PPG Industries cuts profit forecast for fourth quarter

PPG Industries Inc. of Pittsburgh today lowered its forecast of fourth quarter earnings about 50 percent to a range of 35 cents to 45 cents a share because of the "accelerating rate of decline in the global economy that has emerged."

A consensus of analysts had projected that PPG earnings would be about 73 cents a share, Bloomberg News reported.

PPG, a global supplier of paints, coatings, chemicals, optical products and glass, said that its industrial coatings and glass segments are expected to report losses in the fourth quarter. The fourth quarter results will reflect the benefit from falling raw material and energy costs.

The market softness initially seen in the U.S. industrial markets now is prevalent on a global basis, PPG Chief Financial Officer William H. Hernandez said today.

The business serving the industrial-end markets are experiencing significant loss of volume because customers are responding to lower consumer demand and tighter credit by cutting production and reducing inventory, Hernandez said.

PPG's commodity chemicals, performance coatings and architectural coatings segments continue to perform solidly and the company's optical products business continues to show growing volumes, Hernandez said.

The company plans to release fourth quarter results on Jan. 16.

PPG to shutter 3 plants in streamlining move

The Consumer Electronics Inventory Glut

Universal Stainless cuts earnings forecast

Economic crisis kills Beaver County ethanol plant plans

Plans to build a multimillion dollar ethanol plant in Beaver County have apparently been ditched.

Pittsburgh-based Sunnyside Ethanol LLC had proposed building the ethanol plant and waste coal electrical facility on about 80 acres in Aliquippa. The plant was to be on land that once housed a sprawling steel facility.

Chuck Betters is one of the property owners. He says the credit crisis and the drop in gasoline prices apparently played a role in Sunnyside's decision to halt its plans.

Betters says Sunnyside had a sales option for the property, but it expired.

Sunnyside officials have said they are having difficulty securing funding for the Aliquippa plant, which would have been built on land along the Ohio River that once hosted a sprawling J&L Steel plant.

Flabeg expansion plans spurs infrastructure upgrades

Bringing Broadband to Rural America

Smaller banks inking bigger business deals

When an investment banker tried to line up money to buy Boscov's stores out of bankruptcy early this fall, he ran into the credit crisis.

"The big banks, including money center banks, just blew us off," said Joseph Harenza, CEO of Griffin Financial Group in Reading.

But he got around that wall when a group of smaller, regional banks coalesced to back a nearly $300 million deal that enabled two of the retailer's top former executives to rescue Boscov's from oblivion last month.

The deal illustrates a wider trend, say bankers and other industry experts. While many large banks are freezing up these days, smaller banks are often filling the financing void for businesses.

"Some of the bigger banks are distracted, either by selling or buying (banks) or by more national issues," said David Lazare, managing director of Stifel Nicolaus & Co., Philadelphia.

"But community banks are seeing business opportunities in loan and deposit relationships that they hadn't gotten access to in the past several years," the analyst said.

Several second-tier banks around Pittsburgh are enjoying a higher profile these days, especially among business customers hungry for credit.

First Commonwealth Bank, for instance, posted its busiest quarter for new business loans over the summer that it's recorded in the past three to four years, said Mike Price, president of the Indiana, Pa.-based bank.

"Times may be tough, but not all businesses are struggling," Price said. "Their business may not be as good as last year, but they can still be profitable and pay good wages and give out a Christmas turkey each year."

Dick's Sporting Goods Inc., for instance, is forging ahead with a new, $107 million headquarters in Findlay, near Pittsburgh International Airport, which should be completed in about a year. The building is being financed by a consortium of mostly Western Pennsylvania regional banks led by First Commonwealth.

"They have been our go-to banking partners in this region," said Rodney Piatt, CEO of project developer Horizon Properties. "They clearly understand the markets they serve and understand the economics of the markets they're in."

Larger banks are still providing project financing, "but it's a lot more challenging because they are pulling in their horns," Piatt said.

"If we get a deal, we have no problem working on it with other lenders, depending on the circumstance," said Rob Jorgenson, senior vice president of marketing for S&T Bank, Indiana, which helped finance the Dick's headquarters project.

Regulators limit the size loan a bank may extend according to the institution's asset size. S&T loans, for instance, can not exceed about $20 million, Jorgenson said. So, construction of the sporting goods company headquarters required that several smaller banks band together their resources.

"Smaller banks are still staying within their strategy, however," Lazare said. "They're not being overly aggressive, or relaxing their underwriting standards or going outside their markets."

First National Bank has about $3.2 billion in outstanding business loans across Western and Central Pennsylvania, with one-third of that in the Pittsburgh region. The Mercer County-based bank added eight branches in Allegheny County to its previous 15 here with the acquisition of Iron & Glass Bank in August.

"We bring the sophistication of a bigger bank in a community bank wrapper," said Vincent Delie Jr., banking group president of First National. "Our (loan) decisions are local, and our credit officers are engaged with the companies."

Since the bank hired commercial bankers dedicated to the Pittsburgh market in 2005, First National has grown its outstanding business loans about 15 percent a year, Delie said.

First Commonwealth CEO Price attributes much of his bank's business loan growth to monthly "blitz days" this year. That's when branch managers, commercial lenders and even "the top brass" call on companies probing for business, he said.

"This is not rocket science. If you want a company's business, you go inside and ask if there's anything you can do for them," Price said.

"Our customers know who to call if they need to," he said. "They're not calling a different area code or a different state."

Smaller banks seemed to get an added chance to grow their businesses in early December. The Justice Department ordered PNC Financial Services Group to divest 61 Western Pennsylvania branches before it can complete its acquisition of National City Corp., expected by Dec. 31.

"We would love to purchase some of the National City branches that PNC has agreed to sell," said Robert McCarthy Jr., CEO of Parkvale Financial Corp., which helped finance the Dick's project. "That would be a good way to grow, with mature offices and nice deposit bases."

But as McCarthy and other local banks later discovered, antitrust authorities are requiring PNC to sell the National City branches in chunks by market. That means, all 50 offices in Allegheny County must be sold to one buyer -- a transaction too big for smaller banks to swallow, analysts say.

Extra branches or not, Parkvale has expanded its business loans more than 15 percent this year to date over last year, said chief lending officer Bob Stephens.

"It's having our loan officers be more proactive," he said.

IndyMac’s Fast-Track Mortgage Modification Program

Feds tell PNC to sell 61 National City branches

PNC must integrate National City, sell branches, realign work force

Will Bank Rescues Mean Fewer Banks?

One bank must take 50 National City branches

A Beacon of Sanity in Subprime

Nissan operation 'a great opportunity'

Pittsburgh businessman David Scaife has expanded his car sales activities in the region, recently taking over operations of a Nissan dealership near Johnstown in Cambria County.

Scaife, the owner of Auto Palace Porche on Baum Boulevard in North Oakland, is operating the Nissan franchise on Scalp Avenue in Richland under the name Auto Palace Nissan. He purchased the franchise and started operations Sept. 1, said Aaron Comstock, general manager of his dealership operations.

"We saw this as a great opportunity," Comstock said. The previous franchisee for the Nissan dealership was Team Motors, a business that owns Chevrolet and Kia dealerships in the Johnstown area.

The franchise Internet site lists just under 100 vehicles for sale, including 2008 and 2009 models, ranging in price from $15,000-plus Nissan Versa sedans and hatchbacks to Nissan SUVs running at more than $40,000.

State records show the business is owned by DNS Nissan LLC, on Baum, with Scaife shown as manager. A purchase price was not disclosed.

Despite the economic downturn and its impact on domestic automakers Chrysler, General Motors and Ford, Scaife's team is optimistic about prospects for both the new venture and its existing business in Pittsburgh, Comstock said.

Japanese automakers are in far better financial state than their American counterparts, but they are getting battered in the shrinking market.

In November, when auto sales plunged 37 percent to their worst level in more than 26 years, Toyota's sank 34 percent, Nissan's were down 42 percent and Honda Motor Co.'s fell 32 percent.

In Western Pennsylvania, Nissan has been among the Japanese brands gaining market share -- with a 1.1 percent increase over the last nine months, according to figures from the Greater Pittsburgh Automobile Dealers Association, which includes some dealers in the Johnstown area.

The brand is projected to increase new car and light truck registrations by 7.1 percent this year, the association said in its 2008 third-quarter Pittsburgh Auto Outlook report.

"The economy is causing everyone concern, and there is a downturn in auto sales across the board," Comstock said. "But we're looking forward to making it through the downturn and moving forward."

Plans are to continue to operate the Richland Nissan dealership at its location under a lease agreement until sometime next year when Scaife hopes to have a brand new complex built at a nearby site.

Comstock did not disclose the location because the purchase of the property isn't completed and plans still are being developed.

"We want to build a state-of-the-art facility. We think it will be exciting and will create a lot of customer traffic in that area," he said.

While Scaife expanded his business in Johnstown, in November he finished renovation of his existing dealership on Baum Boulevard. Comstock declined to disclose the cost of the renovation, which was completed Thanksgiving week, but said the investment was "substantial."

"We completely gutted and remodeled the showroom, and added drive-in service, he said. "It was a complete renovation."

Scaife, who is the son of Tribune-Review owner Richard M. Scaife, has owned the Baum Boulevard site since 2000 and operated the Porche franchise since 2002, said Comstock. Based there is his Spyker of Pittsburgh, a business that sells hand-built luxury vehicles.

Also located there is Scaife's Race Car Museum, a private collection of about 15 classic cars, including such makes as Porsche, Jaguar and Ferrari, that is not open to the public.

The Hidden Pension Threat

John Naretto Buick to close Sept. 30

Government officials worked to keep strip mill in Valley

Landing the $1.2 billion hot strip mill at ATI-Allegheny Ludlum's Brackenridge Works required the cooperation of state and local elected officials, who took key steps to set the stage for the project.

It happened with a sense of urgency as ATI considered putting the new mill in Kentucky, which was offering an incentive package that included cheap electricity, or on its property in Midland, Beaver County, which already had the state designation of a Keystone Opportunity Zone.

Either scenario posed the likelihood of Ludlum eventually leaving the Valley.

State legislators, including state Rep. Frank Dermody of Oakmont, state Rep. Jeff Pyle of Ford City, and state Sen. Sean Logan of Monroeville, went to work pushing legislation on two fronts. One was passing a bill that allowed businesses such as Ludlum, which uses huge amounts of electricity, to cut their long-term deal with power companies and thus lower costs.

A second bill allowed for expansion of the Keystone Opportunity Zones (KOZ) to include the ATI-Ludlum project. It will provide 10 years worth of tax abatement from the counties, municipalities and school districts on new construction related to economic development. In return, ATI-Ludlum will pledge to invest at least $750 million into new development and create or preserve 1,400 jobs, which happens to be the normal size of the work force at the Brackenridge Works.

Once the legislation was approved, it was the local officials' turn to step up and keep the relationship with Ludlum from going on the rocks.

Brackenridge Council, Harrison Township Commissioners and the Highlands School Board approved the tax abatements for the KOZ.

"It's a no-brainer," George Conroy, Harrison commissioners' chairman said at the time. "Basically, it means getting that or not getting anything because, if they don't build it here, I think they'll close Brackenridge."

Brackenridge Council was called to go beyond that.

The Brackenridge Works belongs to that borough in name only. The mill is located in Harrison, but on its western end it abuts Mile Lock Lane in Brackenridge. ATI officials told the borough it would need to expand the mill property's footprint to fit the new project. To do that, Brackenridge Council vacated Mile Lock Lane and will reconfigure the street to allow the mill to move over about 20 feet.

After some behind-the-scenes wrangling with company officials, borough council approved the action on Sept. 9.

On Sept. 17, ATI announced that the hot strip mill would be built at Brackenridge.

They Warned Us About the Mortgage Crisis

Palin No Pushover on Pipeline Project

Expectations blossom with Brackenridge strip mill

Expectations blossom with Brackenridge strip mill

The ATI-Allegheny Ludlum Corporation's relationship with the Alle-Kiski Valley, like many marriages, isn't a match made in heaven but has weathered stormy times to forge something of value.

Looking back through the stainless steel producer's history marked by high profits and low profits, strikes, acquisitions, environmental problems, corporate restructuring and challenges from subsidized foreign steel producers, Ludlum and the Valley have stayed true to each other for each other's benefit.

There is no better example of that than the September decision by Ludlum's parent company, Allegheny Technologies Inc., to invest between $1.2 billion and $1.5 billion in a new hot strip mill at its Brackenridge Works.

"I think it is a long-term thing," said Dennis Davin, Allegheny County's economic development director. "What it does for us in Allegheny County and Western Pennsylvania is solidify that manufacturing presence for the future.

"Companies don't do this kind of thing lightly. They don't do it unless it is the right business model. These guys were convinced that this is the right place to do it, the right work force and it really keeps 1,400 manufacturing jobs going in the Valley."

Speculation

A Mideast Valley of Peace

Government officials worked to keep strip mill in Valley

Allegheny Technologies layoffs to affect hundreds

Nursing-home ratings called inconsistent

Area nursing home owners say the federal government's new rating system is a good first step but, by itself, could mislead the public.

The Centers for Medicare and Medicaid Services on Thursday released its first-ever nursing home rating system, which gives each home a rating of from one to five stars. About 22 percent of the nation's nearly 16,000 nursing homes received one star, the lowest rating, and 12 percent received five stars, the top grade.

In an eight-county region of Western Pennsylvania, 133 nursing homes were rated.

Stars were given based on criteria such as staffing and how well the nursing homes fared in state inspections.

Owners of two or more nursing homes particularly were perplexed with the ratings. Some of their properties received a single star, while others were awarded five stars.

"We own three care communities and operate another two in the region, and all operate under the same standards of care," said Pat Kornick, spokeswoman for Presbyterian SeniorCare, based in Oakmont.

One of Presbyterian SeniorCare's facilities -- the Willows of Presbyterian SeniorCare in Oakmont -- received a single star. But Longwood at Oakmont in Verona garnered a five-star rating.

"We fully support quality-of-care measurements, but we also believe that quality of life is important -- and this star system doesn't address quality of life," Kornick said. "To us, the truest indication of how we're doing is the daily report card that we get from our residents and their families."

In Allegheny County, 25 percent -- or 16 or 64 nursing homes -- received single-star ratings, or much-below-average performance. Two of the poorest-performing facilities within the county are owned by the University of Pittsburgh Medical Center -- Canterbury Place in Lawrenceville and UPMC Heritage Place in Squirrel Hill.

"Some of the data in this rating system is both older and unclear, with questionable methodology that may cause fear in the public," said UPMC spokeswoman Gloria Kreps. "Our concern is that this may also cause unnecessary fear among our patients and their families."

For-profit and nonprofit facilities are included in the federal rating, as were government-owned nursing homes.

Allegheny County's four John J. Kane centers received varied ratings -- a five-star rating for the nursing home in Scott, three stars for the Kanes in Ross and Glen Hazel, and two stars for the McKeesport facility.

"It's too early to make a determination as to how the criteria plays into such a complex area," said Dennis Blondo, executive director of the Kane facilities. "It's very difficult to understand how you can place a rating on something as personal as where somebody lives. There is much more that goes into quality of life for a nursing-home resident.

"Having said that, we're very pleased at the five-star ranking for our Scott facility, and I feel all our centers deserve a five-star ranking," Blondo added.

In Westmoreland County, three of 22 nursing homes were awarded one star, while two received five stars. Of Washington County's 12 nursing homes, three were given a single star, while no facilities garnered a five-star rating. In Butler County, one of 13 nursing homes received a single-star rating, while three were given five stars.

Two of Fayette County's eight nursing homes earned one-star ratings, while one facility garnered a five-star grade. Two of Beaver County's seven facilities received single stars, while none garnered five stars. None of Indiana County's five homes or Greene County's two nursing facilities were given one or five stars.

Kerry Weems, acting administrator for the Centers for Medicare and Medicaid Services in Washington, D.C., said the agency's ratings were based on data already on its Web site and were aimed at making it easier for patients and families to choose a nursing home. He said it can be difficult for people to understand all the aspects of an inspection.

Lyn Manns, administrator at Sycamore Creek Nursing Center in Kennedy, said the data used in determining her facility's one-star rating were old. Mann said the nursing home's owner, Cleveland-based Sabre Healthcare Group, has been making improvements -- the latest of which is a new name. Effective Friday, the facility now is known as Caring Heights Community Care and Rehabilitation Center.

"We invite people to come out, take a look at what we're doing," said Manns.

Even five-star facilities are somewhat cautious in acknowledging the top-notch rating.

"We really weren't surprised at this. We know our staff and leadership team does a great job, and this ranking took notice of that," said Chris Newport, administrator at Covenant at South Hills in Mt. Lebanon, a five-star awardee.

"We're ecstatic we were awarded five stars, we work hard at what we do, but all nursing homes strive to do the best they can do," said Sister Bernice Fiedor, administrator at St. Anne Home in Greensburg.

Home sales in region decline 6.3 percent

The Growing Frustration of eBay Sellers

McCandless project to include offices, big-box retail, hotel

Construction of the first phase of the $120 million McCandless Crossing in McCandless will include a big box retailer, a 123-room hotel, 200,000 square feet of office space and a restaurant.

Details of the development, to span the east and west sides of McKnight Road near LaRoche College, were outlined by Jeffrey A. Mills, of Pepper Hamilton LLP, legal adviser to developer AdVenture Development LLC of McCandless, whose president is Kevin Dougherty.

"About 100,000 square feet of offices will be for a medical facility to accommodate physicians from nearby UPMC Passavant, with the remainder general office uses," Mills said.

The initial phase of the 130-acre complex, to be built on the west side of McKnight, could be completed by the summer of 2010, and the second and final phase, on the east side of McKnight, will be started either that year or in 2011, he said.

The overall development will consist of 1 million square feet and include a town center, an entertainment area with a cinema and possibly residential units.

Mills spoke before the Redevelopment Authority of Allegheny County, which on Thursday authorized the county's Department of Economic Development to seek up to a $10 million grant from the state's infrastructure improvement program.

The grant would finance debt payments on the costs of roads and other infrastructure at the site.

Palin No Pushover on Pipeline Project

A Mideast Valley of Peace

East Liberty Target due in 2010

Bloomfield residential plan may be pared

Focus Stock: Time to Order Buffalo Wild Wings?

Stocks open higher after automaker bailout news

NEW YORK -- Wall Street has opened higher as investors cheered the government's pledge to lend as much as $17.4 billion to the U.S. automaking industry.

The decision to help the struggling companies comes after a $14 billion bailout for Detroit automakers failed to emerge from the Senate last week.

The companies' cash flows have been dwindling to a slow trickle due to the weak economy and credit crunch. The White House will let automakers draw $13.4 billion in short-term financing, and another $4 billion will be added later.

Investors have also veen worried about broader job market ramifications of a bankruptcy of an automaker like General Motors Corp. or Chrysler LLC.

In the first minutes of trading, the Dow was up 107 points to the 8,712 level.

Automakers Rev Up for a Bailout, Too

$14B auto bailout collapses in Senate

California to Feds: Got a Spare $7 Billion?

Flabeg expansion plans spurs infrastructure upgrades

Flabeg Corp.'s plan to build a $33 million manufacturing facility in Findlay has prompted Allegheny County to seek up to $1.5 million from the state for infrastructure improvements.

Flabeg, which designs and engineers high-tech optical products and mirrors, said it will build a 150,000-square-foot plant and a 50,000-square-foot office annex on land leased from the Buncher Co. in the Clinton Commerce Park.

The company said the initial building will house a business unit by 2010 that will create about 300 jobs. Flabeg will continue its Brackenridge plant, where 200 are employed.

Flabeg is in line to receive a $9 million aid package from the state and county. The Redevelopment Authority of Allegheny County on Thursday approved a request for the state grant.

U.S. Steel halts plans for Alabama plant

Glass manufacturer may add 300 jobs at new Findlay site

Unemployment: How to Slow the Bleeding

5-county region's home sales plunge 20%

Sales of existing homes in the five-county Pittsburgh region declined 19.6 percent in November compared to the same month last year, marking the 20th consecutive month of falling sales.

There were 1,810 home sales in November versus 2,250 a year ago, according to RealStats, a South Side-based real estate information company.

For the 11-month period of January through November, sales are down 16.3 percent this year compared to the same period last year, the company said.

Total sales this year through November were 24,220 while the total for 2007 was 28,925.

"It should be noted that there were two fewer business days in November compared to a year ago and, factoring that in, the number of sales are off roughly 11 percent," said Daniel A. Murrer, RealStats vice president.

Not surprised by the decline is Tom Hosack, president of Northwood Realty Services.

"With all the economic distress and bad news, people are not buying houses but shopping for Christmas. The shopping malls and restaurants are packed, and November, along with December, are traditionally slow months for house sales," he said.

Hosack said the market may turn around next year, perhaps not immediately in January, but by the third quarter, thanks to government actions to stimulate the economy.

"We knew November would be down in house sales, based on the number of houses under sales agreements during October," said Howard (Hoddy) Hanna III, chief executive officer of Hanna Holdings Inc.

RealStat said the average price of homes sold in November declined about 2.5 percent, compared with last year. The average sale price was $146,121 last month compared to $149,830 a year ago.

Median sales prices also declined to $115,000 in November versus $116,750 a year ago, down 1.5 percent. The median price is the point at which half the homes sold for more and half for less.

The average sale prices in Westmoreland County increased 21.7 percent -- $155,362 last month on 285 sales compared to $127,690 on 341 sales a year ago. Prices decreased in all other counties, with Washington down 12.8 percent, Beaver down 11 percent, Allegheny down 5.3 percent and Butler down 0.3 percent.

RealStats said the average price of a new home sold in November was up 2.1 percent, at $311,171 compared to $304,722 a year ago. November new home sales declined 32.5 percent, with 166 compared to 246 a year ago.

Cheaper Gas Prices, but Less Demand

Home sales in region decline 6.3 percent

Will Demand for Solar Homes Pick Up?

The Housing Crisis Spreads to China

State prescription cards offer average 30% savings

HARRISBURG -- Pennsylvania today became the 22nd state where people can get a free prescription drug card that will provide an average savings of 30 percent on medicine.

Funded by pharmaceutical companies and pharmacies, the discounts will help 800,000 Pennsylvanians without health insurance in a difficult economy, said Thomas J. Shaw, program director for the Pennsylvania Drug Card.

Anyone can get the card, he said.

"There are no restrictions to membership, no income requirements, no age limit and no applications to fill out," Shaw said.

The card, available at www.padrugcard.com, offers discounts of up to 75 percent.

"We encourage all residents to take advantage of the opportunity to help offset the rising prices of prescription drugs purchased in Pennsylvania," said former Gov. Mark Schweiker, now CEO of the Greater Philadelphia Chamber of Commerce.

Schweiker backed the plan Wednesday in Philadelphia. Shaw made an announcement Thursday in the state Capitol Rotunda.

California, New Jersey, Florida, Georgia, Colorado and Virginia are among states offering the card, according to Shaw.

All drugs are included, he said.

"There is medicine manufactured that is not sold," said William H. Gutches, the program's pharmacy business development director, when asked why drug companies would do this.

That doesn't mean companies are selling drugs near or over the expiration dates, Gutches and Shaw stressed.

"On the face of it, it looks great," said Chuck Ardo, a spokesman for Gov. Ed Rendell.

Big Pharma: What Safe Haven?

Citizens Bank promotion links to GetGo gasoline

LeNature CEO Podlucky accused of $110M bait-and-switch

It was a skim that would have made the Mafia proud.

Two men running a business out of a house in North Carolina allegedly handled millions of dollars for former LeNature's CEO Gregory Podlucky and helped him skim $110 million in financing that Podlucky used to enrich himself by building a mansion and purchasing $30 million worth of gems and jewelry.

The scheme, detailed in a lawsuit filed in U.S. District Court in Pittsburgh against Podlucky, former company officers, family, friends and investment bankers, could serve as the blueprint for money laundering, bank, wire and mail fraud charges being considered by a federal grand jury in Pittsburgh.

The funds were part of more than $500 million allegedly looted by Podlucky as part of a fraud that kept the failing company afloat through forgery, deceit and questionable loans.

Evidence uncovered by forensic auditors has since been turned over to the U.S. Attorney's Office, postal inspectors and the Internal Revenue Service for use in the criminal probe, according to bankruptcy court records that detail the investigation.

Also named as defendants are Podlucky's brother, Jonathan, who was the company's COO; David Getzik of Washington, Pa., the former CFO; Robert Lynn of Ligonier, vice president; and Drew Murin, formerly of Derry, who is a friend of Podlucky's and served as a company consultant.

None of the defendants would comment on the allegations.

Here's how the scheme worked, according to Trustee Marc Kirschner's filing, which is seeking more than $1.5 billion in damages.

Podlucky hired The Pollinger Co., of Charlotte, N.C., to act as an intermediary in arranging the financing and purchase of bottling equipment that Podlucky wanted to use to expand his Latrobe plant and a sprawling plant he built in Arizona.

Podlucky and owners Donald and Paul Pollinger used a simple bait-and-switch to run the scam.

The Pollingers ordered an expensive line of equipment, then switched to cheaper machinery after the financing was in place. The company leasing the equipment ended up paying Pollinger Co. more than the Pollingers had to pay the company manufacturing the equipment, according to the suit.

When LeNature's auditors in 2006 wanted to confirm that Pollinger had the equipment deposits in a bank, the Pollingers confirmed that they held more than $200 million in deposits for Podlucky. The money was supposed to be transferred to a German company making the equipment.

As a result, "tens of millions of dollars" were funneled to Podlucky, according to Kirschner.

The suit alleges the Pollingers also helped Podlucky obtain financing for machinery that did not exist.

Kirschner said no one raised alarms when it was discovered that Pollinger was a small, two-man operation with little or no assets or credit rating. More importantly, no one bothered to check where the money was deposited, he said.

In each instance, the leasing company paid too much in financing and Pollinger sent the excess to Podlucky. In 2003 and 2004, more than $8.1 million in excess financing was transferred to Podlucky, according to the lawsuit.

The lawsuit also details Wachovia Bank's role.

Wachovia Bank and its affiliates, Wachovia Capital Markets and Wachovia Securities, are named as defendants in the lawsuit. Wachovia, which arranged a total of $600 million in financing for LeNature's, knew the company was teetering financially yet it continued to provide LeNature's "with a steady stream of capital" by issuing more debt, according to Kirschner.

Kirschner said LeNature's should have failed financially as early as 2002 but Wachovia's steady stream of money kept the company in business, piling up even more debt, until late 2006.

Despite Wachovia's own misgivings about LeNature's financial affairs, the bank kept loaning the company more money.

Using internal company e-mails, Kirschner shows that Wachovia's investment bankers were at odds with their own analysts who had serious doubts about LeNature's and Podlucky.

One Wachovia analyst questioned why LeNature's earnings did not match its reported growth projections since its line of water and juice products were not being carried by the major stores. Its products were disappearing from shelves at places like Wal-Mart, Target, Pathmark and Kroger's.

Another analyst in Wachovia's food and beverage division asked how LeNature's could be making money by selling its product for 99 cents.

Finally, it got to the point where Wachovia analysts said LeNature's financial information was "frankly worthless" even though brokers had put out a "buy rating" on a series of junk bonds for the company.

Wachovia was able to reduce its liability to nothing by selling its debt to other financial institutions and hedge funds who never were told about LeNature's financial problems.

In the process, the bank earned more than $7.1 million in fees "for a few days' work." Wachovia's actions in that instance also are the subject of a lawsuit in federal court in Pittsburgh.

Pat Huddleston, the former chief of enforcement for the Securities and Exchange Commission, said corporate corruption "is all about the money."

"There is always a battle between the compliance department and people who make money for the investment banking firms -- the investment bankers," said Huddleston, who now operates Investors Watchdog, a Web site in Atlanta that tracks financial fraud.

"Voices get drowned out by investment banking fees, which are pretty hefty. Some officials just don't have the courage to insist that people take a harder look at these things out of fear for their job," Huddleston said.

"On one hand, you have someone raising red flags. On the other, you have someone saying, 'I can make $20 million on this deal.' "

He said creating bogus financial records and forging documents are nothing new in corporate America. Corrupt businessmen are willing to go to any length to conceal fraud.

He said he tracked a recent scam involving a company official who creating a non-existent accounting firm so it could issue fictitious financial opinions on behalf of the company to hide the businessman's misdeeds.

"Truth is stranger than fiction," he said.

LeNature’s plundered for $500 million: lawsuit

Marcial: BioSante May Be Buyout Bait

California firm pays $34 million for O'Hara software company

A California software company said Wednesday it will pay $34 million to buy Algor Inc. of O'Hara, which makes computer-aided engineering software used to design products ranging from mobile phones to oil pipelines.

Autodesk Inc. of San Rafael, Calif., said acquiring Algor will strengthen its own digital prototyping software, by adding advanced simulation functions.

Michael Bussler, Algor's president and founder, said his company has "enjoyed a longstanding partnership with Autodesk, and the combination of our proven technologies will be an exciting new chapter for our customers worldwide."

Autodesk, with more than 7,000 employees and $2 billion in annual revenue, said it intends to integrate Algor into its manufacturing solutions business unit, while continuing to sell and develop Algor's core product line.

Algor, founded in 1976 and incorporated in 1980, has 75 employees and the acquisition's effect on its local operations is uncertain.

Autodesk spokeswoman Clay Helm said because the agreement was just signed, "it would be premature to talk of facilities plans, long-term." The acquisition could close by late January.

Customers of Algor, according to its Web site, include the GM Powertrain unit of General Motors Corp., Hewlett-Packard Co. and Solar Power Industries Inc., of Belle Vernon.

Autodesk software is used in a wide range of products. The company announced this week that "Mortal Kombat vs. DC Universe" and many other top video games in stores this holiday season were built with its products.

Investment firm offers to buy Tollgrade Communications

Pittsburgh home prices hold despite nationwide slump

Despite the nationwide slowdown in housing starts and sales, the Pittsburgh region is one of the brighter spots in Pennsylvania and the nation, home builders said Wednesday.

"Although production of new housing is down 50 percent from the peak construction years of 2003 and 2004, the region is one of the few markets not seeing a decline in overall pricing levels," said Frank Thompson, president of Sweetwater Builders Inc. of Cranberry.

Thompson spoke during a conference call Wednesday, hosted by the Pennsylvania Builders Association, that included Ken Kurtz, president of Ken Kurtz Builders in Jermyn, Lackawanna County, and Dave Seiders, consultant to the National Association of Home Builders.

Thompson said new housing prices have not declined in the region and the inventory of unsold new houses is slowly decreasing. But that has not spiked sales because buyers are concerned about whether they can sell their current home, job security and whether new housing prices will decline, he said.

In October, the median new home price in the five-county Pittsburgh region was $273,607, up slightly from $267,050 in October 2007, according to RealStats, a South Side-based real estate information service. The median price is the point at which half the homes sold for more and half for less.

Housing starts have held up in the region until recently, said Jeff Burd, president of Tall Timber Group, which monitors the local construction industry.

"It has only been the last two months -- October and November -- that the numbers have really dived," Burd said. There were 115 starts in October and 81 in November, he said. He had forecast 1,700 to 1,800 starts this year.

In October, there were 236 sales of new homes and townhomes, down from 284 last year, according to RealStats. Money spent on new homes in the five-county area dropped 15.5 percent from $85.7 million to $72.4 million with the sharpest declines in Beaver and Westmoreland counties where the activity was off by more than 50 percent. Allegheny County had the only increase in sales during October. Also included were Butler and Washington counties.

Nationally, housing starts fell 18.9 percent from October to November -- what some experts are calling the worst month since record-keeping began in 1947 -- the Commerce Department reported Tuesday.

"Some builders are able to weather the current economic crisis but others have been devastated and either have gone into home improvement or temporarily suspended operations," said Thompson, a former president of the Builders Association of Metropolitan Pittsburgh. "Several customers I have been working with for awhile agreed to buy a house, but have also asked construction be delayed until the spring, in hope that prices will decline," he said.

Kurtz said the picture was worse in the eastern part of the state.

A builder of two to five homes annually, Kurtz said he had five solid buyers recently and four of the five decided to delay construction start until spring, citing the economy and worry that their investment will maintain its value.

Housing starts are down two-thirds from the peak years, he said.

"Our message to Congress is to fix housing first. That's a key component to turning the economy around," Seiders said.

Home sales in region decline 6.3 percent

Will Demand for Solar Homes Pick Up?

Longtime Oakland restaurant Duranti's closing Friday

Duranti's Restaurant in the Park Plaza condominiums in Oakland will close at 9 p.m. Friday.

An investor working to acquire the space plans to lease it to the University of Pittsburgh. The university's Office of Institutional Advancement signed a 10-year lease, starting in May, at an initial cost of $492,678 to occupy 20,965 square fee in the building.

Theodora Duranti, the restaurant owner, declined to identify the investor but said she hopes to reopen Duranti's at a new location.

Duranti's has been in the building at 128 N. Craig St., since 1979. A Stouffer's restaurant was there previously.

Kicking the Tires at Ford Motor

Federated to relocate 2 units to Marshall

Oakland Portal might be path to growth

Gas-drilling permit fees in Pa. set to skyrocket

The Pennsylvania Environmental Quality Board on Tuesday approved rules that would sharply increase permitting fees for companies drilling into the natural gas-rich Marcellus Shale formation.

For the average Marcellus Shale horizontal well that stretches 10,000 feet down and then across the shale formation, the permit cost next spring would jump to $2,600. That's up from the $100 fee, regardless of depth, that was adopted in 1984.

"Due to technological advances in drilling and rising natural gas prices, gas exploration in the commonwealth has increased significantly with 40,000 new drilling permits anticipated during the next three years," said John Hanger, acting secretary for the state Department of Environmental Protection.

DEP estimates the new fee structure will bring in an additional $3 million a year for the department. Proceeds will be used to hire 37 DEP staff to review Marcellus Shale permit applications and monitor drilling activities statewide.

Sixteen of the new employees are to be based in Pittsburgh, DEP spokesman Tom Rathbun said yesterday.

"We'll be hiring oil and natural gas inspectors, water quality specialists, environmental engineers, technical staff like geologists and office permitting staff," Rathbun said. Oil and natural gas inspectors will be paid between $41,017 and $62,338, the DEP said.

Trade associations and independent oil and natural gas exploration-production companies doing business in the Marcellus formation generally were supportive of the fee increase.

"The additional fees will help the DEP expand its resources to match increased activity in the Marcellus," said Matt Pitzarella, spokesman for Fort Worth-based Range Resources Corp., with an office in Cecil in Washington County. "Ultimately, this should help foster Marcellus development, which will add good-paying jobs in Pennsylvania and boost the state's economy."

Steve Rhoads, president of the Pennsylvania Oil & Gas Association, said his organization generally supports increased fees -- those pertaining strictly to Marcellus Shale drilling, and others for different types of oil and gas drilling programs.

The 20-member Environmental Quality Board, chaired by the DEP secretary, is an independent board that decides on all DEP regulations.

Rathbun said now that the board has approved the increase, it goes to the Independent Regulatory Review Commission, which considers whether all agency regulations are in the public's interest. Finally, the state attorney general must approve the increase.

Natural gas in Marcellus Shale can create revenue, jobs

Shakeup in the Oil Ranks

Gas, Gas Everywhere

Oil, gas drilling booming in state, study says

National City OKs settlement for shareholder lawsuit

National City Corp., the Cleveland-based bank being acquired by PNC Financial Services Group Inc., agreed to release more data and pay $1.2 million in legal fees to settle lawsuits challenging the fairness of the deal.

In one of eight Delaware Chancery Court lawsuits, shareholder Arthur Klein alleged Oct. 27 that National City directors were duty-bound to get a higher price. A hearing to block the transaction had been scheduled for yesterday.

"Counsel for the parties have concluded that a settlement" on the claims "is fair, reasonable and adequate and in the best interests" of National City stockholders, lawyers said in court papers filed in Wilmington Dec. 12.

Pittsburgh-based PNC said Oct. 24 it would buy National City, Ohio's largest bank, for $5.2 billion to create the eighth-largest U.S. bank by assets, after receiving $7.7 billion in funding from the U.S. Treasury.

Under the buyout agreement, National City investors will receive 0.0392 share of PNC common stock for each of their shares, according to court papers. National City shareholders will vote on the deal Dec. 23.

In a memorandum of understanding filed with the court, National City officials denied wrongdoing and agreed to pay the legal fees and expenses for plaintiffs' lawyers.

They also disclosed information about the buyout process, including a planned $25 million transaction fee to be paid by National City for work by Goldman Sachs Group Inc. and $56 million paid by PNC to Citigroup affiliates related to the merger.

The settlement terms must be presented to Judge William B. Chandler III for approval at a later hearing.

The buyout plan won approval from the U.S. Federal Reserve yesterday and may close by the end of the year.

National City joined Wachovia Corp. and Washington Mutual Inc. in takeovers after losses tied to subprime-mortgage loans. National City was once among the nation's top 10 subprime lenders. Its stock price has fallen 88 percent this year.

National City rose 20 cents to $1.93 at 4 p.m. in New York Stock Exchange composite trading. Pittsburgh-based PNC rose $3.20, or 7 percent, to $49.20.

Lawsuits filed to stop National City sale

2 National City shareholders file lawsuits over sale

Bankruptcy sales hurt business for other retailers

Brian Koerber and Jim Perez are the kind of shoppers bankrupt retailers love and solvent chains these days seek to entice.

Both shoppers walked out of Steve & Barry's discount clothing store at Century III Mall this week with bags of deals, courtesy of the Port Washington, N.Y., chain's going-out-of-business sale.

"It absolutely impacts where I'm shopping, with a sale like this," said Koerber, 33, of South Park. "You can't beat the deals. For $20, I got two pairs of jeans and three T-shirts."

With a week left until Christmas, retailers are doing all they can in an ailing economy to entice consumers with half-off or buy-one-get-one offers. But with bankrupt retailers such as Steve & Barry's, Circuit City, Linens 'n Things and Whitehall Jewelers hoping to dump as much merchandise as quickly as possible this season, solvent stores have an additional challenge, experts say.

"The bankruptcies are impacting other retailers tremendously," said Howard Davidowitz, chairman of retail consultant/investment bank Davidowitz & Associates Inc. of New York.

"Look at Bed Bath & Beyond. It's really being hurt by Linens 'n Things' bankruptcy, but the impact is for the short-term. Next year, Linens 'n Things will be gone."

Shoppers are waiting to make purchases, particularly when dealing with bankrupt retailers. They know that as the time nears for the doors to close forever, the markdown percentages increase.

"This is my third time shopping (the liquidation sale) at Linens 'n Things," said Angie Bedilion of Greensburg, as she entered the store Tuesday at Greengate Centre in Hempfield.

"I came here with my Mom because I was interested in a chair cushion, but it was only 10 percent off. I waited and finally bought it for half off, which I felt was a good price." Bedilion was back yesterday to check out some some exercise equipment.

While retail bankruptcies aren't unique, so many store chains selling off all of their inventory weeks or even days before year's end is somewhat out-of-the-ordinary, experts said.

The economic downturn has caused many consumers to pull back on spending, and for some retailers on the edge, even the prospect of increased holiday revenues couldn't fend off going-out-of-business sales. No fewer than 15 major retail chains filed for bankruptcy in the year's third quarter alone, including Circuit City and Linens 'n Things.

"The liquidation sales definitely are taking consumers away from solvent retailers," said George Whalen, president of Retail Management Consultants of San Marcos, Calif. "Linens 'n Things definitely is impacting Bed Bath & Beyond's sales, and Circuit City is impacting Best Buy."

The latest major retailer to seek U.S. Bankruptcy Court protection and hang huge going-out-of-business signs is KB Toys. The company is in its second trip to bankruptcy in four years.

KB Toys, which operates some 460 stores, has said it will try to find a buyer for its wholesale distribution unit as it conducts going-out-of-business sales.

Carol Dailey of Munhall wasn't aware KB Toys was closing until she got to the Century III store this week, saw the signs and enjoyed the 30 percent markdown.

"I didn't know they were closing until I got here, but I found some really good deals," Dailey said.

KB Toys, which started in 1922 as a family-owned business, previously filed for bankruptcy protection in 2004 and emerged one year later after selling itself to Prentice Capital Management Inc.

Bankruptcy sales notwithstanding, the overall tenor this holiday shopping season is, in a word, "horrendous," Davidowitz said. "We'll close 8,000 stores this year and 12,000 stores next year," he said. "Business is terrible."

The longtime retail watcher sees no quick solutions to the downturn and subsequent bankruptcy filings. "We have exploding consumer debt and exploding unemployment," Davidowitz said. "The consumer never has been in this much debt before."

Both Whalen and Davidowitz believe a number of other retailers will be hoisting liquidation sale signs after totaling their holiday sales.

"We'll see a significant number of retailers going out of business in February and March," Whalen said.

Bankrupt Retailers: Pushed to the Brink

A Very Anxious Christmas for Toys ‘R’ Us

One bank must take 50 National City branches

The government told PNC Financial Services Group to sell 50 National City Bank branches in Allegheny County as one block to one buyer, a move that could introduce a big new competitor to Pittsburgh, industry sources said Tuesday.

The federal mandate is part of the Justice Department's order on Thursday that PNC divest 61 branches throughout Western Pennsylvania before it may acquire National City Corp.

"All of the Pittsburgh divestitures have to go together. All of the (50) branches must go to the same buyer," said PNC spokesman Fred Solomon, confirming details of the order.

The 50 National City branches represent $3.35 billion in deposits in Allegheny County. The other 11 branches represent $750 million in deposits.

Analysts said a 50-branch bunch would cost somewhere between $160 million and $335 million -- too rich for a smaller bank to handle, but not for other, bigger banks outside this region.

Candidates include M&T Bank of Buffalo and Fifth Third Bank of Cincinnati, said Bob Wagner, senior vice president at Ferris Baker Watts' office in Mt. Lebanon.

M&T operates more than 700 branches in seven states, including 227 branches in Pennsylvania, plus Washington, D.C., and has more than $65 billion in assets. Spokesman Kent Wissinger said the bank would not comment on industry speculation.

Fifth Third already has a dozen branches in Allegheny County and "intends to continue to build out our presence in Western Pennsylvania," said James "Jay" Ferguson III, Western Pennsylvania president. But he declined to say whether Fifth Third, which has nearly 1,300 branches and $116 billion in assets, would want to buy all 50 branches.

Other candidates might include investment banks Morgan Stanley and Goldman Sachs, which recently created holding companies that could accommodate commercial banking franchises, said Wagner.

"I don't think you'll see any of the super-community banks in our region swallowing 50 branches at once," said Wagner.

"It appears the Justice Department is trying to bring another good-sized bank into the region. It would have to be a fairly big bank to buy that many branches," said Robert McCarthy Jr., CEO of Parkvale Financial Corp., which has less than $1.9 billion in assets.

The government required PNC to spin off branches to "resolve competitive concerns raised in the proposed merger," the agency said in a statement without elaborating.

"We understand (the mandate) but are disappointed by it," said McCarthy. Parkvale would otherwise be interested in buying some of the National City branches, he said.

PNC received approval from the Federal Reserve on Monday to acquire Cleveland-based National City in a $5.6 billion deal announced Oct. 24. The only remaining step is for each bank's shareholders to approve the deal in votes scheduled for Tuesday.

The merger will make PNC the nation's eighth-largest bank by assets ($288.5 billion), fourth-largest by branches (2,747) and fifth-largest by deposits ($180 billion).

A single buyer could purchase the remaining 11 branches in Erie, Meadville, Titusville and Warren, said Solomon. PNC expects to strike sales agreements, or even one deal for all 61 branches, around the time the National City acquisition is completed around Dec. 31, he said.

It was not clear yesterday what would happen if PNC were not able to sell the 50 Allegheny County branches in one transaction, said Solomon. The Justice Department could not be reached for further comment.

Will Bank Rescues Mean Fewer Banks?

Citigroup’s Uneasy Victory

PNC must integrate National City, sell branches, realign work force

Feds tell PNC to sell 61 National City branches

Japanese hurt by auto woes

TOKYO -- Japan's automakers aren't celebrating the troubles of their U.S. rivals, believing that what's bad for the industry in America is bad for carmakers in Japan, too.

In recent years, the Japanese have expanded in the United States, making the world's biggest auto market a cornerstone of their growth strategy. By growing more American, however, they have become such a part of the U.S. industrial landscape that the collapse of any of Detroit's Big Three would be a blow to the Japanese manufacturers.

"The damage to our business is certain to be tremendous," Toyota Motor Corp. spokesman Hideaki Homma told The Associated Press on Monday. "The conditions for the U.S. auto market are extremely tough right now, and any additional negative is sure to make things worse."

One reason is that Japanese carmakers in the United States share many of the same parts suppliers with General Motors Corp., Ford Motor Co. and Chrysler LLC. If a Detroit automaker were to collapse, suppliers would likely follow in a damaging chain reaction.

More broadly, the crisis could lead to huge job losses and further weaken consumer spending, especially for big-ticket items like automobiles. Together, the Big Three automakers employ 239,000 workers in the United States. Counting other businesses that depend on the automakers, economists estimate that 2.5 million jobs would be lost if all three went out of business.

"Whether it is the impact on consumer confidence or the impact on the suppliers that we all share, having one or more of the major automakers in severe distress has consequences for the entire industry," said Simon Sproule, corporate vice president of global communications at Nissan Motor Co., Japan's third-biggest carmaker.

Among the major U.S. suppliers are Delphi Corp., Bosch Auto Parts and TRW Automotive.

Dan Irvin, spokesman for Mitsubishi Motors North America, said the Japanese automaker is "on the sidelines" on the specifics of the bailout proposals, but some assistance for the U.S. industry is likely needed.

Mitsubishi has one factory in the nation, in Normal, Ill., that employs nearly 1,600 people. Irvin said the plant does not share any parts suppliers with the Big Three.

"We would say that these are extraordinary economic times and the auto industry is critical to the American economy," Irvin said. "So in an extraordinary situation, some kind of extraordinary help for these major players in the auto industry is probably appropriate."

Fred Standish, a spokesman for Nissan's U.S. arm, offered support in principle for federal aid.

"What we hope comes out of all of this is a strong and vibrant U.S. auto industry, and so we would support efforts that we think would result in that," he said. "As for what those things are individually, we have to wait and see what Congress or the president ... come up with."

Jeffrey Smith, spokesman for U.S. operations for Honda, Japan's No. 2 automaker, said the company "encourages initiatives that are essential to maintain the short and long-term stability and viability of the auto industry."

A possible advantage from a collapse of the U.S. auto industry could come only many years later -- perhaps in a decade -- when Japanese manufacturers would compete against weaker rivals, especially if they further exploit their lead in green technology with hybrids or electric vehicles, said Koji Endo, an analyst with Credit Suisse in Tokyo.

$14B auto bailout collapses in Senate

Automakers Rev Up for a Bailout, Too

Gas, electricity shut-offs soar in state

Gas and electricity shut-offs have soared since passage of a 2004 law that made it easier for utilities to stop service to nonpaying customers, but the law has not universally delivered the improved bottom lines that the companies sought.

A report issued Monday by the state Public Utility Commission said considerably more households faced a potentially dangerous situation heading into last winter than in the years before the law passed.

Termination rates are at record highs, with statistics in the report showing that electricity and gas shut-offs rose by more than 43 percent from 2004-07. Locally, Allegheny Power, Duquesne Light, Penn Power, Columbia Gas of Pennsylvania and Equitable Gas reported terminations rose by 70 percent to almost 220 percent, with Penn Power reporting the highest figure. Dominion Peoples Gas reported terminations were down 12.4 percent.

The number of disconnected customers who were reconnected to service rose substantially, more than 77 percent from 2004 to 2007.

At the same time, many more households are taking part in assistance programs that are supported by customers who pay their bills. Those programs have grown by more than 50 percent to $330 million, or about $45 a year per residential gas or electric customer.

The law was enacted with the support of gas and electric utilities, and has been criticized by consumer advocates because of what they said was the potential to harm low-income utility customers. Consumer advocates criticized the law because it passed in a lame-duck legislative session without public hearings.

The law required the utility commission to issue the report, the second of five, on its effectiveness.

The utility commission made no recommendations on how to change the law, but did encourage the Legislature to put more state taxpayer dollars into programs that help low-income households pay utility bills.

"Financial support is necessary because the declining economy is creating a 'new poor' as diminishing purchasing power for consumers combines with higher utility costs," the report said.

It warned that thousands more customers will find their utility bills unaffordable in the next two years upon the expiration of decade-old, state-imposed electricity rate caps that have shielded more than 80 percent of the state's customers from being billed for the true price of the power they use.

Columbia Gas bills to increase $8 month

GM Cuts Costs to the Bone

Price of natural gas dips

Wind: The Power. The Promise. The Business

Jobless rate drains state's benefits pot

HARRISBURG -- Pennsylvania is among 30 states that risk running out of money to pay unemployment benefits, according to an organization of state administrators who oversee unemployment insurance laws.

"The economic climate is a really painful one," Ingrid Evans, a spokeswoman for the National Association of State Workforce Agencies, said Monday.

Chuck Ardo, a spokesman for Gov. Ed Rendell, said the Unemployment Compensation Fund won't be threatened before spring.

There will be enough left in the trust fund "for several months' worth of benefits" by the end of December, said Barry Ciccocioppo, another Rendell aide.

Pennsylvania this year has paid out more than $2.8 billion in unemployment benefits, up from $2 billion last year, an increase of 42 percent, according to the state Department of Labor and Industry.

Barney Oursler, co-coordinator of the Homestead-based Mon Valley Unemployed Committee, said the trust fund drying up would exacerbate the effects of the recession.

"If the unemployment checks run out, then it's even a much bigger disaster," Oursler said.

When that happens, the Legislature usually steps in and tries to find new sources to replenish the fund.

"Then they struggle over whether to put it on the backs of companies or on regular people," Oursler said.

Options for replenishing the trust fund include raising the amount employers and employees pay into it, slashing the benefits and borrowing money, Ciccocioppo said.

When the fund ran low in 2004 and 2005, officials borrowed money from other state funds, Ciccocioppo said.

Indiana and Michigan are borrowing money from the federal government to keep paying benefits to their residents who have applied for unemployment assistance, Evans said.

Pennsylvania's unemployment rate jumped 1.4 percentage points this year to 5.8 percent, which is still below the national rate of 6.7 percent.

Unemployment compensation claims have increased about 12 percent in the past year, state Labor and Industry figures show.

The most recent peak for Pennsylvania's trust fund was $1.8 billion. It will be about $1 billion by the end of December, according to the governor's office.

Pennsylvanians may collect up to 26 weeks of unemployment benefits and apply for 13 weeks of extended benefits from the federal government.

Sovereign Wealth Funds Taste Bitter Losses

Unemployment: How to Slow the Bleeding

State hiring workers to help the jobless

Collapsed Ponzi scheme hits high and low

In a Connecticut town, officials scrambled to get a handle on damage to pension funds held for its police officers and firefighters. A Massachusetts charity announced it was shutting down. In New York, a distinguished economist feared he had lost his $2.2 million nest egg.

Damage continued to ripple Monday from the widespread fraud allegedly engineered by storied Wall Street money manager Bernard Madoff, even as investigators worked to unravel the scheme's working and its reach.

While details remained sketchy, the sudden collapse of Madoff's firm began revealing an impact far beyond the world of the ultra-wealthy and well-connected who were the mainstay of his client base. And the firm's extensive dealings with charitable foundations and other groups suggests the fraud may take a toll in unexpected places.

"It's devastating to people and communities and lives," said Deborah Coltin, executive director of the Robert I. Lappin Charitable Foundation, a Salem, Mass., organization that sponsors Jewish educational program and is being forced to close its doors.

The 70-year-old Madoff, well respected in the investment community after serving as chairman of the Nasdaq Stock Market, was arrested Thursday in what prosecutors say was a $50 billion scheme to defraud investors. Some investors claim they've been wiped out, and it is thought many more are yet to come forward.

Late yesterday, a federal judge directed that proceedings to liquidate the assets of Bernard L. Madoff Investment Securities LLC be moved to bankruptcy court.

The biggest victims include international banking institutions HSBC Holdings PLC of Britain, Royal Bank of Scotland Group PLC and Man Group PLC, Spain's Grupo Santander SA, France's BNP Paribas and Japan's Nomura Holdings. All reported that they had fallen victim to Madoff's alleged Ponzi, or pyramid, scheme.

The victims who sunk cash into the veteran money manager's investment pool include real estate magnate Mortimer Zuckerman, and a charity of movie director Steven Spielberg. Irwin Kellner, a well-known economist for MarketWatch.com, filed a lawsuit Friday against Madoff in U.S. District Court in Long Island, seeking repayment of more than $2.2 million he invested with the money manager.

But the list of people and organizations allegedly taken by Madoff reached into the ranks of the little guy, too.

When officials in Fairfield, Conn., heard of Madoff's arrest, "it set off every bell," said Paul Hiller, the town's chief fiscal officer.

The town's employees board and police and fire board -- which cover 971 workers -- had $41.9 million invested with Madoff, said Paul Hiller, Fairfield's chief fiscal officer.

Town officials immediately notified their investment fund to liquidate. "At that point, it was too late," he said.

"We obviously didn't ask enough questions," Hiller said.

Without the Madoff funds, the town's pension funds remain safe, officials said, but the loss means they've lost their cushion.

Others, though, have no such comfort zone.

Officials at the New York-based JEHT Foundation, a nonprofit focused on juvenile justice and fair elections, said it was freezing all its grants and would shut down at the end of January. The group gets all its fundings from a couple, Jeanne and Kenneth Levy-Church, whose personal investments were managed by Madoff.

"The impact is really quite deep because we're talking about $25 (million) to $30 million in funding to organizations that are no longer going to be getting that money," Robert Crane, the president of the foundation, said. "So it's a very significant ripple effect."

Another New York nonprofit, the Philoctetes Center for the Multidisciplinary Study of the Imagination, may be forced to close, spokesman Adam Ludwig said.

In Palm Beach., Fla. -- a denizen of the very wealthy where Madoff found many investors -- news of his arrest continued to reverberate.

"Ever since Thursday, I've been getting these phone calls. Levi, I need your help," said jeweler Levi Touger, who had just returned to his office after seeing a yacht one customer wanted to use as collateral for a loan.

He said people seeking money were offering a variety of collateral, from four-carat diamonds to a Lamborghini.

"There are people who have been hurt by this and they need a quick fix and they need right now to send to their broker X amount of money," Touger said.

New Jersey Sen. Frank Lautenberg, one of the wealthiest members of the Senate, entrusted his family's charitable foundation to Madoff. Lautenberg's attorney, Michael Griffinger, said they weren't yet sure the extent of the foundation's losses, but that the bulk of its investments had been handled by Madoff.

Reports from Florida to Minnesota included profiles of ordinary investors who gave Madoff their money. Some had been friends with him for decades, others were able to invest because they were a friend of a friend. They told stories of losing everything from $40,000 to an entire nest egg worth well over $1 million.

They join a list of more powerful investors that have come forward, all worried about the extent of their losses. The roster of names include Steven Spielberg's charity the Wunderkinder Foundation, New York's Yeshiva University, former Philadelphia Eagles owner Norman Braman, New York Mets owner Fred Wilpon and J. Ezra Merkin, the chairman of GMAC Financial Services, among others.

Among those overseas confirming exposure yesterday, Banco Santander, the largest bank in the euro zone by market capitalization, said its clients have $3.07 billion invested with Madoff, mostly through a fund called Optimal Strategic US Equity.

HSBC, Britain's largest bank, said a "small number" of its institutional clients had a total of about $1 billion in Madoff funds.

Sovereign Wealth Funds Taste Bitter Losses

LeNature’s plundered for $500 million: lawsuit

BNY Mellon might have to absorb $313M in new costs

Libya terror settlement check deposits refused

CNX Gas well hits production record

CNX Gas Corp. said this morning its first horizontal well in the Marcellus Shale region is producing 6.5 million cubic feet of natural gas per day -- a record for any well in the company's history.

The well in Greene County began flowing into the sales meter on Oct. 2, producing 1.2 million cubic feet a day and 4,000 pounds of backpressure.

Since then, backpressure on the well gradually was reduced, allowing the flow to increase to 4 million cubic feet.

On Friday, new surface equipment was installed that enabled the well to reach record production.

CNX is mostly owned by Cecil, Washington County-based Consol Energy Inc. The company is drilling its second vertical Marcellus well, and soon will hydraulically fracture its second and third horizontal gas wells, to allow gas to excape from the shale.

CNX also said this morning it is raising its 2008 production guidance by 1 billion cubic feet, to a total 75 billion cubic feet.

Gas, Gas Everywhere

Palin No Pushover on Pipeline Project

Exxon’s Production Falls as Profits Soar

Plant to process natural gas

Benefits touted for 3 projects

The city is eyeing state support for three projects designed to improve public access to developing areas of the North Side, East End and Squirrel Hill.

At a meeting Tuesday, the Urban Redevelopment Authority's board will consider applications to PennDOT for $2.4 million, including $1 million to help build a key pedestrian bridge connecting East Liberty and Shadyside in the vicinity of the Whole Foods store that anchors the burgeoning EastSide commercial project

An additional $1.1 million would go for improvement to two North Side underpasses at Sandusky and Anderson streets.

Officials plan to seek $300,000 more to study transportation connections at the Summerset at Frick Park residential development, which spans the neighborhoods of Squirrel Hill and Swisshelm Park.

The 87-foot Eastside Pedestrian Bridge would span the East Busway to give shoppers quick access from Ellsworth Avenue in Shadyside to Eastside -- a $29 million Mosites Co. project that has attracted Starbucks, Borders and Eva Szabo Spa as well as Whole Foods to once-downtrodden East Liberty.

More recently, officials have disclosed plans for a new Target store to be built in the neighborhood.

Costs for the bridge are estimated at $2 million, including $1 million already allocated from the state's Hometown Streets program.

Improvements to North Shore underpasses will "enhance local networks connecting the North Side to Downtown and the entertainment complexes on the North Shore," the URA said.

The $3 million project would include improvements to the two railroad bridges abutments and concrete fascias, installation of sidewalks, curb, and roadway lighting, sidewalk canopies, landscaping, wall demolition and backfill.

The state planning grant for the Summerset at Frick Park development would be used to study transportation connections between the first two phases of the residential community and the planned third phase. Phase one is complete and phase two is under way.

A Big Delivery for Whole Foods

East Liberty Target due in 2010

Focus Stock: Tough Times Favor Family Dollar Stores

Falling gasoline prices hurt small stations

With gas prices tumbling to levels last seen in 2004, Scott Royer has grown accustomed to seeing drive-offs by customers once loyal to his family-owned service station in central Pennsylvania -- but not the kind that make him call the police.

In recent months customers pull in but see a lower price posted at a big station across the street and pull right back out.

Small independent service station owners say they can't keep pace with plunging gas prices. By the time they empty a storage tank of gas, prices have fallen so far that the amount they must charge to recoup the purchase price appears exorbitant compared with high-volume chains, they say.

"We can't fluctuate as much," said Royer, whose father started Royer's Gulf Service Station in Carlisle in the 1960s. "Sometimes I have to just drop (the price) and take the loss."

It can take Royer three weeks to sell his 8,500-gallon shipments. When gas prices fall below the wholesale price he paid, he either has to eat the difference or stay with his higher price and risk losing customers.

In just the past month, the national average retail price for a gallon of gasoline has fallen more than 55 cents.

"If the price is falling, it really hurts," said Louis Ferrara, who sells about 60,000 gallons a month at his Sunoco in South Philadelphia, compared with average station sales of 75,000 to 100,000 gallons a month.

Gas station chains and large-volume sellers like Costco can lower their gas prices and absorb losses more easily than smaller stations because they buy so much gas and have other business to fall back on, said Ralph Bombardiere, executive director of New York State Association of Service Stations and Repair Shops Inc.

Prices in the Pittsburgh market are ranging from about $1.69 to about $1.85 a gallon, said Donald Bowers, who manages petroleum products for Superior Petroleum Co. in Ross.

"The guys who are at $1.85 aren't selling very much gas. They are still trying to get rid of it at better margin or no profit at all," he said.

Bowers' company distributes gasoline to about two dozen independent stations in Western Pennsylvania, including BP, Citgo, Sunoco and Valero, which entered the market last year.

Pittsburgh area fuel prices tend to be 20 to 40 cents higher than in Ohio, "and that in turn, doesn't help these smaller dealers," he said

Ray Moore, owner of Ray Moore's R&S Service, a Gulf station in Swissvale, said he's making money thanks to declining gas prices.

"I am supplied by a distributor, and every day my price is set. So when I get a load of gasoline coming in, I know the first thing in the morning what the price will be," Moore said. "And in a down market, I can make money because my market will change faster than, say, most of your Sunoco dealers who are on a contract and their prices may change every four or five days."

Moore said he bought gasoline for about $1.55 a gallon and is selling it for about $1.79 per gallon, "so I'm working on 14.5-cent profit," he said.

"That's the worst margin I've had in the last two months. There have been days where I've been leading the way down on my prices and consequently stealing business from other stations that when there is an up market can take business off of me."

"As my prices go up real fast, theirs don't, so they can hold a lower price longer than I can. So I'm making up for the days when I was selling gas at 2- or 3-cent profit margin when the prices were heading up."

"For the last two months as prices have been heading down, I've been making money," Moore said.

Over the past 15 years, the total number of gas stations across the country has fallen amid stricter environmental regulations, according to Carl Boyett, president of the Society of Independent Gasoline Marketers of America. Credit card fees have made business tougher for small station owners.

In 1994, the United States had 202,878 gas stations, a number that dropped to 161,768 in 2008, said Boyett, who is CEO of Boyett Petroleum, a gasoline distributor in California.

Cheaper Gas Prices, but Less Demand

In Praise of Oil Speculation

$1 gallon of gas possible soon, Gulf chief says

India: Soaked by Oil Subsidies

Exec steps up with gift for United Way

Kim Tillotson Fleming is a businesswoman who leads with her feet.

Fleming, president of the investment firm of Hefren-Tillotson, Inc., walked 16 miles Sunday from the company's Wexford branch to its office Downtown to raise money for United Way of Allegheny County.

"Do you have any champagne?" quipped Fleming, dressed in a long-sleeved United Way T-shirt, workout pants and hiking boots. "Whatever's best for sore muscles."

She arrived at 12:50 p.m., cheered by about a dozen employees, and promptly performed a Rocky Balboa dance. She later handed an oversized check of $180,400 to Robert Nelkin, president of the local United Way. Last year, the company gave about $142,000.

"This is a tough time, and people are struggling, and what you've done is show people in these tough times you can step up," Nelkin said upon accepting the check.

Fleming promised to do the charity walk if her company added 50 donors to the United Way campaign from among 140 employees. Her challenge resulted in 62 new donors, including a five leadership donors who contribute at least $1,000 a year. That raised the number of leadership donors at the company to 22.

Rachel Hawili, retirement plan coordinator, helped recruit the new donors. She said most signed up as a sort of present to Fleming, who celebrated her 50th birthday three weeks ago, rather than to make her make good on her promise.

"If anything," Hawili said, "people felt bad about making her walk."

Fleming completed the 16 miles in less than five hours. She said she didn't do anything special to prepare for the walk but normally works out at least an hour a day playing squash, lifting weights and exercising on a stationary bike or a treadmill.

"It was really a perfect day for doing a walk like this," she said. "If anything, it was almost too warm at times."

Fleming had a close call when a car failed to stop at a stop sign near Community College of Allegheny County's North Campus.

"It almost hit me," she said.

Her husband, Curt, and her 16-year-old son, Todd, joined her for the last six miles through the North Side.

Nelkin said Hefren-Tillotson is not the only company that uses a gimmick to encourage donations. The campaign leader at Highmark, for instance, shaved of a goatee he had sported for 30 years to get employees to contribute.

Nelkin said reaching the campaign goal of $32 million is especially important during the economic downturn.

"Obviously, we're very concerned about the effect of the economy on donations," Nelkin said.

As of Friday, he said, 85 percent of the people who contributed last year were increasing their donation or keeping it at the same level as last year.

The campaign ends April 30.

Fleming said her walk through the area emphasized the importance of the United Way's work.

"I thought of the community and the needs," she said. "When you walk through different neighborhoods, I felt so appreciative of what I have."

Universal Stainless employees threaten to walk off job

Holiday shoppers lean toward gift cards

Economic tension breeds unintentional biases

1 in 14 in on the family leave act

Revisions to the Family and Medical Leave Act that go into effect Jan. 16 resolve some confusion over procedures that allow time off from work, but advocates for employers and employees say the changes fail to address other important issues.

The law affects 95 million workers, allowing job-protected time off to deal with serious health conditions, to care for a newborn or soldiers injured in the line of duty. About 7 million workers a year, or one in 14 eligible workers, use some portion of the law, government figures show.

The Department of Labor said revisions clarify reporting procedures, limit who can access an employee's health records and set time requirements for when workers must see a doctor to certify their reason for taking leave. Those revisions are based on 15 years of experience with the act, as well as several Supreme Court and lower court rulings.

"The new regulations provide clarification and guidance in a few areas, such as 'serious health condition' that is helpful," said John Henry, vice president of human resources at the University of Pittsburgh Medical Center, where 3,700 employees took leave under the law in the past year. UPMC has 50,000 employees globally. "Although the new regulations require some modifications, we think they are manageable."

The Pennsylvania Manufacturer's Association, which represents the state's largest manufacturers, believes the "reforms look to be a perfectly reasonable clarification in the law to make it work for employers and employees like the way it was intended to do," spokesman David Taylor said.

But other spokesmen for employers say the revisions failed to resolve some important issues, such as concerns that intermittent leave -- an employee taking their 12 weeks of unpaid leave in increments of a few hours or a day at a time -- could be open to abuse. The Labor Department said that about 1.7 million workers, or about 24 percent who took the leave in 2005, took their leave in intermittent periods.

"Intermittent leave disrupts a workplace. It can be a blanket excuse to call-in and say they are not coming in," said George Basara, an attorney representing management in employment and labor law at the Downtown firm of Buchanan Ingersoll & Rooney P.C. "It's easily abused and hard for an employer to work around."

The Port Authority Transit of Allegheny County, which recently reached a contract with the Amalgamated Transit Union Local 85, said in a statement that "the revised regulations do not go far enough to assist employers with those who abuse intermittent leave." The Port Authority was among those who submitted 20,000 comments to the Labor Department about the proposed revisions.

Intermittent leave proved to be a blessing for Nettie Sullenberger of Latrobe, a home health nurse whose husband, Charles, underwent heart transplant surgery in December 2007. By using intermittent leave in her part-time job with UPMC/Jefferson Regional Health, she was able to retain her health care insurance, while taking time off to help her husband in his first three months after the surgery.

"My husband had a long road to recovery. I was able to go to work and keep my mind occupied ... and not worry about losing medical benefits," Sullenberger said.

The provisions of the Family and Medical Leave Act are critical to women because they are not forced "to choose between their family and a job, which is so important in this economy," said Mary Ann Eisenreich, executive director of Pennsylvania Women Work, a Downtown-based nonprofit.

Sharon McNemar of North Apollo found the medical leave act gave her the chance to take six weeks off work this past summer to care for her mother, Margaret Ross, after her father, James Ross, had surgery.

"I took time off to help my father, who is my mother's primary caregiver. The only alternative was a nursing home" for her mother, said McNemar, a rehabilitation team assistant for UPMC/Jefferson Regional Home Health in Seven Fields.

"It worked out really well. I don't get to spend that much time with them," she said of her parents, both 79, who live in Spring Church, Armstrong County.

Some supporters of the medical leave act were disappointed with some of the revisions and some issues the Labor Department failed to address.

Among issues that upset supporters were requirements that workers now must follow a company's normal call-in procedure for missing work, unless there are unusual circumstances. Before the revisions, workers could miss up to two work days before notifying their boss they were taking unpaid leave.

"It's generally detrimental to nonmilitary workers, and it restricts eligibility standards for medical leave and creates a variety of additional hurdles for employees with health issues," said Bruce Fox, a Downtown attorney who represents people in discrimination cases for Obermayer Rebmann Maxwell & Hippel LLP.

Provisions that permit employers to require a "fitness for duty certification" from a physician, or workers being forced to see a doctor to say they can do a job, could lead to "a whole bunch of litigation," because of differing medical opinions on a patient's health, said Bill George, president of the Pennsylvania AFL-CIO, which represents 900,000 Pennsylvania union members in 1,400 local unions.

By permitting an employer access to medical records of a worker or their family member to certify their medical reason for taking a leave, their privacy could be jeopardized, said Sharyn Tejani, senior policy counsel for the National Partnership for Women and Families, a Washington-based group that worked for passage of the law during the Clinton administration in 1993. Companies could gain access to sensitive medical information that workers would rather not share, she noted.

The Labor Department also missed a chance, Tejani said, to expand coverage to millions of workers by requiring more employers to abide by the law. Companies with more than 50 employees must abide by its regulations. "The FMLA requirements should be lowered to 15 employees like the Civil Rights law. It should mirror that," Tejani said.

Labor and management groups agree that the new regulations will help families of military soldiers injured in the line of duty. The new rules increase from 12 weeks to 26 weeks the amount of time a worker can take off to care for a family member who was seriously wounded or suffered a serious illness.

Family members of reservists on active duty can take the unpaid leave to take care of personal matters for those serving in the military, but it fails to define what kind of "exigencies" -- situations demanding immediate attention -- are covered by the job-protected leave, Korbell said.

The revisions

The Department of Labor revised the Family and Medical Leave Act, which permits workers in companies with more than 50 employees to take up to 12 weeks of job-protected leave a year for treatment of a serious health condition or to care for a child or seriously ill spouse or parent. Employees must have worked 1,250 hours in the past year to take the unpaid leave. The revisions:

• Expand from 12 weeks to 26 weeks the length of leave for military families to care for a service member with serious illness or injury while on duty.

• Allow family members of National Guard or Reserve personnel on active duty, to take FMLA leave to handle soldier's affairs, such as child care, financial matters, recuperation and post-deployment activities.

• Require workers to follow their company's normal call-in procedure for taking time off instead of allowing workers two days off before notifying employer of the leave.

• Bar a worker's direct supervisor from contacting an employee's physician to get medical information and limit managers who are permitted to contact that physician.

• Require employees who take more than three consecutive days of leave to have two visits to a doctor within 30 days of being ill or injured.

• Ensure that time spent on "light duty" work does not count against FMLA leave entitlement.

• Increase obligations of employers so workers will better understand their FMLA rights.

Sources: Department of Labor, Employment Standards Administration

Amid economic downturn, bright spots for jobs

Health-Care Reform, Corporate-Style