupons, so their ad revenue is maximized as well.

Perhaps it is a sign of the times. Or, maybe I have not paid attention in the past, but it seems like I am reading about more and more corruption in our industry than ever before. Yes, business is business, and some people are corrupt – period. However new articles are appearing on a regular basis in the trade journals about indictments, arrests, prison sentences handed down. All of these happening in the industry I have been associated with for 35 years, and cannot remember this many illegal activities. For example, just today I read:
“Newton man is sentenced to 3 years in prison for stealing more than $100K from business”
Published: Friday, September 10, 2010, 1:38 PM
FRANKLIN TOWNSHIP (Somerset) — A Newton man today was sentenced to three years in prison for taking more than $100,000 from a Somerset County printing business where he worked as the controller. David Hathaway, 51, apologized for his actions and defense lawyer asked Judge Paul Armstrong to give him a suspended sentence for the theft from Toppan Printing Co., a firm located in Franklin Township.
Attorney Drew Hurley insisted his client didn’t take the money for a lavish lifestyle, but to help support his family. They were struggling under debts that mounted when Hathaway was unemployed. “He did so to pay bills, not to go to Atlantic City, not to buy drugs,” Hurley said, adding that his client is bankrupt. “It was aberrant behavior.”

This was on the same page as:
Charges say Frank Russo traded printing business for political contributions
Updated: Thursday, September 09, 2010, 8:28 PM The Plain Dealer
The scheme: Russo traded public business for political contributions, according to prosecutors.
Russo is accused of using his official position, between 2005 and 2007, to funnel nearly $450,000 in county work to a printing company. Damir Blecic is not named, but matches the description of Public Employee 53, an employee in the auditor’s office with an interest in Business 34, described as a printing company located in Garfield Heights.
Critics of the printing transactions have said the work was done at inflated rates, and also noted that the county has its own printing operation. In exchange for the work from the county, according to the charges against Russo, the auditor’s employee contributed an unspecified sum to Russo’s political campaign. The charges also say Russo hired relatives of Public Employee 53 and “made personnel decisions” that benefited them. Those decisions are not spelled out. In addition, the charges say that, on or about May 5, 2006, Russo “caused to be paid” an invoice from the printing company to the auditor’s office for about $10,786.40. Federal prosecutors subpoenaed the printing records in November as part of the public corruption investigation.

I tend to believe we live in times where some will act out of desperation. In the meantime, our industry is getting a tarnished reputation which has nothing to do with us being “tree killers” or “environmental polluters”. We can’t afford this kind of bad press, especially right now…

In my opinion, the Personal Selling model (traditional print sales) does not work for digital. In spite of wanting to be “one stop shopping”, can you or any company afford to have you chasing and handling the details of a digital job that pays you $15-30 in commission? One Trip to a client will burn that in gas money…not to mention phone calls, proof reviews, RFQ, a lunch, etc.

The digital model, in my opinion, only works when it is a direct Internet sale with no human intervention. As a Salesperson, you could
direct them to the web, and then collect the equivalent of a referral fee without intervening; but you would have to be excluded from the rest of the production process and concentrate on non-digital. And, as you can read below, Salespeople are not very pleased when their company buys digital and expects them to sell it…for pennies in their pockets. This is an article excerpt I recently came across, and I couldn’t agree more…

Why Sales People HATE Selling Digital Printing
August 4, 2010       By Bill Farquharson

Sometimes, I don’t get what people don’t get about digital printing and VDP. Like when it first came out and Charlie Pesko et.al. ran around the continent yelling their “Emperor’s New Clothes” message, challenging anyone who didn’t see that vision. Now that those pie charts and graphs of yesterday have been downsized to reflect reality, we are faced with another “Don’t get it” moment: I don’t get why no one else but me sees why their sales reps won’t sell digital printing and VDP.

Imagine being in a sales meeting and the owner walks in. He’s jacked up and wears a smile from ear to ear. “Ladies and gentlemen,” he begins, “This is a big day in the history of our company. Today, we install the new Xerodigomapress 3000, a device that will put us in the race to capture digital and variable data print. Here to describe what your sales future looks like is our new digital sales savant, Bill Nevergonnahappen. Bill?”

“Thanks, Dick. Sales reps, this new device is going to push you from your comfort zone. You will no longer be calling on buyers, but instead, a whole new breed of potential clients. These people are in Marketing and Product Management. They’re owners and C levels. So, immediately, you are going to feel discomfort. Eventually, you will come across the IT Department. They know a lot more than you do, so prepare to feel stupid. Also, selling digital and VDP takes time. In fact, know that if the selling cycle for traditional print is 3-6 months, the selling cycle for digital and VDP is twice that. Plus, you can expect the average order size to be in the hundreds of dollars, meaning that according to Dick’s current sales compensation plan, you will see commissions in the tens of dollars (pause for dramatic affect).
“Thus, you can expect a solutions-driven sale made to someone who is smarter than you. It will take longer. You will sell less dollars for more work and make far less than you are used to. Remember, this is a team effort. My door is always open. Best of luck,” concludes Bill.

Not a day goes by without hearing the familiar phrase “when the economy recovers….”. Quite honestly, I think people that use that phrase are badly misinformed. There is no “when the economy recovers”, there is only “when the economic restructuring is more complete”. We are not in a recession alone, but in the midst of a restructuring of the business world we live in. Many market sectors will never “go back to the way business was in pre-recession periods”.  Real estate, banking, automotive and  media markets are only a few of the industries that will never be the same.

Even before the recession hit, these markets were under pressure to restructure (cognizant or not) and re-invent their business models. It was only a matter of time before high/uncompetitive costs caught up with GM. Likewise, cable and legacy TV networks have been under attack since the first video was streamed online; real estate prices were so out of touch with what the average person could actually afford for at least the last 10 years, the resultant unscrupulous lending practices (under pressure from the Federal Government) were always a recipe for disaster.

So – don’t “wait for the recovery” – learn what needs to change in your business or daily practices in order to survive in a new world. Those that wait for recovery will be waiting a very,very long time…

Today, yet another mill, Suzano Mills announced a price INCREASE effective August 15, 2010 of $2/cwt. The letter merely states there is an increase, and gives absolutely no explanation. Keep in mind that many economists would agree that we are in a deflationary mode (prices should be going DOWN, not up. Allow me to quote one of them:
“Four major considerations suggest that the past several quarters may be nothing more than an interlude in a more sustained economic downturn, with further negative quarters still ahead. Such an outcome will suppress inflation further and quite possibly lead to deflation. ” (http://www.marketoracle.co.uk/Article21046.html – 7/10/2010)
This increase is on the heels of many other mills increasing prices as well. I wish the Department of Commerce and Justice would worry more about paper mills engaging in collusion than worrying about taxing foreign imports and protecting their antiquated pricing models.

Nittany Valley Offset is proud to be a certified G7™ Master Printer. Here are some of the benefits for our customers:

• The assurance that your proof represents your file and that the press sheets will match your proof
• Costly travel for on-site press checks can be eliminated
• Faster make ready time results in less paper waste
• Color consistency is maintained throughout the press run

The International Digital Enterprise Alliance G7™ Master qualification program permits certifying only those printing companies who have been trained to proof and print using the new G7™ methodology. The qualification mark means that the printer uses the most modern technology, techniques and process controls and standards required to produce high-quality commercial printing. To continue Master Printer status, NVO will go through a yearly re-certification to assure we maintain IDEAlliance calibration and processes.

What exactly is G7?
G7® is both a definition of grayscale appearance, and a calibration method for adjusting any CMYK imaging device to simulate the G7 grayscale definition. G7 yields a visual match between different imaging systems using simple 1-dimensional curves, and enables shared appearance between different printing devices or specifications when additional color management is not available.  A key benefit of G7 is that it is device independent. The G7 neutral print density curve (NPDC), gray balance definitions and calibration methodology are the same for any imaging technology, regardless of substrate, colorants, screening technologies, etc. The NPDC at the heart of the G7 grayscale definition was derived by analyzing the neutral tonality of typical ISO Standard commercial offset printing using computer-to-plate technology.  This is the logo that will appear on all customer proofs: