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Author: Joseph N. DiStefano

  • Data centers to casinos, retired investor Ira Lubert says he’ll give until he’s dead — and after

    Data centers to casinos, retired investor Ira Lubert says he’ll give until he’s dead — and after

    When he turned 74 last year, Ira Lubert retired from the day job that had consumed him since the 1990s — raising more than $20 billion for the investment funds he set up with partners.

    A top IBM salesman and former IT exec before he set up his constellation of investment funds, Lubert is rich enough to focus on investing what he’s kept and giving the profits away.

    Lubert is a salesman, planner, and recruiter, not an investment genius, he said.

    “The key is to always hire people smarter than you,” he said at his family investing office at the Battery, the former electric generating station on the Delaware River that his real estate group, Lubert-Adler Partners, renovated into hotel suites, offices, recreation sites, and apartments. It opened in 2023.

    The Battery, formerly an electric generating station, was converted to apartments, offices, meeting spaces, and a hotel by Lubert-Adler Partners in 2022-2023.

    Those funds own or have financed hundreds of enterprises and properties around the U.S., including locally familiar Acme Markets, Five Below, and Philadelphia’s Aramark and Bellevue buildings. They have generated billions in net client profits, and a fortune in fees for Lubert and his partners, including hundreds of millions from his key early clients, Pennsylvania‘s state pension funds.

    Lubert built a business renting trailers to Penn State varsity wrestlers and grad student couples, before graduating in 1973 with a hotel management degree.

    After IBM, he spent the 1980s running big IT businesses, then the ’90s as top aide to Warren “Pete” Musser, Philadelphia’s best-known venture capitalist. He quit, Lubert said at the time, because he didn’t understand how to make money from the early internet (as it turned out, neither did Musser, or a lot of pro investors).

    Instead of just trusting his gut, Lubert then partnered with real estate veteran Dean Adler, investment banker Seth Lehr, venture accountant Howard Ross, turnaround ace Greg Segal, and other experts to run his funds, while he focused on convincing state treasurers and other big investors to bet on their projects. Like others, he was solicited by and gave to state officials’ campaigns: only in 2010 did the SEC curb firms paid to manage state and local funds from making political contributions.

    The funds include Lubert-Adler; LLR (military contractors and other private equity); LEM Capital (apartments); LBC Credit Partners (distressed debt); and bank, biotech, and other specialty enterprises, most of them owned by Pennsylvania’s pension funds since they started.

    Lubert also invested separately from his funds, on what he considered riskier projects, like the Valley Forge Casino Resort. And he lost money, for himself and private partners, during the data center frenzy of the early 2010s, long before the current AI boom.

    He was a Penn State trustee and chaired the board as his alma mater coped with the Paterno-era scandals, stepping down for the last time when he got a license to build the Happy Valley Casino near State College.

    In retirement, Lubert oversees his family office, Belgravia Management LP, named for the Locust Street building he and his partners renovated as their first operating base. He also oversees his charitable foundations, with assets over $100 million, that give away profits to Penn State, University of Pennsylvania and Jefferson hospitals, Project HOME, Jewish causes, and other nonprofits. He relies on a veteran staff of seven, plus advisers such as Philadelphia trust lawyer Lester Lipschutz.

    Lubert recently spoke with The Inquirer about his goals in retirement in light of his career. The conversation has been edited for brevity and clarity.

    Who drew you toward business?

    My grandfather, Isidore Brody, was an immigrant from Romania. Age 18, he came through Ellis Island and went to his aunt in Newton, N.J. My father grew up there; he had an appliance-repair business. But with my grandfather, it was a lot of businesses. He had a butcher shop, a liquor store, a Sunoco station. He had apartments, the largest had nine units.

    A couple days a week, I’d walk a mile to his house from school. He showed me a lot about business and real estate.

    Pro investors like to call their shots. Why let your partners pick investments?

    At age 47, my expertise was in raising capital. I wasn’t an engineer. I had tremendous respect for people [with specialized knowledge]. I wanted them to do their thing and then at a cocktail party they would be able to say ‘I founded Versa’ or ‘I founded LLR.’ Not ‘I work for Ira.’

    I get recognized because my name came out in the different funds. And they got bigger.

    Why did you buy high-return assets you didn’t put in clients’ funds?

    Not all investments were appropriate for them. But when I did buy something personally, we had to bring it to the fund compliance people to make sure there wasn’t a conflict of interest.

    You had a reputation for getting intense in meetings. Did you dial that back as you got bigger?

    I don’t believe I have an aggressive style. I am focused and disciplined. I don’t deviate from a plan. I look for partners who are honest, ethical, committed, and capable.

    Your son Jonathan is also an investor, now based in Florida. Will family members succeed you?

    I have it set up so when I pass, my net worth will go to donor-advised funds and charitable foundations.

    Philadelphia had big multi-company investors — the Fox brothers, the Perelmans, Ralph Roberts of Comcast. Did you learn from them?

    They were brilliant business people and entrepreneurs. I’m really different from those guys. They each had a major operating business that they started, then they sold it and used the money to start their funds. I just started funds from the beginning [in the late 1990s] and partnered with top talent.

    It was a great run. Now I really want to do this, while I have something left.

  • A bilingual credit union is opening in Philly, seeking ‘unbanked’ customers to buy homes, build family businesses

    A bilingual credit union is opening in Philly, seeking ‘unbanked’ customers to buy homes, build family businesses

    At a former restaurant in a drive-up shopping strip on the edge of Port Richmond, a bilingual credit union has joined the neighborhood.

    The newest branch of federally-chartered Finanta credit union, which also calls itself Cooperativa Finanta, “is not just a banking place,” says Pedro A. Rivera II, Finanta’s board chair, president of Thaddeus Stevens College of Technology in Lancaster, and a graduate of Kensington High School.

    “We are focused on people that are unbanked: small business owners and workers who go to check-cashing agencies and use money orders and sometimes predatory [high-rate private] lenders,” said Daniel Betancourt, the credit union’s president and CEO.

    Finanta Federal Credit Union offers mortgages, personal and small business loans, Visa debit cards, and interest on deposits. And credit union staff help customers learn to use these products — in English and Spanish.

    Branch manager Iris Santiago signed off on one of its first home mortgages to cleaning-service co-owner Libra Rivera, on Wednesday. The credit union office at 2313 E. Venango St. officially opened Friday but began accepting deposits and booking loans earlier.

    Iris Santiago, branch manager, and Bart Rivera, assistant branch manager, at Finanta Federal Credit Union, in Philadelphia.

    Rivera said the concept takes him back to his North Philly youth, when he banked both the funds of the Amigos de Roberto Clemente youth track and field association and his newly minted teacher’s pay at the former Borinquen Federal Credit Union at Front and Allegheny, which shut in 2011.

    “It was the size of a rowhouse. You’d go in and connect to the tellers in a space where you could catch up what was going through the community and ask questions about percent yield, about how to leverage dollars in a place that was trusted,” Rivera said.

    He got that same feeling when he visited Finanta’s pilot branch in Lancaster after it opened in 2023. Rivera agreed to serve as Finanta’s chairman and went to work lining up support to speed its growth.

    Now, bolstered by private foundations and a state investment, Finanta is opening what it expects to be its largest branch in Port Richmond, with others to follow in Reading, Northeast Philly, Allentown, and other communities with large English-and-Spanish-speaking populations.

    The Lancaster branch signed up 2,000 members in three years. Betancourt expects as many in Philadelphia by next fall.

    This growth is not yet organic. Mackenzie Scott’s Yield Giving foundation in 2023 pledged $2 million a year for seven years to help finance loans. Santander Bank and M&T Bank each invested $1 million as part of their community-banking mandates.

    State House Appropriations Committee chair Jordan Harris, at the recommendation of state Rep. Jose Giral and state Sen. Tina Tartaglione, all Philadelphia Democrats, granted $4 million to build the Reading and Port Richmond branches.

    The credit union made its first mortgage this summer and offers home loans up to $400,000, enough to purchase homes in many but not all Philadelphia neighborhoods.

    The credit union also has made business loans to local firms like Puerto Rican bakery and restaurant El Coqui in Kensington. El Coqui had previously borrowed from the Finanta loan fund, which Betancourt also leads.

    Founded in 1996, the fund later merged with the larger Community First Fund of Lancaster and now lends in several cities under the Finanta name.

    The fund’s Philadelphia clients include developers such as HACE, projects such as Charles Lomax’s Village Square on Haverford in West Philly, and family-owned stores such as Silvia’s Bakery and Mucho Perú.

    Alicia Placeres, member sales representative, working at Finanta Federal Credit Union.

    A new credit union, open to everyone but anchored in the Latino communities, “is very much needed,” said Pedro Rodriguez, cofounder of Café Don Pedro coffee roasters in Brewerytown.

    He’s worried about loan volume amid the Trump administration’s push to arrest and deport immigrants. “They have people scared of their shadow,” he added.

    Others call the credit union a lifeline for people under pressure.

    “Our immigrants are very brave. A lot of the people who come to us are pursuing mortgages, pursuing small business loans, they say what’s going on is not unusual for them, and they are persisting” in building lives here, said Will Gonzalez, head of Ceiba, a Philadelphia-based economic-development advocacy coalition.

    Gonzalez has noted a drop this year — from almost one a day to less than two a month — in noncitizens filing for the first time to pay their income taxes with help from his agency, but those who have already been assigned IRS numbers have returned to file again even if their own immigration status is unresolved.

    “People are paying taxes because it’s the right thing to do,” Gonzalez added. “And because they want to borrow to put their kids in college and to buy a house. To do that, they know they need to show the lenders they have paid their taxes.” It’s a sign they see their long-term future in Philadelphia.

    He said the former Borinquen credit union was badly needed but was underfunded — “a little tree in a desert.” It operated from 1974 to 2011 until it was taken over by regulators and closed after suffering losses. A manager was sentenced to 7½ years in federal prison for stealing from the institution and members from 2006 to 2009.

    The Finanta credit union board Rivera heads, which oversees Betancourt and his growing staff, includes Mennonite Church USA moderator Elizabeth Soto Albrecht, Amalgamated Bank first vice president and 2016 Democratic National Convention CFO Jason O’Malley, and other professionals based in cities with large bilingual populations.

    For all his experience overseeing institutional budgets, Rivera said he and the other directors have had to learn banking in accordance with National Credit Union Administration guidelines.

    “I take my fiduciary responsibility seriously. We are now facing the regulatory expectations and demands of the banking world,” he said. “We know what is expected of us.”

    Gonzalez said Finanta’s focus on Pennsylvania cities with large and growing Latino populations makes it a natural support network.

    ”They are helping these communities build political and economic power,” he said. “They are in the right place at the right time.”

  • Pennsylvania’s $80 billion school pension fund gets a new director

    Pennsylvania’s $80 billion school pension fund gets a new director

    Uri Monson, Gov. Josh Shapiro’s longtime confidant and Pennsylvania’s budget secretary, is the new executive director of the $80 billion-asset Pennsylvania school pension and investment system, known as PSERS.

    The move puts Monson, a former top finance officer for the School District of Philadelphia and for Montgomery County government while Shapiro was its top elected official, atop the agency responsible for paying retirement checks to half a million current and retired school employees.

    Monson has shown “exceptional financial leadership and integrity,” Shapiro said in a statement, citing Monson’s bond refinancing work that shaved state interest costs and helped boost its credit ratings so they are no longer among the lowest of the 50 states.

    He is making the move to PSERS following a 135-day state budget impasse that resolved last month with a $50.1 billion budget deal between Shapiro and the divided legislature.

    Zachary Reber, a deputy secretary in Monson’s office with 30 years of state government experience, will become the state’s new budget secretary. Shapiro credited Reber as a top negotiator for the 2025-26 budget, helping clinch the deal with legislators.

    At PSERS, Monson will lead a staff of 350. The board picked Monson “because of his extensive public-sector financial experience,” board chair Richard Vague said in a statement that also said Monson’s hiring followed “a nationwide search.”

    The new executive director “understands both the financial demands of a pension system and the responsibility” to school staff and retirees, said vice chair Sue Lemmo, a retired teacher.

    Monson pledged to work with the board, staff, and other stakeholders — who include taxpayers and pension system members — to ensure “retirement security.”

    He holds both a master’s degree in public policy and a bachelor’s degree from Columbia University and a second bachelor’s from the Jewish Theological Seminary of America.

    PSERS is one of the most expensive state programs, consuming $5.5 billion directly from public revenues last year, including both state and local property tax funds, plus $1.2 billion routed through school workers’ paychecks.

    The system also collects profits from its wide-ranging investments, totaling $5.7 billion last year.

    The switch will likely mean a significant pay raise for Monson, who earned $211,000 a year as budget czar, the most of any Pennsylvania cabinet officer and more than the lieutenant governor.

    While working as the top budget officer in the state since 2023, Monson oversaw Shapiro’s annual state budget proposals, which guide spending for the next five years.

    Republican lawmakers criticized Shapiro’s 2025-26 budget proposal for counting on new revenue streams, such as marijuana taxes, that had yet to be approved by the General Assembly.

    Pennsylvania faces a tough fiscal outlook, as the state will spend more than it brings in this year, led by ballooning Medicaid expenses and pension costs.

    Monson’s predecessor at PSERS, Terrill Savidge Sanchez, was paid $317,000 in fiscal 2024. A longtime PSERS employee who also headed the smaller Pennsylvania state workers’ pension system (SERS), Sanchez announced her retirement earlier this year. Chief investment officer Ben Cotton stepped in as interim director after she left.

    Sanchez was tapped for the top PSERS job in 2022 after the departure of Glen Grell, a former state representative and lawyer who tripled his legislative paycheck by joining PSERS in 2015.

    Grell and other top staffers retired during a federal investigation into the system’s exaggerated earnings and secretive land deals, which was followed by changes in pension investment, financial reporting, audit, and travel practices.

    Monson worked closely with Shapiro, then a county commissioner, in Montgomery County’s 2013 decision to fire dozens of Wall Street money-management firms and turn its pension funds over to locally based Vanguard Group and SEI Investment Corp., cutting fees and reporting better returns over the next 10 years.

    As governor, Shapiro has not attempted such a purge, either at PSERS, where he controls three of 15 trustee seats, or at the SERS state employee pension system, where the governor appoints six of the 11 trustees.

    PSERS trustees on their own have scrapped hedge funds and cut back on private-equity funds in recent years, citing high fees and poor returns compared to the rising U.S. stock market.

    PSERS, like the state workers’ pension system, was among the first state pension systems to invest heavily in private assets in the late 1990s and 2000s.

    PSERS’s private investments underperformed U.S. stocks during the 2010s bull market. Those investment returns, plus rising retirements and pension underfunding in the early 2000s, required higher taxpayer payments in recent years to keep the fund from growing less solvent.

    Pennsylvanians now pay 34 cents into the PSERS plan for every $1 in school staff wages.

    Some owners of private money managers who solicit top leaders of PSERS and other state pension funds for investments are major political donors at the national level, though an SEC rule has barred them from collecting state and local pension fees after donating to state or local candidates.

    U.S. Sen. David McCormick (R., Pa.) was chief executive of hedge fund Bridgewater Associates when it was PSERS’s largest money manager. It oversaw about one-tenth of the state’s investments and collected more than $750 million in Pennsylvania investment fees over the 20 years before PSERS trustees voted to drop hedge funds in 2021.

    Staff writer Gillian McGoldrick contributed to this article.

  • Shwego helps home service companies get plumbers and painters to you faster

    Shwego helps home service companies get plumbers and painters to you faster

    Shwego is Philly-speak for “‘Should We Go?’ Go here, go there, go where you need to be,” said Sam Puleo, a former door-to-door sales manager who gave his software start-up that name.

    Launched last year, Fort Washington-based Shwego tracks trucks and tradespeople for a collection of home service companies: several plumbers, a painter, electrician, mover, air-conditioning and heating, and solar electric contractors. Most serve Philly’s rowhouse neighborhoods and suburbs, plus outposts from Brooklyn to Miami.

    Contrasting expensive, feature-laden enterprise packages from big Silicon Valley companies, Shwego says it offers “easy-to-use software to contractors for quoting, job scheduling, dispatching, invoicing, and payments.”

    “This app makes it so much easier to steer the ship. You can’t order pizza this fast,” said Ryan Larrimore, founder of Express Drains, an early Shwego client.

    Puleo said he and business partner Junny Kim, a past Accenture IT consultant, are in growth mode, meeting demand from small businesses looking for simple digital systems without the expensive features the Silicon Valley giants sell.

    They are family men who spend less time than they’d like at home. Puleo sold his digital marketing firm to focus day, night, and weekends on Shwego. Kim has kept his day job, running a Gong Cha bubble-tea franchise in Chalfont.

    Sam Puleo, cofounder of Shwego, in client Express Drains’ office in Warminster. Express Drains owner Ryan Larrimore is at left.

    Not ‘the dinosaur way’!

    Their first and so far biggest client is Larrimore’s Express Drains, which contracts with plumbers to unstop customers’ pipes.

    “Those guys streamlined my whole business,” he said at his Warminster office and truck-repair garage. “They save me hours every night. They made it so simple. With notes, like in grade school. We do a job, the pin goes off the map. New job comes up, we see who’s nearby that can do it faster. We know where guys are. It’s like now we are playing a chess game three moves ahead.“

    Larrimore and a partner started Express Drains in 2008 after they lost their jobs when package-delivery giant DHL shut the hub where they worked. They began with a set of Spartan tools, Larrimore’s Teamsters union severance, and a $20,000 loan from Philadelphia Police and Fire Federal Credit Union.

    “I felt like Indiana Jones, stepping onto that invisible bridge,” Larrimore said.

    The service caught on fast. “Six months later we were doing 25-30 calls a week, and we figured we could use another truck,” Larrimore said.

    Soon he was paying off truck loans, buying a $4,000 sewer camera — “Worth it!” — and training friends. Apartment building owner Allan Domb is a regular client.

    Larrimore hired workers he now pays more than $30 an hour. By last year, Larrimore had a problem other small businesses might like: Too much work.

    “We were doing 100 service calls a day,” he said. “Guys were working 10 hours a day running through the whole city. It was getting crazy.”

    Revenues totaled $3.6 million last year; an average job paid $180.

    But Larrimore’s management tools hadn’t kept pace. Orders went out on a single Gmail account to which all drivers had access. Updates were a challenge.

    Someone would accidentally delete a job, he said, which meant lost work.

    Financial records were kept on paper. “Saturday night, me and my wife would separate all the bills and put it into an Excel spreadsheet. Every Monday, I’d drop a printout on [clients’] desks, and they’d give me a check for the previous week.”

    Larrimore’s brother, Josh, disapproved. “I yelled at him: ‘You can’t do everything via email. This is the worst idea ever. This is the dinosaur way.”

    Josh Larrimore (left), who works with his brother Ryan’s company, Express Drains, with Junny Kim, cofounder of Shwego, the app Express Drains uses to schedule dozens of drain-cleanings daily.

    Ryan Larrimore finally went shopping for business software — but warily.

    From ServiceTitan, the $800 million yearly sales Silicon Valley company whose software platform focuses on home-service providers, he got a quote of $5,000 a month, a big expense for a subcontractor with tight margins. Josh yelled at him some more.

    Larrimore connected with Shwego after a cold call from Puleo. “I was doing digital advertising for plumbers,” Puleo recalled. “I saw these guys got good reviews on Google.”

    Larrimore paid Puleo to update his website and online ads. On his next visit, Puleo asked, “What else do you need?”

    “I said, ‘Build me an app for dispatching,” Larrimore recalled. “He changed my life,” delivering the Shwego app for $1,100 a month.

    Simplify

    “Our number one thing is: Keep it simple,” Puleo said.

    Neither he nor Kim is a software engineer. Backed by a loan from a Lehigh Valley utility auditor, Puleo built the Shwego prototype using a Google app builder and tested it with Larrimore’s company in 2023: “I know enough to be dangerous.”

    Kim, he said, is the “logical and level-headed” partner, who oversees the five outside software developers who built the commercial app Shwego, rolled out in late 2024.

    Son of a doctor, Puleo graduated St. Joseph’s Prep in 2006 but dropped out of Temple University during what he now calls his “knucklehead” youth. After a disastrous foray into deregulated electricity brokerage (he pleaded guilty to a fraud count for his role in a 2012 price-changing scheme), Puleo went into natural gas sales, with the Pennsylvania Public Utility Commission’s blessing.

    When COVID rules stopped in-person selling in 2020, he started the digital-marketing firm, which he sold last year to a Lancaster company to concentrate on Shwego.

    Shwego is Philadelphia dialect for “Should we go?” according to cofounder Sam Puleo, who founded the business last year with partner Junny Kim to make software for what Puleo calls “blue-collar” clients that need similar solutions for scheduling, payments, and other basics.

    As an IT consultant, Kim, a Neshaminy High School and Penn State graduate, was on the road “90% of the year.” As his family grew, he sought to work for himself, close to home.

    Puleo met Kim through his office landlord. By the time they connected, Kim had already committed to running the bubble-tea store.

    Kim researched, like a good consultant: “The home-services industry is shrinking; prices are going up; there’s a lot of interest, even from private equity. And they are moving toward technology, then to AI.“

    They got a business license, bank account, and insurance. After a bad initial experience with software development, they hired professional programmers in Eastern Europe, where Puleo’s wife has family.

    Last Thanksgiving, with Kim’s store shut for the holiday, the pair met at 6:30 a.m. to begin final prep for taking the improved Shwego app live.

    “We burned the midnight oil” evenings and weekends, Kim said. “We probably speak to each other more than our spouses.”

    Last December, they put Express Drains on the new app, “just the basic bones,” as Kim put it.

    “It still looks the same now, like pins in a map. But we have added a lot of efficiencies and features,” Kim said. “Now we are ramping up to allow payments over mobile phones.”

    Next in line: adding QuickBooks integration and an improved calendar feature. Customers are asking for project management and inventory.

    Happy customers

    Shwego has a function for drivers to mark failed calls and route them back to the dispatcher, then move right to the next job.

    “We are making the product more streamlined and efficient,” Kim said. “Our main goal is to keep this product simple, so we don’t overwhelm clients” who are going electronic for the first time.

    “There’s a sense of satisfaction, fixing something,” Larrimore said. “It feels pretty good, and the customer’s happy.”

    Puleo said Larrimore has referred additional customers from the plumbers who hire his drain service.

    “I swear we have plumbers that still run paper,” Larrimore said. “You can hear it rustling when you talk on the phone. They are still stuck in their ways. I tell ‘em, ‘You should talk to Sam.’”

  • Latest Par Funding plan will give scammed investors nearly all their money back

    Latest Par Funding plan will give scammed investors nearly all their money back

    More than 1,600 victims of the Par Funding scheme will get nearly all their money back, despite repeated warnings from the U.S. Securities and Exchange Commission (SEC) that full reimbursement would be highly unlikely.

    The news comes 5½ years after a federal court-appointed receiver seized the Philadelphia loan company amid investigations that have sent its top officers to federal prison.

    “Sounds like Christmas to me!” said investor Joe Brock, a management consultant who invested $200,000 with Par.

    Starting in 2011, Par raised $550 million, telling investors it was lending to merchants at high interest rates for big profits. But Par insiders diverted over $200 million to themselves, and many of its clients couldn’t repay the loans. In March 2020, Par stopped paying investors back.

    In July 2020, the SEC filed a sweeping fraud lawsuit against the firm, its owners and pitchmen. Criminal charges followed in 2023. Eight people involved with the company have pleaded guilty and been sentenced to prison and fines.

    How much will investors get?

    The investors were repaid $111 million, just over half their missing $220 million, under an initial “distribution” of Par assets approved last December.

    Another $97 million will be on the way, pending approval by Florida-based federal Judge Rodolfo Ruiz, who has overseen the case since FBI agents raided Par’s Old City offices and detained founder Joseph LaForte on gun charges in 2020. The judge has declared Par a Ponzi scheme, designed to defraud, by using old investors’ money to fool new investors into falsely believing Par was profitable.

    A third, smaller payout may be arranged in the future, which could bring the recovery above the loss total, according to the new proposal.

    The plan was filed Friday to the judge.

    In July 2020, the FBI raided Par offices and founder LaForte’s Haverford home, and the SEC asked Ruiz to put the company into receivership to protect what was left of investors’ money and to investigate whether LaForte and his allies had stolen money from the company.

    The SEC also filed civil charges against founder LaForte, his wife, Lisa McElhone, chief financial officer Joseph Barleta, and four investment salespeople, accusing them of selling unregistered securities and failing to disclose LaForte’s prior federal fraud convictions.

    Federal criminal fraud charges followed against the three top Par officials, plus debt collectors James LaForte and Renato Gioe; an investment salesman, Perry Abbonizio, and two Colorado accountants who did Par’s taxes.

    The investors are getting their investments back, but not the promised interest. And the paybacks will be uneven.

    Under the terms of the proposal, investors in Par funds set up through Dean Vagnozzi, a former King of Prussia insurance agent who was Par’s most successful salesperson, are on track to receive as much as 98% of their total investment, or as little as 46%, depending on when they invested and how much was in Par.

    Some of the funds set up for Vagnozzi’s A Better Financial Plan invested partly in Par and partly in life-settlement contracts, insurance policies purchased from their owners at a discount so investors collect the proceeds when they die. Investors in those funds still hope to collect additional funds as the policyholders die.

    Where the recovered money is coming from

    The $110 million in the first distribution from the receiver was funded largely by money seized from Par and from founder Joseph LaForte, McElhone, and other Par officials.

    The $97 million in the second distribution included $36.5 million in Par funds that had been held in escrow while the receiver negotiated how much was owed to investors in the Chehebar family (some members spell it Shehebar), who own Rainbow Stores.

    Lawyers for the Chehebars argued that they had negotiated senior payment rights and should have gotten repaid before other investors. But the receiver said the Chehebars were actually “insiders” who worked closely with the LaFortes and didn’t deserve special treatment.

    The Chehebars agreed to settle for $3.1 million — or more if the receiver is able to pay all approved investor claims.

    Another $31 million for the payback has been collected from a settlement of lawsuits against John Pauciulo, salesman Vagnozzi’s longtime lawyer, whom Vagnozzi and others blamed for failing to warn that the Par funds ought to be registered with the SEC and to warn investors about LaForte’s criminal past.

    Insurers for Pauciulo’s former law firm, Eckert Seamans, agreed to pay $47 million, but part of that total was consumed in payments to lawyers and others with claims against Pauciulo.

    In hearings this fall, investigators for the Pennsylvania Disciplinary Board, an arm of the state Supreme Court, have argued that Pauciulo failed to properly advise his clients about the danger from investing in Par. A ruling is pending.

    Helping fund the planned second round of payments to Par investors was $10 million from the sale of LaForte’s former vacation home in Jupiter, Fla., one of the last of 25 properties seized by the receiver as proceeds of the Par founder’s fraud.

    The rest is funded by millions taken from Par and its investors and not paid out earlier.

    For a potential third distribution, the receiver and its consultants have identified several additional funding sources:

    • $11 million in still-uncommitted cash from the funds the receiver took from Par and its owners;
    • $10.5 million in a requested IRS refund of taxes Par paid on phony profits the company reported when it was trying to get more people to invest;
    • $1 million from the sale of three remaining properties at 20-22 N. Third St. in Philadelphia, the last of 20 city properties the receiver has used to raise cash for victims;
    • Up to $4 million that might still be collected from Par’s last borrowers, half of it from Kingdom Logistics, a Texas-based mining company.

    Investors also should receive some proceeds from the liquidation of the former Par Funding corporate jet, worth an estimated $6 million when it was seized by the FBI in 2020, and a Charles Schwab investment account, worth more than $13 million at that time. The government has a separate process for deciding how to pay back that money to investors.

    Expenses for the receiver’s lawyers and other professional services have cost around $100,000 a month, according to the receiver’s most recent quarterly reports.

    All the Par officials charged with crimes were sentenced, most of them earlier this year, after pleading guilty to criminal fraud and, in some cases, other charges.

    Besides fines, restitution and probationary periods, these are the prison terms for people involved:

  • French water giant Veolia buys King of Prussia waste recycler

    French water giant Veolia buys King of Prussia waste recycler

    Veolia, the French water and sewage giant with R&D labs in Trevose, has agreed to pay $3 billion for Philadelphia-based Enviri’s Clean Earth division, which treats contaminated materials for big manufacturers.

    Clean Earth, based in King of Prussia, serves manufacturers such as Boeing, Merck, computer-chip makers, and hospitals. Veolia operates local water utilities in towns across the U.S., including a slice of Delaware County and northern Delaware.

    Clean Earth employs around 1,800, and already uses Veolia incinerators to burn hazardous medical waste and other refuse. Enviri bought that business for $625 million in 2019. Veolia says it plans to cut $120 million in spending as it integrates Clean Earth, to make the deal more profitable.

    Combined with Veolia’s existing hazardous-waste business, Veolia says it will be among the largest businesses of its kind. Veolia also bought medical-waste companies in New England and California earlier this year, and it has incinerators in Texas, Illinois, and Arkansas.

    Clean Earth includes tar-contaminated soil collection treatment centers on the Schuylkill in Southwest Philadelphia; in Morrisville, Bucks County; and New Castle, Del.; and a hazardous-waste and chemical disposal site in Hatfield, Montgomery County, among 82 waste-management and 19 federally-permitted treatment sites, along with hundreds of trucks. Veolia has industrial facilities in Bridesburg and Pennsauken, among other area locations.

    Veolia will pay cash worth around $15.50 a share, or $1.3 billion, to Enviri shareholders for Clean Earth; plus $1.35 billion to pay down some of Enviri’s debt load; and around $400 million to help finance Enviri as it restructures as a smaller company and issues new shares. Both boards have approved the deal, pending a vote by Enviri shareholders next spring.

    The price to shareholders is a premium to Enviri’s recent share value, and triple what it was worth at its recent low in March. But it’s also less than the stock was worth as recently as 2022, before the company changed its name from Harsco and moved from central Pennsylvania to Philadelphia, where its leaders said it’s easier to recruit engineers and managers.

    The sale leaves Enviri with two remaining business lines: steel-mill slag management and railroad track equipment and maintenance. The latter business faces large environmental expenses, and Enviri had earlier tried to sell it.

    After selling Clean Earth to Veolia and reducing management costs, Enviri will spin off the remaining businesses into a new company, under the same name.

    Announcing the deal, Enviri chief executive F. Nicholas Grasberger also said he’ll be stepping down from the company’s top job, to be succeeded by Russell Hochman, a ten-year Enviri veteran who already serves as the company’s senior vice president, top lawyer, and compliance officer.

    F. Nicholas Grasberger, chairman & CEO of Enviri, at the company’s Philadelphia headquarters in 2023. He will be stepping down as the company sells its hazardous-waste division to France’s Veolia.

    The restructured Enviri will have more cash to invest in its businesses and lower finance costs, Grasberger said in a statement. He praised successor Hochman’s “deep business acumen and proven ability to navigate mergers and acquisitions, regulatory matters, and transformation efforts.”

    The boost in Enviri’s capital “will create enhanced opportunities” for both slag and rail, Hochman said in a statement.

  • How Delaware helped keep OpenAI from turning into a typical for-profit company

    How Delaware helped keep OpenAI from turning into a typical for-profit company

    It’s been 10 years since OpenAI was set up as a nonprofit by Sam Altman, Elon Musk, and other software developers and investors, friends, and rivals who didn’t quite trust each other to run a traditional for-profit business with explosive potential.

    Chartered in business-friendly Delaware like most big corporations, OpenAI laid out its public purpose in a mission statement: “to ensure that artificial general intelligence — AI systems that are generally smarter than humans — benefit all of humanity.”

    A decade later, its best-known product, ChatGPT, claims more than 700 million weekly users.

    Delaware officials who monitor the state’s nonprofits took a particular interest as OpenAI became so valuable, and so contentious, that the San Francisco-based startup ballooned into an enterprise requiring multibillion-dollar investments and sought to restructure as a for-profit company.

    “We realized building [artificial general intelligence] will require far more resources than we’d initially imagined,” the company wrote in an open letter last year, explaining its plans. In fact, OpenAI had set up for-profit affiliates at least as far back as 2019.

    But the company said it needed more corporate flexibility if it was to bring in the billions needed to fund high-speed data centers full of Nvidia chips and other systems that could withstand intense AI searches and commands.

    Recent investments have boosted OpenAI’s value to around $500 billion. That’s more than Musk’s SpaceX or Jeff Yass-backed ByteDance (which owns TikTok) or any other private firm — underscoring the bonanza potential and the returns investors hope to realize.

    So it wasn’t surprising last year when OpenAI, which Altman runs, announced plans to raise billions of new dollars by ending its previous limits on investor profits — or that Musk, now owner of a competitor, X.AI, and others, promptly sued, challenging terms of their plan.

    That’s when Delaware Attorney General Kathy Jennings, and California Attorney General Rob Bonta, stepped up.

    Jennings and Bonta filed court papers challenging the proposed business structure — not to stop it, as Musk wanted, but to ensure that the public interest was somehow protected, so OpenAI wouldn’t stray from what the company has called its “save the world” mission.

    Critics, including some in Congress, have worried that ChatGPT is prone to surveillance abuse, crime and encouraging self-harm.

    The final plan, as OpenAI posted it last month, preserves the original company as the nonprofit OpenAI Foundation but moves its businesses to a new, largely investor-owned Delaware “public-benefit corporation.”

    A public-benefit corporation is a for-profit company but does not have the usual legal obligations to enrich investors before anything else, freeing directors to act in favor of public goals even if it hurts sales or profits.

    A public-benefit corporation provides “a clear and durable vehicle” for companies whose goals go beyond shareholder gains, says Lawrence Cunningham, who runs the Weinberg Corporate Governance Center at the University of Delaware. “I like seeing it used in that way here.”

    State intervention at the corporate-charter level “does not happen often” and usually involves questions about nonprofit hospitals’ business activities, said Mat Marshall, spokesperson for Delaware AG Jennings.

    Jennings hired lawyers from Manhattan-based Pillsbury Winthrop Shaw Pittman and financial analysts from Moelis & Co. to buttress the state’s fraud and consumer protection director, Owen Lefkon, in talks with OpenAI.

    Delaware Attorney General Kathy Jennings at a December 2024 press conference.

    What changes for OpenAI

    At first, OpenAI planned to pay off its nonprofit obligations by leaving those to a large charitable foundation and then move forward as a typical for-profit company, still professing public goals but responsible to private investors.

    Lawyers for the two states argued that the company’s public mission had to survive the restructuring.

    OpenAI “is the world leader in the artificial intelligence industry,” but it needs guidelines as it funnels massive information about science, medicine, and communities to private, commercial, and government users, and power to “hold OpenAI accountable” for the safety of those whose information is raw material for AI, Jennings said in a statement.

    The foundation also needed some way to keep control over the company, alongside its powerful new for-profit investors. The nonprofit has kept the power to name and remove board members for the business.

    OpenAI’s Safety and Security Committee will remain in place, with “authority to oversee and review the safety and security processes and practices of OpenAI” and the companies it controls, even halting new AI systems if it finds them dangerous, or taking time to resolve ambiguities.

    Zico Kolter, professor of machine learning at Carnegie Mellon University in Pittsburgh, will continue to head the safety committee, attend the corporation’s board meetings, and receive “all director information regarding safety and security.”

    And the states will be given “advance notice of significant changes” in governance.

    In a statement praising the new structure, OpenAI chair Bret Taylor, creator of Google Maps and a former Facebook and Twitter officer, acknowledged changing the plan in discussion with Delaware and California.

    He said the parent, now called the OpenAI Foundation, will own around one-quarter of the business group. Outside investors include Microsoft, Japanese investor Softbank, company employees, and other investors, with room for more.

    Besides keeping the business subordinate to the foundation’s mission, Taylor wrote that the foundation will set aside $25 billion: for “open-sourced and responsibly-built” health data sets to speed up diagnostics, treatments and cures; and to fund AI security to protect power grids, banks, governments, companies and individuals” from AI abuse.

    Microsoft Chief Technology Officer of Microsoft Kevin Scott, right, and OpenAI CEO Sam Altman at the Microsoft Build event in Seattle in 2024.

    Microsoft shows its power

    Since the restructuring, Microsoft has revealed new details of its already-lucrative agreement with OpenAI, the noted Philadelphia-based accounting professor and researcher Francine McKenna and her investigative partner Olga Usvyatsky wrote last week in McKenna’s newsletter, The Dig.

    Microsoft has invested $11.6 billion in OpenAI over several years (and promised at least $1.4 billion more).

    Thanks to exploding OpenAI sales and additional private investments, Microsoft says its investment is now worth $135 billion. That’s more than 10 times what the company paid. Microsoft is the largest OpenAI shareholder, with around 27%. .

    Under a recent agreement following the restructuring, Microsoft said, OpenAI promises to buy another $250 billion in Microsoft Azure cloud networking and other services but also gains the right to form more partnerships with other companies.

    The companies also enjoy a revenue-sharing agreement — the first time that’s been disclosed, according to McKenna and Usvyatsky — though details will have to wait for future disclosure.

  • Philly-based DuPont spin-off hopes merger with global paint giant will boost sagging sales

    Philly-based DuPont spin-off hopes merger with global paint giant will boost sagging sales

    Axalta, the Philadelphia-based automobile paint and coatings maker, is set to be acquired by AkzoNobel NV, the Netherlands-based maker of Dulux and other paint and coatings brands, in an all-stock deal worth $6 billion.

    Both companies have plants in the Philadelphia area, among other locations worldwide.

    Axalta’s headquarters and central research lab is in South Philadelphia.

    AkzoNobel, which employs around 34,500, almost three times Axalta’s 12,600, last year promised to update its powder coatings plant near Reading. AkzoNobel also has a Sikkens vehicle refinishings plant near Malvern.

    “The last few years have been really challenging,” Axalta CEO Chris Villavarayan told investors in a morning conference call. “The market has gone sideways at best. Coatings demand is still below 2019 levels. At some point there’s going to be some kind of recovery.”

    He predicted that sales will benefit as soon as next year as auto, shipbuilding, and other cyclical markets rebound, and that the merger will help boost sales of both companies’ products, after cutting costs.

    AkzoNobel CEO Greg Poux-Guillaume will head the combined company, with sales totaling around $17 billion a year, across 160 countries. Poux-Guillaume said in the conference call that’s large enough to earn it a listing on the S&P 500, like rival PPG.

    Poux-Guillaume said the combined company will maintain Axalta’s main office in Philadelphia as a second headquarters.

    AkzoNobel shares slipped around 3% to $55 on Tuesday. Axalta shares closed down 0.64% to $28, well below the $30 to $40 range where the stock traded last winter.

    The deal, if completed on schedule by early 2027, ends years of Axalta merger talks that began soon after its 2013 spinoff from the DuPont Co., with Axalta periodically discussing possible deals with competitors including PPG and Kansai, as well as AkzoNobel. AkzoNobel’s Dulux is also a former DuPont brand.

    “The stars have finally aligned for this longtime proposed transaction,” said Georgina Fraser, a stock analyst at Goldman Sachs, during the companies’ conference call with investors.

    “The industrial logic has been very clear,” Poux-Guillaume said: combined, the company, whose new name hasn’t been chosen, can push more AkzoNobel products in the Americas and other areas where Axalta sales are concentrated, while Axalta paints can find bigger markets in Europe and Asia.

    Axalta CEO Villavarayan will serve as deputy CEO in charge of cost-cutting $600 million from current expenses by 2030. Villavarayan said the company would also spend $400 million a year on research and development, enough “to drive growth.”

    Rakesh Sachdev, a senior adviser at New Mountain Capital and Axalta’s chairman who served as interim CEO before Villavarayan took the job in 2022, will serve as chairman of the combined board, with four directors from each company and three outsiders. AkzoNobel shareholders will hold around 55% of the combined company’s shares.

    “The Axalta Board is confident that this combination with AkzoNobel will create significant value for our shareholders,“ Sachdev said in a statement.

  • DuPont’s latest spin-off, Qnity, soars with demand from Nvidia and AI

    DuPont’s latest spin-off, Qnity, soars with demand from Nvidia and AI

    The latest DuPont Co. spin-off, Qnity, supplies Nvidia, the world’s most valuable company, and other Big Tech giants with high-tech materials to make the high-speed and artificial-intelligence systems that have drawn billions in new investments and sparked the data center building boom.

    Though DuPont is a larger company, Qnity, which started trading Nov. 1, is worth more on the stock market, a sign that investors expect its Big Tech customers — chipmakers like AMD and electronics giants like Samsung — will buy Qnity’s Kalrez sealants, Pyralux adhesives, and other products.

    And they expect it will do so faster than DuPont can boost sales to its remaining brands such as Tyvek and Corian.

    With expected sales of $7 billion next year, DuPont has a stock market value of about $16 billion. Qnity, with sales expected to approach $5 billion, is worth $20 billion. Both companies are profitable, but Qnity’s margins are bigger.

    Based a five-minute walk from DuPont headquarters in suburban Wilmington, Del., Qnity was given away to DuPont shareholders — one share for each two DuPont shares. The company employs around 10,000 at 39 factories and 17 labs worldwide, including 1,300 in the Wilmington area.

    It was the latest in a string of sales and spin-offs that have cut DuPont sales from $62 billion in 2017 — after Edward Breen of New Hope, now DuPont’s executive chairman, took over with a mandate to cut costs and boost shareholder payouts — down to an expected $7 billion next year.

    DuPont’s Chestnut Run Plaza headquarters in Wilmington, Del. The company’s November 2025 spin-off, Qnity, is based at the south end of the campus.

    Qnity’s price quickly spiked from an initial $70 a share to around $100 in early November trading, and stock analysts predict it will go higher on relentless demand for AI and high-speed computer chips.

    The company’s name (pronounced CUE-nitty) was “inspired” by the letter Q’s role in electrical notation. It trades as Q on the New York Stock Exchange.

    Q is “the symbol for electrical charge and unity,” Qnity CEO Jon Kemp said in a meeting with DuPont investors.

    What does Qnity make?

    Qnity’s profit margin before financial expenses is a robust 30%, but analysts warn the chip business might not stay so profitable.

    “Wafer starts,” a count of how many new silicon pieces are being used to build new chips, rose roughly 5% this year. Qnity is growing faster than the industry because some of its products are in special demand, “fueled by the adoption of leading-edge technologies for AI applications,” Kemp told the investors earlier this year.

    Qnity’s “AI-driven technology ramps” include densely layered circuit boards that allow more computing power in a smaller space and barriers to keep data centers from overheating. The company also sells to aerospace, and military equipment and vehicle makers.

    At an August investor meeting, JPMorgan analyst Steve Tusa noted the soon-to-be-spun-off company’s reliance on AI growth. He asked whether the global slump in consumer electronics demand was likely to end, broadening the company’s growth prospects.

    Kemp, in response, acknowledged that consumer demand had been “weak,” noting that “all of the growth for the last several quarters is really coming from AI-driven applications.”

    Worth more in pieces?

    DuPont has sold or spun off many of its once-familiar products in recent years.

    In August, DuPont agreed to sell its Aramids fiber business, which includes Kevlar bulletproofing, to a private equity-backed firm for $1.8 billion. The company sold its remaining nylon lines and other polymer businesses for $11 billion in 2022.

    DuPont still makes Tyvek house and medical wraps, Corian counters, Molykote lubricants, FilmTec membranes, and medical-device packaging systems, automotive battery and aerospace parts, as well as water, gas, and mining products.

    In all, it’s a radical reduction from the 1950s, when DuPont was the most valuable company in the world, and owned major stakes in General Motors and other customers, or in the 1990s, when DuPont owned oil giant Conoco and attempted a drug-making joint venture with Merck.

    DuPont was dropped from the Dow Jones 30 industrial stock index in 2017. It remains one of the S&P 500 stocks, a list Qnity has also joined.

    The Qnity spin-off is just the latest in the dismemberment that began before Breen joined DuPont and became chief executive and chairman in 2015. Breen, who similarly broke apart the former Tyco International in the 2000s, came to DuPont at a time when some investors were discontented with low profit growth.

    As CEO, Breen led a merger with Dow Chemical, enacted in 2017. He gutted central staff including a large part of the company’s research establishment, then broke up DowDuPont into three successors, and kept selling or spinning off business groups.

    The result is a string of DuPont successor companies, most still based in the Wilmington area.

    They include Corteva Agrisciences, a 2019 combination of DuPont and Dow pesticide lines and genetically engineered seeds with offices at the old DuPont headquarters. The company expects more than $17 billion in sales this year.

    Corteva, whose U.S. operations are mostly in the Midwest, announced this month that it was moving corporate offices from the suburban Wilmington office park that also houses DuPont and Qnity to the former DuPont headquarters complex in central Wilmington.

    The Rodney Square side of the former DuPont Co. headquarters in Wilmington is now home to its chemical spin-off, Chemours. The western end of the same campus will soon be home to offices of Corteva, which includes DuPont’s former pesticides business. This 2019 photo also shows a statue of independence leader Caesar Rodney, which was removed from its pedestal after protests in 2021.

    Another global leader in pesticides, Philadelphia-based FMC, owns some former DuPont products and the company’s Newark, Del., research farm.

    In 2020, DuPont sold its food and biosciences business to a smaller company, IFF, for $7.3 billion. Both companies had plants in the Philadelphia area.

    In 2015, before Breen joined DuPont, it spun off a group of its old chemical businesses, calling it Chemours. It has joined DuPont in settling some of the long-running chemical pollution claims for damages related to Teflon and other former DuPont products.

    In 2013, DuPont sold its automotive paints group, Axalta, to private-equity giant Carlyle Group. Carlyle took Axalta public the next year, making three times what it paid DuPont for the South Philly-based company.

    Axalta and Corteva shares have roughly doubled in value since DuPont spun them off, though the S&P 500 index is up more. DuPont itself trades at about the same price it was worth just before the Dow merger in 2017. Chemours shares are also roughly flat since it went public. (Update: Axalta announced its sale to rival AkzoNobel NV in November, 2025.)

    With its stock trading at a premium over DuPont’s, thanks to investor faith that digital demand will keep going up, Qnity has given shareholders more to celebrate — so far.

  • As data center water demand surges, rivals American Water and Aqua are merging

    As data center water demand surges, rivals American Water and Aqua are merging

    Camden-based American Water has agreed to buy its Bryn Mawr rival Essential Utilities and its Aqua water division in an all-stock deal that combines the two largest municipal water and sewage system companies in the U.S. into a single entity that aims to acquire more.

    The deal joins two companies that trace their roots to the late 1800s, Essential chairman and chief executive Christopher Franklin told investors Monday in a conference call.

    Joined under the American Water brand at its Camden headquarters, the enlarged company will be worth around $40 billion on the stock market, ranking with water and electric companies among the 10 most valuable U.S. utility stocks, American Water CEO John Griffith, said in an interview.

    “It’s going to be a real powerhouse, must-own” stock, said Griffith, a former investment banker who took over as American Water CEO last year and will head the merged companies.

    With around 10,000 total employees, the companies together serve around 5 million water and wastewater customers across 17 states, plus military bases in more than a dozen states, with Pennsylvania accounting for around one-third of the total.

    The two companies are “by far the two largest players in the regulated water utility industry,” said Ryan M. Connors, a veteran utility analyst now with Northcoast Research in Cleveland. Together they would be “a truly dominant” water utility, he said.

    Locally, American Water serves users in the Coatesville, Downingtown, Exton, Norristown, Phoenixville, and Plymouth Meeting areas, and in Burlington, Glassboro, Haddonfield, and other areas in South Jersey.

    Aqua has customers in communities throughout Philadelphia’s Pennsylvania and New Jersey suburbs.

    Franklin acknowledged that Essential’s share price has been trading “at a discount,” adding that sales and profits should grow more quickly under American Water.

    The companies are looking for a possible buyer for Essential’s Pittsburgh gas utility, Peoples, which Franklin bought for $4.3 billion in 2020.

    The partners will need approvals from shareholders and state utility regulators in at least five states, including Pennsylvania and New Jersey, to close the deal on schedule by early 2027. Connors said the combined company from its New Jersey headquarters needs to show it can continue Aqua’s success getting Pennsylvania regulators to approve water charges and plans.

    Franklin said that on Sunday, he told his predecessor, longtime Aqua CEO Nicholas DeBenedictis, about the merger. “He said, ‘It could have happened 20 years ago. These companies belong together.’”

    As a combined company, the leaders said it would be easier to finance the $28 billion in improvements needed over the next five years to upgrade systems.

    About two-thirds of that total will go toward routine upgrades and new technology. The rest includes environmental improvements, including the cost of complying with lead and copper limits, and cleaning water from potentially cancer-causing PFAS chemicals formerly leached into U.S. waters by chemical manufacturers and government firefighting gear.

    Franklin said the merger would make it easier to “keep customer rates affordable” as the business expands.

    As a larger company, the two CEOs said they also would be able to more easily service AI and high-speed data centers and other large new customers.

    Essential has committed to investing $26 million to supply 18 million gallons a day to International Electric Power’s 1,400-acre data center and nearly 1,000-megawatt natural gas and battery storage plant, which sit on former coal-mining lands in western Pennsylvania’s Greene County. Griffith said other large projects are under consideration.

    Though neither company ruled out back-office job cuts, offices in Bryn Mawr and Pittsburgh as well as the Camden headquarters will remain open. Griffith said he plans to honor union contracts with dozens of labor organizations, including locals of the Operating Engineers and Steelworkers.

    “This is really not a cost savings-driven transaction. Both American Water and Essential are growing in a robust way,” Griffith said.