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Internet Edition, June 14, 2000, Page 1


The Wall Street Journal has narrowed down its search for a PR firm to handle its $500K account to Shandwick International and Fleishman-Hillard.

Miller Shandwick has been handling the paper's website,, but the paper has not had its own PR firm. Richard Tofel, VP of CC, Dow Jones, parent of the WSJ, and Vickee Adams, director of CC for the WSJ, are overseeing the selection process. Adams said the second and final presentations will take place later this month.


PRSA CFO Joseph Cussick has resigned his post after six years as of the end of June.

Cussick, who is in his 60s, will start his own financial advice firm. PRSA has asked Deloitte & Touche to do a special study of its finances.

Reports were that increased supervision of the finances by the board led to Cussick quitting. D&T has thus far refused to sign the 1999 audit. Treasurer Joann Killeen is meeting with D&T this week but otherwise had no immediate comment.

Chair Steve Pisinski ordered the release of the unaudited figures of PRSA last week after waiting two months for D&T to sign the audit.

The figures show that PRSA had a 281% jump in payables as of Dec. 31, 1999 to $880,379 and that receivables jumped 51% to $544,097.

The deferred dues account, representing services owed to members in the future, was drawn down to $198,746 from $350,309 even though membership increased to 19,623 in 1999 from 18,512 in 1998.

This account was $941,767 in 1991 when PRSA had 15,276 members. Most other associations, including the American Society of Assn. Executives, have deferred dues equal to about half of total dues. Cash and investments fell to $1.26M at the end of 1999 from $1.55M a year earlier.

Nominations to Be Secret

Pisinski said members will not be able to learn this year who is running for the nominations although 1997 president Debra Miller and others had called for open nominations. Kathy Lewton is in line to be chair, Killeen to be chair-elect and Deanna Pelfrey to be treasurer. A nominating study committee headed by Jack Felton was formed in March but has issued no findings.

President and COO Ray Gaulke, it was revealed, has four-and-a-half years to go on a five-year contract.


Embraer, Brazilian aircraft maker, ended its tie with Burson-Marsteller April 30, the last day of the six month Foreign Agents Registration Act reporting period. The account generated $912,406 in fees/expenses or 78% of B-M's FARA total.

Embraer spent $1,544,369 at B-M in the previous six months.

Duties were helping Brazil to handle a dispute with the World Trade Organization and promoting the launch of a new jet airplane.

Also departing B-M on April 30 was the Finland Bureau. Remaining FARA clients are the King Faisal Foundaiton ($91,456 in the latest period) and the Royal Norwegian Consulate General ($85,168).


Omnicom did a quick flip-flop recently concerning a web investment it made. Zero.Net, San Francisco incubator firm, said in April that OMC made a "significant" investment in it. OMC CEO John Wren warmly endorsed Z.N and joined the board, according to a release April 26 by Z.N and Fleishman-Hillard, an OMC PR firm. But Wren now says that less than 4% of Z.N was purchased and that he quit the board.

He said OMC was drawn to Z.N because its CEO is Jake Weinstock, 28--year-old son of Davis Weinstock, a principal of the OMC PR firm Clark & Weinstock. Davis Weinstock is on the board of Z.N.

Wren said he quit when he found OMC could only buy 4% of Z.N and not 10% as promised.

Z.N was sued May 23 by a Massachusetts web firm that charges Z.N stole its business plan and 18 of its employees. The firm, Biz2Net, is refusing to pay back $2 million that it borrowed from Z.N.

OMC "Invested in Jake"

OMC basically "invested in Jake," Wren told this NL. The New York Observer's Christopher Byron, writing June 12 about Z.N and one of its owners, Andrew Evans, said Evans was using young Weinstock as "a way to give his ragtag Internet incubator some legitimacy on Wall Street."

Byron, who had an "extended interview" with Evans, said Evans told young Weinstock, who was hired this year, that Z.N would go public and its principals would receive valuable stock options.

Evans and his wife, Ann, served six-month prison terms in the 1980s on charges of giving false reasons for obtaining a $500,000+ bank loan.

(continued on page 7)

Internet Edition, June 14, 2000, Page 2


Dorothy York, daughter of Ron Levy, founder of North American Precis Syndicate, on of PR's largest service firms with 136 employees and seven offices, has succeeded her father as NAPS president.

Levy, instead of continuing his lawsuit for control of the company, has opened Episodic PR Assistants at 300 E. 40th St., a firm that will be in competition with NAPS.

Joining him as EVP is Galina Grunin, who was EVP and operations manager of NAPS, handling programming, clippings and reports.

Levy said that in 1990 he put 400,000 shares of NAPS into his daughter's name "to save her taxes" and that she recently exercised an option and took control of the company against his wishes. He had selected Grunin as the future president of NAPS.

EPRA (212/682-2432) is offering a 15% discount to agencies using its services and two distributions for the price of one until Labor Day.


Jeffrey S. Wigand, the tobacco industry whistle-blower, was dismissed as a speaker at a "youth summit" for an anti-smoking conference after he told an account supervisor for the Nixon Group, which hired him, that he planned to go beyond the parameters of his speaking contract.

The Miami-based PR firm had been retained by the New York State Health Department to handle the conference. The PR firm has been involved in arranging similar anti-smoking youth summits for health departments in Florida, Washington and Pennsylvania.

About 160 teenagers were invited to the New York event, which was held June 2 at a resort in Catskill, N.Y. Among those attending the event was Gov. Pataki's health commissioner, Dr. Antonia C. Novello.

Bradley Coulter, an A/S in Nixon's Tallahassee office, said Wigand, who was under contract to only make comments about his role as portrayed in the movie, "The Insider," told him shortly before the meeting began that he planned to criticize New York Gov. George Pataki, who recently vetoed a bill that would have imposed fire safety standards on cigarettes. Coulter said he informed a health department official about his conversation with Wigand.

John Signor, who is the health department's PR director, said he was also told by Wigand that he was going to give some political comments. Coulter said a "joint decision" was made to cancel Wigand's speech. Coulter said Wigand was taken to Albany for a flight back to Atlanta, where he works for the Centers for Disease Control.

Coultor said Wigand will be paid his $2,000 speech fee. Wigand told The New York Times, which covered his dismissal, that he could not believe that "somebody tells me I can't speak about what is factually true."

FT.COM NAMES BBDO & PORTER NOVELLI, the Internet partner of the Financial Times, has named BBDO New York to spearhead an integrated marketing program that will use on and offline advertising, direct mail, promotions, PR, and special events.

The program will start in September and is expected to be supported by an estimated $15 millino budget, spread over the last four months of the year.

Porter Novelli will implement PR programs and handle media relations as well as staging of special events.

Both firms are member of the Omnicom Group.


Dot-com companies have put pressure on many PR firms to work harder at retaining their Hispanic talent or risk losing them to competitors that even offer equity in the company as a perk, reports Manny Ruiz, who is co-founder of Porter Novelli's U.S. Hispanic market practice and its media relations director.

In a recent poll of 10 South Florida firms, Ruiz said 80% of the respondents stated that 50% or more of their work was Hispanic related.

Eighty percent also responded that they had had a U.S. Hispanic dedicated practice for three or more years, he said.

When competing for Hispanic-related accounts, Ruiz said 50% of the respondents said they competed against Hispanic ad agencies, 30% said they competed against national PR firms and 20% said they faced competion from local firms.


Robert Bork Jr., whose Washington, D.C.-based PR firm specializes in litigation communications, said the No. 1 thing to avoid with the media is never say "no comment."

"That's a killer in public perception," said Bork, who is a former journalist.

"When a company is sued, 40% of those polled think the corporate defendant must be guilty. But that number goes up to 60% if the company says 'no comment' about the litigation," Bork told The Washington Business Journal.

He advises a high-profile defendant to tell its story "clearly, in context and to enough people that you move opinion to your side of the ledger."

"If litigation is telling a persuasive story to a judge and a jury, then litigation communication is making sure that story is heard, understood and remembered outside of the courtroom by those critical to your company," said Bork.

Thomas Bell, chairman/CEO of Young & Rubicam, which is being acquired by WPP Group, registered with the SEC on June 1 to sell 300,000 Y&R shares for about $16.3 million. He intends to step down from Y&R following a transition period. As of April 14, he held 1,178,017 shares.

DEATHS ______________________________

Lou Brott, 83, a publicist, died May 19 in Washington, D.C. In the early years of TV, Brott, who retired in 1992, was publicist and announcer for "Meet the Press."... Irving Rudd, 82, who handled publicity for the Brooklyn Dodgers, Yonkers Raceway, Nathan's Famous and Muhammad Ali, died June 2.

Internet Edition, June 14, 2000, Page 3


A new study about reports of medicines in newspapers and on TV should make publicists for pharmaceutical companies happy.

The findings, which appear in the June issue of The New England Journal of Medicine, show media reports about new drugs often leave out essential information such as drugs' risks and cost, and frequently quote experts without disclosing their financial ties to the pharmaceutical industry.

The study also found most of the reports did not provide enough quantitative information to allow readers or viewers to assess the drugs' likelihood of preventing certain diseases. Instead, news reports tended to overstate the possible benefits.

Side Effects Ignored

"Over half the stories were totally silent on side effects," said Ray Moynihan, an Australian journalist who initiated the study during a fellowship at Harvard Medical School.

"What we're seeing here is the media behaving too often like a cheering squad rather than the skeptics that we want them to be," he said.

The study was conducted by researchers from Harvard, the University of Newcastle in Australia and the University of California at San Francisco, who used databases to select news reports on three drugs' Fosamax, Pravahol, and aspirin.

A total of 180 newspaper stories and 27 TV news reports, which were published or aired between 1994 and 1998 in 36 U.S. newspapers, or on TV networks, were analyzed.

Of 207 news stories, fewer than half mentioned risks or side effects of the drugs, and only 30% mentioned the medicines' cost.

Forty percent of the stories did not provide any guarantee information to back up assertions of a drug's benefit. Of those that did, 83% reported only the relative benefit and not the absolute benefit.

Reporting the relative benefit tends to make a study's results sound more dramatic.

For example, most stories about a study on Fosamax (also known as alendronate) stated the drug lowered the frequency of hip fractures caused by osteoporosis by 50% (the relative benefit) but did not explain that such fractures occurred in 1% of patients who took the drug versus 2% of patients who did not.

It's a Miracle

A CBS reporter described the 50% reduction in fractures as "almost miraculous," the study noted.

The anlysis also found that when news reports cited experts, such individuals often had financial connections to the maker of the drug under discussion that were not revealed in the story.
For example, 85 stories mentioned experts or studies that had received funding from the manufacturer of the relevant drug, but only 33% of them disclosed such ties.


Newsweek has criticized Conde Nast's new women?s fashion magazine, Lucky, for blurring the line between advertising and editorial.

Critics said the magazine is more like a catalog than a magazine. The 202-page test issue, which was published last month, was crammed with merchandise of every description. If Conde Nast sells enough, it is expected to launch Lucky in the fall.

"That may thrill shoppers, but for some in the magazine business, Lucky is the most egregious example yet of a trend in which magazines are becoming glorified catalogs," reports Newsweek's Alisha Davis and David Noonan in the June 12 issue.

One ad executive said he foresees a flood of titles catering to every imaginable market---including men and teens, and high-tech enthusiasts.

Susan Ungaro, editor-in-chief of Family Circle, worries that these "magalogs" will erode reader trust.

"Lucky is all picks, no pans--- and she (Ungaro) fears that inevitably magazines will try to share in the profits from the sale of goods in their pages," Newsweek said.

Internet Edition, June 14, 2000, Page 4


Fortune's June 12 edition says Internet magazines are so packed with ads that publishers are 'spending lavishly' to expand their editorial staffs. The magazine said Business 2.0, which had 408 pages in its June 13 number, the first bimonthly issue, hopes to nearly double its 72-person staff.

Fortune said Eric Hellweg, a senior editor for 2.0, recently sent an e-mail to journalists around the country that invited them to apply for jobs.

"We're in the midst of a hiring frenzy," said Hellweg, who is looking for everything from editorial assistants to executive editors, for the magazine and the magazine's website.

The San Francisco-based 2.0 has a bureau in New York and it is opening bureaus in Los Angeles, D.C., Boston, and possibly Austin. It also plans to start five editions in Europe, Asia, and Latin America this year. "What's true for Business 2.0 is true for virtually every magazine covering this space, including Fast Company, the Industry Standard, Red Herring, and Upside," said Fortune.

Cited as examples are the 360-page June issue of Upside, which Fortune noted was larger than the June issues of GQ (278 pages) and Vanity Fair (246 pages); Fast Company's 418 page June number; Red Herring's new biweekly edition; Industry Standard, which publishes as many as 360 pages every week, and Time Inc.'s eCompany Now, which was launched this month with a 302-page issue.

Fortune said Red Herring has doubled its editorial staff in the past year to 100, hiring writers away from The Wall Street Journal, Wired and Forbes with high salaries and stock options.

The magazine also opened bureaus in Boston, Washington, D.C., and London. Also recruiting journalists is line56, which is scheduled to launch this summer.


Jay North, who owns a PR firm in Ojai, Calif., is pitching business editors on running a press release that berates advertising. "People are tired of obnoxious advertising," states North in his pitch letter.

"Too many businesses are wasting or losing money because of ineffective advertising and promotion," according to North, who handled "Project Blue Bird," a national campaign to help blue bird survival and population recovery.


Relationships with media are vital to PR success, according to DeFrancesco/Goodfriend. The Chicago-based PR firm said the media do not interview or quote someone because they have "more knowledge, expertise or clout."
Rather, the reason is "they or their PR departments or agencies, have worked to build relationships with media."
D/G offers these seven tips for establishing a relationship with reporters:

1. Develop a list of reporters who deal with information you know and the media that reach audiences you want to target;

2. Learn what the media need or want;

3. Send a letter and packet of useful background information about your company and the industry in which you operate;

4. Visit the media most important to you;

5. Ask editors to visit you;

6. When you read a story on which you have useful information, contact the media on your list to talk about the subject, and

7. Make time to respond by providing numbers where you can be reached day, night and weekends.


Melinda McIntire, managing editor at KGO-TV in San Francisco, told a DWJ Television seminar last month that 10 to 15% of the station's news comes from VNRs. Here some of her recommendations:

--Product placement should be subtle; commercials are a turnoff;

-- Give the story a timely news peg; "Don't overwhelm viewers with too much information;"

--Tie into a current trend, study or event whenever possible;

---Use real people in VNRs; "Provide enough B-roll to support what they say;"

--An expert is helpful; Diversity is important;

--Include graphics; Soundbite should be no longer than 12 seconds;

--Offer satellite interviews when possible;

--Send faxes; For national tours, have local angle.

PLACEMENT TIPS_________________________

Advertising Age has hired Jon Fine, a freelance writer, to replace Ann Marie Kerwin as publishing beat reporter. Kerwin was promoted to New York bureau chief in February.

'The Payoff Years,' a new talk radio program, has named Carol Abaya, whose column, "The Sandwich Generation," appears in newspapers, as senior lifestyle editor.
The show, which is targeted at listeners who are over 45, focuses on finance, fitness, and fun, as well as aging and elder/parent care issues.

Other on-air segments are hosted by veteran broadcasters, including Ralph Saviano and Bill Bresnan. The show airs on Sundays on WEVD-AM (N.Y.-N.J. region) from 8 a.m. to 9 a.m. and on WPEN-AM (Pa.-N.J. area) from 9 a.m. to 10 a.m; and daily on WAXY-AM in Florida from 2 p.m. to 3 p.m.
The program's managers are based in Marlboro, N.J. at 732/780-9200. Abaya can be reached in Wickatunk, N.J. 732/536-6215.


Melina G. Bellows, previously a senior editor at Ladies' Home Journal, where she was in charge of celebrity cover stories, profiles and Hollywood trend features, was named editor of Washington, D.C.-based National Geographic World, a magazine for children eight to 14.

Justine Simons, 31, a field producer in New York for 'Pure Oxygen,' which covers issues of importance to women and appears on Oxygen cable TV, and Christopher B. Huntington, 39, the senior editorial producer of 'Moneyline News Hour' on Cable News Network in New York, were married June 3.

Becky Takeda, who was VP for marketing and IR at Smart Modular Technologies, was named COO of Digital Courier Technologies, Park City, Utah

MEDIA BRIEFS___________________________

Emerge, the Washington, D.C.-based magazine which covered black culture and politics has suspended publication.
Emerge was launched in late 1989 by Wilmer Ames Jr., a former Time reporter, with backing from Time Inc. and Black Entertainment Television, which later took control.
Bill Curry, who is president of the American Society of Magazine Editors, is editor of Emerge.

Individual Investor, a magazine published by Jonathan Steinberg, who is the husband of CNBC's financial news reporter Maria Bartiromo, is trying to raise $6 million to keep the magazine going, according to Crain's New York Business.

CNNfn, CNN's financial news network, will expand its programming to 24 hours from 18 on weekdays starting June 20. The network's new weekday morning show, "Market Call," also debuted June 7, with Rhonda Schaffler, senior CNN correspondent, as anchor. The program will cover the first hour and a half of trading after the 9:30 a.m. opening on the New York Stock Exchange. Alan Chernoff, previouisly a correspondent for CNBC, will contribute reports.
CNNfn also plans to begin producing another new show about mutual funds in the coming weeks.

Computer Reseller News has changed its name to CRN, and is transforming itself into a publication with added editorial content that focuses on e-business and e-business consultants.
The 18-year-old publication, which will retain its traditional reseller/hardware readership, has also changed from a tabloid to a 10" by 12" trim size weekly newsmagazine format. CRN is published in Manhasset, N.Y. Elliott Markowitz is editor (516/733-8677) and Kelly Damore is sr. executive editor (781/839-1272).

Internet Edition, June 14, 2000, Page 7

WREN QUIT WEB BOARD (cont'd from page one)

Wren said that to his knowledge Evans was neither an officer nor a director of Z.N at the time OMC made the investment in Z.N.

Jake Weinstock, who was married June 3, is on his honeymoon, according to his father, and could not be reached for comment.

The younger Weinstock has a B.A. in international business from the University of Pennsylvania and helped found Gold's Gym in Moscow five years ago. He still has an interest in it. Following graduation, he also worked for Ernst & Young.

C&W, which specializes in corporate positioning, political strategy, and financial PR, does not reveal the size of its staff, its fees or its clients. Davis Weinstock confirmed that one client is Microsoft, handled by C&W's Washington, D.C., office.

Evans is Friend of Gates

Evans is described in an article in the June 12 New York Observer by Christopher Byron (read story) as a longtime close friend of William Gates, co-founder of Microsoft and the richest individual in the world.

Gates, according to the Byron article, which examines the numerous financial interests of Evans, became the godfather to all three of Evans' children.

Gates, says the article, came to the sentencing hearing after Evans pleaded guilty to the charges.

Evans, who was a stockbroker, allegedly took out a $500,000+ loan from a Seattle bank saying it was for real estate purposes when it was needed to meet minimum capital requirements for an investment firm owned by Evans and his wife. Evans helped manage Gates' stock portfolio for several years although this activity has ceased, the article further states.

The Byron article says "a contact in San Francisco" introduced young Weinstock to Evans in April and that Evans promised Weinstock he would become CEO of Z.N. Davis Weinstock said his son has extensive business experience and that he served in other positions in Z.N before becoming CEO.

Evans Has Numerous Investments

The Observer article details numerous private and public investments of Evans.

He is an owner of the publicly held Envision Development Corp., an "umbrella" entity for various Internet companies; Perfumania, a chain of perfume stores, and Dominion, an investment vehicle.

Evans, who controlled Maritime Capital Partners, used it to invest in New World Coffee. Byron's article says SEC filings raise questions as to whether all stock sales and purchases of entities controlled by Evans took place via stock exchanges as required.

Envision Development, trading at $66 per share, on April 7 paid 1.4 million shares (supposedly worth $98 million) to Sundog Technologies for QVtech, an e-mail security firm. But Sundog remains publicly traded at two cents a share, meaning the 1.4M shares are not, "in reality, worth anything at all," writes Byron.

The April 26 release, via PR Newswire, had Wren saying: "We believe Zero.Net's business strategy, which focuses on Internet infrastructure and technology within the business-to-business marketplace, addresses the fastest growing part of the new economy. We look forward to assisting Zero.Net in the pursuit of this strategy."

The release, with contacts listed as Stan Ades for Z.N and Rebecca Weiss of Fleishman-Hillard/ New York, had Z.N announcing that the Communicade unit of OMC had made a "significant equity investment" in Z.N and that Wren "has joined the Z.N board of directors effective immediately." There is no known release announcing Wren's resignation.

Jake Weinstock was quoted as saying:

"We're extremely pleased that a strategic investor with the global reach of Omnicom has chosen Z.N as a strategic and investment partner. Having their financial support and professional guidance will be a strong driver for our continued growth. Not only will Z.N profit from our relationship with OMC, but our Internet companies will also be able to easily access the depth of expertise offered by the world's largest provider of marketing communications and advertising services."

The release said Z.N joined Communicade's interactive division, which owns part of dot-com companies such as, Organic, Razorfish, Red Sky Interactive, Nuforia, L90 and

Z.N was said to have investments in more than 25 Internet companies and also to have offices in New York, London and Tokyo. Z.N's companies, among other things, were said to offer "cutting-edge software tools," "state-of-the-art networking," "strategic guidance," "innovative technologies," and "dynamic infrastructure solutions."


Christopher Byron's financial news column for The New York Observer will run each Wednesday on Bloomberg News, which is distributed worldwide to investment firms and 350 newspapers and magazines.

It will also be on the web at Byron, who continues to have a daily financial news show on MSNBC, will also be a regular guest on Bloomberg TV and radio. Besides a large audience among the general public, Bloomberg is used by 180,000+ financial professionals worldwide.

"Chris Byron is the closest thing to a guardian angel an investor can have," said Matthew Winkler, editor-in-chief of Bloomberg News.

Bloomberg also described Byron as "the financial journalist who cuts through corporate hype to get to the bottom line."

Byron's "Back of the Envelope" column has run in the Observer for five years and has "exposed swindlers and con artists from Wall Street to Silicon Valley," said the Bloomberg announcement.

Bloomberg Has Huge Audience

Bloomberg has eight million radio listeners and an estimated 173 million homes receive Bloomberg TV. The 350+ publications receiving Bloomberg have an estimated 50 million readers. A total of 6.9 million unique visitors log onto the Bloomberg website each month. Bloomberg Radio is syndicated through more than 200 affiliates worldwide.

Byron, author of three books, including "The Fanciest Dive," has worked for Forbes and Time and has been a contributing editor to Esquire, Playboy, Men's Health and Worth. He wrote "The Bottom Line" column for New York magazine from 1989-94.

His new book, "Delete Your Broker.Com: Using the Internet to Beat the Pros on Wall Street," will be published in January 2001 by Simon & Schuster.

Fran Gallogly, who is retiring, has resigned as outside administrator of the Publicity Club of New York. She also handled Women Executives in PR.

Internet Edition, June 14, 2000, Page 8

Tales about two chronic stonewallers and disbelievers in the free flow of information --Omnicom and PRSA-- are in this issue. They present a good example for others not to follow.

OMC's CEO John Wren, who has publicly stated he likes to keep a low profile, has been drawn into what has become an embarrassing personal endorsement of a dot-com company called Zero.Net.

If the company was so great, as Wren's initial endorsement said it was, why did he withdraw from its board so quickly? Why was a false press release put out by Zero.Net and an OMC PR firm (Fleishman-Hillard) saying that a "significant" investment had been made by OMC in Zero.Net when no such investment was ever made?

Wren, by his own admittance, says he was drawn to Zero.Net because the son of one of the principals of an OMC PR firm (Jake Weinstock, son of Davis Weinstock of Clark & Weinstock) was its CEO. The 28-year-old Jake Weinstock led Wren "down the garden path," as the saying goes. He certainly had a meteoric career at Zero.Net.

Did OMC ever make a thorough study of Zero.Net and its owners? The latter company is now involved in a lawsuit and we won't presume to judge whether it is guilty of anything or not. But readers who want to read the entire 47-page suit can find it on the website. We will post the Zero.Net reply when that becomes available.

There is a possibility that SEC rules have been broken. At the least, a false release was circulated via PR Newswire that OMC had made a "significant" investment in Zero.Net. Now would be a good time for Wren, Davis and Jake Weinstock, and others to hold a press conference and answer questions.

OMC, as is well known, employs neither an IR nor a PR person. This NL has been given the cold shoulder by OMC for years while security analysts get the royal treatment. Evidence is that other reporters have also been shunned by OMC since not one reporter except us has attended any of the three last annual meetings of OMC.

Other chickens have come home to roost at PRSA, the biggest national organization of PR pros which has not had a PR pro on staff for nine months.

It owed $880,379 to suppliers as of Dec. 31, 1999, a huge 281% jump from a year earlier. Its current liabilities, as we figure them, exceed its current assets. When an organization is not paying its bills, as PRSA was not last December, it is insolvent. What are the payables now? Treasurer Joann Killeen won't say. She is meeting with Deloitte & Touche this week and hopes to have some answers.

Actually, Killeen and chair Steve Pisinski knew or should have known of the payables situation the first week of January 2000 and should have revealed this to the membership instead of waiting until June.

The current crisis, which included the sudden resignation of CFO Joe Cussick (annoyed out of his job by board questions about PRSA's finances, sources said), also involves the refusal of D&T to sign off on the PRSA audit. It's a big warning signal when a CPA won't do this. D&T is acting as the CFO and has also been hired to do a special study of PRSA's fiances.

This does not impress us since D&T is the firm that gutted IABC's financial report to members earlier this year. Most likely the D&T study will take many months and members won't see a word of it. Auditors report to the board, not the membership of an organization.

Pisinski "Outed" PRSA Financials

Pisinski deserves credit for publishing the unaudited financials of PRSA when D&T refused to sign off. Killeen says the figures that show PRSA makes money on Tactics and Strategist (revenues of $1.38M and expenses of $1.24M) are false because the revenues include $502,500 of dues. But she has been powerless to do anything about this (as have all the treasurers before her). She needs the publicly expressed help of chair-elect Kathy Lewton and board members like Maria Russell, Mitch Head, Sandra Longcrier and Stephen Shivinsky, who have jobs at well-known institutions or companies.

The deferred dues acknowledged as a liability by PRSA (a pathetic $198,746, down from $350,309) is also a false item on the financial report. This should really be $1.7M or about half of dues income of $3.38M. The Amer. Medical Assn., Amer. Bar Assn., Amer. Marketing Assn. and Amer. Society of Assn. Executives all defer large amounts of their dues. The ASAE by example recommends this. Income shouldn't be booked until earned. NIRI does not do this but is reconsidering it since 'revenue recognition' is a big current issue in IR.

PRSA COO Ray Gaulke, it is now known, has four-and-a-half years to go on a contract that pays well over $250,000 a year. The previous top four officers gave this unprecedented five-year contract to the 66-year-old former ad executive without full board approval, sources indicate.

Worst of all, members are not going to be allowed to see who, if anyone, is running against Killeen for chair-elect and Deanna Pelfrey, secretary and the expected candidate for treasurer. The inner clique has decreed that those running for nomination (tantamount to election) will do so in secrecy for another year.



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