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Prison Proves To Be Small Deterrent for Boroian
FranCorp's Chairman Don Boroian Takes Care of Business from Prison Cell
DULUTH, Minn (Blue MauMau) - When Donald Boroian, a legendary franchise business consultant of 30-plus years, surrendered to the Duluth Federal Prison Camp in Minnesota on July 27, 2006, many felt it would be the demise of Francorp, Inc., his world-renowned Chicago-based company. After pleading guilty to tax evasion, a judge on May 16 sentenced him to twelve months and one day in federal prison and two years of supervised release. Boroian’s guilty plea was for failing to report $388,752 in income from his company in 1998 and for failing to report $108,850 in taxes. He also admitted he did not pay an additional $875,337 during a four-year period.
According to a spokesperson at Duluth‘s federal prison, Boroian’s projected release date is now June 9, 2007, although he did not know why. When asked if inmates are allowed to conduct business from prison cells he said they were not, that they must assign authority to someone else within their company. Only if it is necessary for someone to make a decision that will substantially affect the assets or prospects of the business, will they be allowed a special visit. But some sources have reported that regular conference calls are being conducted with Boroian pertaining to current business matters while he is behind bars.
And, Boroian’s “sabbatical” (a term used by staff to explain his absence) doesn’t seem to have slowed down his franchise operation. For the past seven months Francorp has been named in a variety of media press releases as the number-one franchise development consulting firm, engaged to jump-start franchise programs for well-established and fledgling companies. Although Boroian lost several members of his executive team, including his long-time chief operating officer, when the latest IRS probe came to a close, a new group seemed to be taking over in helping to run the company. Francorp projects a huge presence all over the world by touting 12 offices in nine countries, and it attempts to prove it by publicizing a long list of distinguished franchise companies as clients.
One press release this week gives a testimonial from the first franchisees of Palm Tree Computer Systems in Florida, saying they were proud to be part of the new franchise in duplicating the company’s mission in providing high quality computer services. Palm Tree’s founder vowed, “We will accomplish our mission using the honesty and integrity that can only come from following the will of God.”
Other press releases listed under the Francorp name are Jo To Go Coffee, Interior Design by Decorating Den, Deck Rescue, Happy Tails Dog Spa, Hot Stocks, Aging-In-Place and Luggage Express Associates Program. Francorp’s website also advertises that it will be conducting 20 seminars this year in various states, helping companies to get their franchise programs on the fast track.
Boroian on IRS’s “What Not to Do” list
In the IRS’s “FY2006 Examples of Corporate Fraud Investigations,” it names Donald Boroian, president of Francorp, Inc., as one such case, giving the details of his guilty plea and sentencing. But that is not the extent of his financial woes. The Cook County Recorder of Deeds in Illinois also names Francorp Inc. with a long list of tax liens, state and federal, on monies owed to the IRS, Illinois Department of Revenue, and the Illinois Department of Employment Security. One lien was issued last year in the amount of $706,126, in an attempt to recoup an accumulation of quarterly employee taxes. A Chicago newspaper reported that after the criminal case was over, the IRS would send it to the civil division and an audit would be conducted. But one tax attorney who formerly worked for the IRS said it may take as much as two or three years for the civil case to be adjudicated.
What happened to the money? FransCorp.
What does this tell you? One of the biggest Advisory Groups, Francorp, Inc. is still doing great because, apparently, no prospects are doing "due diligence" on Francorp, Inc.
Thanks, JS Parks, for this very interesting and informative article.
The first testimonial by the first franchisee of the Palm Tree Computer Systems concerning the "Will of God" is interesting. When God gets interested in franchising, I hope he spends some time up there with the regulators at the FTC.
IRS Cites FranCorp's Boroian As Tax Fraud Example
Here's what the IRS says about Boroian in its list of what not to do. Janet has already provided the link. I'm posting the text here in case the IRS web page changes in the future. Blue MauMau will still have record of it.
FranCorps Chairman, Convicted Felon
So Francorp, the maker of franchise chains, was founded and lead by someone who is now in jail, Don Boroian. Notice the wonderful bio that FranCorp has about their Chairman, CEO and founder...
There is nothing about him being an accused crook sitting in jail for tax fraud. NOTHING.
Here are a few companies that FranCorp lists as clients.
It makes no sense. FranCorp's clients associate freely as if they do not fear negative association from potential franchise chains or even franchise buyers. Does no one cover the news to give these guys heat?
Do franchisers not care if their company is consulted to by a convicted felon?
Confused Charley
Hiding Prison Terms From Clients
Below is the current bio of FranCorp's Chairman and CEO, which is posted on their site as of today. There is no mention of their chairman's prison time. NOTHING. According to this article, Francorp's staff has found a way to hide the issue by simply stating to customers and visitors that their founder, chairman and CEO is on sabbatical (enjoying prison life in Duluth, MN).
So what do you think? Is FranCorp, annointer of franchise chains, being honest with its customers?
--
Our FounderDonald D. Boroian
Chairman
Chief Executive Officer
A published author, noted speaker and expert legal witness, Donald D. Boroian is one of the world's most sought-after consultants in the field of franchise strategy and business expansion. A dynamic speaker, his exciting and informative franchising seminars are known throughout the world and he is sought after for panels, symposia and media interviews. You may have seen one of his numerous appearances on radio and television.
As an arbitrator and mediator for the American Arbitration Association, he is in great demand as an expert witness in franchise litigation. An accomplished writer, he has co-authored two of the leading books on franchising: The Franchise Advantage; and How to Buy and Manage A Franchise.
Mr. Boroian is a member of the American Bar Association's Forum Committee on Franchising. He served as co-chairman of the Fair Franchising Standards Committee of the American Association of Franchisees and Dealers.
More than 40 years ago Mr. Boroian began his career in corporate management, holding various positions, including executive vice president with one of America's largest, publicly-held, fast food franchisors with over 300 restaurants.
In 1976 Mr. Boroian turned to franchise consulting and founded Francorp – a company which specializes in expansion programs ranging from franchising to licensing, dealerships, distributorships, and direct sales programs. Francorp was the first and continues to be the only firm to offer clients "one-stop" shopping by providing coordinated strategic planning, legal, operations, and marketing services under one roof.
Since 1976 Francorp has provided full franchise development programs for over 2,000 businesses, including ARCO AM/PM Mini Markets, Hershey Foods, Ryder Trucks, Popeye's Fried Chicken, Discovery Zone, Nutrasweet, Nestle, John Deere, Texico, and Valvoline.
With 12 offices in nine countries, Francorp is the largest company in the field, employing over 100 consultants and employees.
Mr. Boroian is a graduate of DePaul University, where he received the highest honor bestowed by the Alumni Association – the Distinguished Alumni Award. He continued his post-graduate studies at DePaul University and the University of Chicago in the Executive M.B.A. program.
Mr. Boroian is a current member of the Advisory Board of DePaul University and a past member of the Board of Trustees of Rush-Presbyterian-St Luke’s Medical Center, Board of Trustees of Riverside Hospital and served as Vice-Chairman of the Rush Alzheimer’s Center.
Boroian Release Date
Mr. Boroian is actually set to be released the first week of April 2007. He will get out early for "good behavior". He will then be at a half-way house followed by home confinement. However, he will be able to be back in the business almost immediately upon his release.
Bororian issue not always relevant
Charley, you are one of the "ER" people , and therefore by definition, confused ;)
On Bororian, his conviction was for failing to report all of his income. While that is a federal crime and I don't condone or excuse that, it is not necessarily related to his franchise industry work.
And remember that way back when people wouldn't give Susan Kezios at the AFA the time of day, it was Bororian who supported the right of franchisee associations to have a seat at the table.
Thanks for Bio on Boroian
He has an impressive bio ----What happened to the money? Why didn't he pay his taxes? We all put in our hours for Uncle Sam and most of us pay our taxes --even those of us who don't have an impressive bio behind us that would normally protect one from investigation.
There must be more to this story that meets the eye!
It is certainly dishonest of FranCorp to hide the prison sentence from clients. How can they justify this? Is Tax evasion now like "perjury" for "sex-related romatic matters" and we apply different judgments to different crimes that are committed by otherwise respectable and respected citizens. That is, Mr. Borian's crime was against the government and not against his clients or the people, or what? But, if Americans become like the French and don't pay their taxes somewhat honestly without police oversight, what will become of us?
Wealthy corporate persons who avoid paying their income taxes by making false statements to the IRS and who spend a little time in Federal Prisons should continue to head their corporations and enjoy all the respect of the business community? I'm with Charlie!
Maybe, he will get out in time to get an award from one of the Franchise Associations!
Will he pay his taxes on time?
Mr. Boroian will be released right at tax time in celebration of his good behavior.
Does the jail time result in negotiation for reduced payment of taxes owed to the governmen? And, can his corporation survive his breech of trust?
Don Bororian and the AAFD
In the same vein, Don Bororian was also one of the prime movers behind the AAFD.
Michael Webster PhD LLB
Misleading Advertising Law
April 15th
Mr. Boroian's release date coinciding with tax time is deliciously ironic.
When Push Comes to Shove
What makes a man like Boroian cheat on his taxes? How could he have achieved so much in life without character and values? Did he just pretend to have character and values throughout his life or did he abandom character and values because he NEEDED the money or because he WANTED the money to support his life style.
The story behind the story is not available and we sit in judgment not knowing all of the facts.
Judging CEOs Serving Prison Sentences
There are probably interesting stories behind the scenes of imprisioned CEOs - people like Enron's Jeff Skilling, Worldcom's Bernard Ebbers, Computer Associate's Kumar and FranCorp's Donald Boroian. Most of us just chaulk it up to greed and power. The difference is that it looks like Boroian continues to participate in his business from his cell in violation of prison terms. Meanwhile, FranCorp continues to hide his conviction to their customers. There's a basic behavior that hasn't changed at all - even in jail. It might be interesting to know how Mr. Boroian justifies such behavior but we already know enough to sit in judgment about dealing with the man and his firm.
if you only knew the story
if you only knew the story behind the story. if you only knew.
Who is affected ?
Skilling, Ebbers, and Kumar all did things which harmed the owners of the company (shareholders); in other words, they stole money from their employer.
As to the other post on perjury and sex, which I take referred to Clinton: The lesson of Martha Stewart and Scooter Libby is: don't lie to the government. And in the case of Clinton, he was an attorney admitted to practice in the state of Arkansas who lied in a court proceeding while under oath. The Arkansas bar regulators took action not because of his private behavior, but because Clinton's action subverted the legal process, and Clinton was an officer of the court.
NONE of the foregoing is applicable in the Bororian case. To the extent that we are on a franchise discussion board, what is relevant is that Bororian gets his money from franchisors but nevertheless Bororian has a lengthy history of supporting the rights of franchisees and supporting balance in franchise regulation.
Enlighten us O wise one
If you have nothing of substance to say, and you have not proven otherwise, why make that known? "If you only knew the story behind the story. If you only knew." Your comment reeks of self-induced grandiosity and the likely accompanying pomp and circumstance that is associated with same.
If you have something to say, then do so. Otherwise, why imply that you do?
JEFF SKILLING
Skilling used to hang out in Muldoons. It was his favorite joint in Houston. That got us into the book and into the magazine stories about Enron. That drove a lot of traffic to our saloon. That made its resale very lucrative - it was really an auction.
We were so stupid that we didn't connect that the President of a Fortune 500 company wouldn't be hanging out in Muldoons during office hours (or at any other time for that matter) if something were not amiss - and that we should have put in short sell orders on Enron. We could have been fantastically wealthy now. DAMN!!
We were actually afraid of someone shooting up the place, because he continued to hang out in there with his pals even after the indictments and the collapse of the company.
For the full story, see
http://www.seamusmuldoon.com/murder_at_muldoons.htm
Richard Solomon
www.FranchiseRemedies.com
"Skilling, Ebbers, Kumar & Boroian
"Skilling, Ebbers, and Kumar all did things which harmed the owners of the company (shareholders); in other words, they stole money from their employer." - Steinberg
Skilling, Ebbers and Kumar didn't walk into a company vault to steal money. They stole from the company by deceiving shareholders. Although he is the major shareholder, Boroian likewise deceived his stakeholders. Money was stolen not just from the government but also from FranCorp, in foregone opportunities. You can be certain that he had a fiscal responsibility to tell the board that he hadn't paid his personal taxes for years. There is also a question of integrity for FranCorp in covering up where their boss is. Saying he is on sabbatical (at the Duluth Federal Prison) just does not cut it.
You are right, Paul, but----the public is affected!
Isn't it dangerous for FranCorp to withhold the information of the felony conviction for tax evasion in the bio that is furnished to prospective clients.
Couldn't this cause problems for the Corporation in a legal sense if one of the franchisees later had trouble with their franchisor?
I understand the Clinton picture and I faulted him only because he was an officer of the court and, as such, he knows how important it is to the law that "purjury" not be tolerated by the courts and the legal system. Martha, Bill, Scooter, Boroian, and many others are examples of what can happen when you lie to the government.
I understand the govdrnment's point of view and I understand that "jail time" makes the point and acts as a deterrent to others. It may be that Libby will do some jail time to deter some of the lies that are told by attorneys who work for high -level gpvernment officials. I don't think Libby is a bad person or a bad attorney and he was just trying to take care of his boss but he got caught in a lie, that he didn't even consider to be a lie. The whole episode is somewhat typical of "inside the beltway" politics and antics and the bitterness between the parties. I asmire the prosecutor and understand that he stands outside of politics and protects the rule of law for the people.
Prosecutions for purjury will become even more important to uphold the rule of law and the respect for the law in the future. In a secular society where witnesses in the future may be able to swear the truth on their favorite comic book, the truth is going to be harder to discover.
Research indicates that we Americans are becoming more dishonest every day, and that includes the Corporations!
If Bororian is a successful business man who has done a lot of good for franchising to include the franchisees, I am sure he will be welcomed back with open arms by his corporation and by the franchisors and the franchisees who are doing business with him.
But, shouldn't this bio that solicits new business reveal this flaw in his charactor to new prospects and his current customers? When you "steal" from the government, aren't you stealing from the people?
Thanks, Paul, for all your comments and for educating me. I know I have a naive and idealistic view of the law and always appreciate your fair and insightful comments.
Richard, do you know...
Richard,
Do you know MEAN GENE KELTON? If so is he still singing the blues around H-Town?
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
The real issue
It seems to me there are a number of issues here. You have already addressed some of the ethical issues, both on the part of Boroian and his staff. But it seems to me there is another significant issue that is being overlooked.
If you look at the links above, you will see that FranCorp has leins for UNPAID PAYROLL tax for almost a million dollars as well. That is in addition to Boroian's personal tax issues.
At some point, can't the IRS just come in and shut them down? And if they cannot pay their payroll tax, how good is their financial shape? And do their client's have a right to know that the company has this sword hanging over its head? It seems to me that their clients are the ones who could be left holding the bag.
"Scooter" Commuted! (partially)
President Bush commuted the sentence of former White House aide I. Lewis "Scooter" Libby on Monday, sparing him from a 2 1/2-year prison term that Bush said was excessive.
Bush's move came hours after a federal appeals panel ruled Libby could not delay his prison term in the CIA leak case. That meant Libby was likely to have to report to prison soon and put new pressure on the president, who had been sidestepping calls by Libby's allies to pardon the former chief of staff to Vice President Dick Cheney.
"I respect the jury's verdict," Bush said in a statement. "But I have concluded that the prison sentence given to Mr. Libby is excessive. Therefore, I am commuting the portion of Mr. Libby's sentence that required him to spend thirty months in prison."
Read More
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
NOPE
Sorry - never met the guy - to my knowledge. Who dat anyhow?
Richard Solomon
www.FranchiseRemedies.com
Re: The real issue
Don't worry, if the IRS comes for the company, someone will purchase the 'assets' (thereby Boroian will be able to settle his debt with the IRS, maybe at an inflated price), set up a new company under a new name with the same logos and 'disassociate' themselves from Boroian. Then they will be able to bring in new clients and they will never know any better. Hire attornies and a national PR firm to handle the mess once people have figured it out on the internet.
This isn't any different that Cuppy's other than it's the franchisor that is the one to lose money/time they've invested with Francorp.
I used to work at Francorp
You want stories, I have many! Paychecks bouncing for years, banks and currency exchanges not accepting the checks...we'd drive to out-of-the way banks and get cash and THEN THEY'D TAKE DOWN OUR NAMES when we got back to the office! They made people dress certain ways (even going so far as to go through their closets and take them shopping!), lie about their education in the brochures...look through clients briefcases... and lie, lie, lie. There are so many stories. We still get together and talk about them!
Okay with Pres. Bush commuting sentence
That's okay with me and I think the American people knew Scooter would just be doing the time for the VP.
The President is already a "lame duck" and some say from standpoint of power an influence, he is a "dead duck" so what did he have to lose?
I'm sure we would have all done the same thing----and at least he wasn't pardoned -----fair enough!
I wish he would talk to Mr. Fielding about franchising and the fact that he has put the troops in danger from franchising and this Patriot Express Loan program because the failure rate of franchised business plans for first-generation franchisees is not required to be disclosed under the law.
Mean Gene Kelton
Mean Gene Kelton and the Die Hards,
Black Leather Blues & Redneck Rock N Roll
Perhaps best know for (turn up speakers & click on link) "My Baby Don't Wear No Panties". My personal favorite is "Little Black Dress".
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
help!! i have an interview with francorp tomorrow
these people don't sound stable. tell me more...
I LOVE IT
God, but that's timelessly wonderful. I owe you big time.
Richard Solomon
www.FranchiseRemedies.com
Francorp Interview
If you are interviewing for a job, I would suggest that you look at all of Janet Sparks' columns on Francorp. Click the link to Janet Sparks then look at all of her blogs on Boroian and Francorp. Then make your decision.
If you have some franchise experience, you may be better served to go elsewhere. They have lost a number of their top managers in the last couple of years. In fact, over the last couple of years or so, they have lost their COO (went on to be a schoolteacher), their president (went on to work for a Francorp client that went bankrupt and she is now out of franchising), a top salesperson (went on to a data management company), another salesperson (also out of franchising), and the head of their marketing department (also out of franchising). And that is just the people I know of. So if you are looking for a career in franchising, this may not be a good stepping stone.
Several of their senior people are actively looking for jobs right now, and are not finding work in the franchise field because of their association with that company.