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LaSalle corruption scandal comes to an end

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Friday, October 2, 2009
The story is old enough now that LaSalle Bank isn't even LaSalle Bank anymore, but its former security director, George Konjuch, has finally copped to charges that he defrauded the bank by taking kick-backs in exchange for funneling work to INS Integrated Security Solutions, at the time headed by Armando Navarrete. We first reported on this back when the news of the charges broke in December of 2007. At the time, Navarrete's lawyer made this argument:
"This is not a conspiracy case," Smith argued. "You can't be a conspirator with someone that's extorting you." Smith said Navarrete was doing security work for which he was contracted, something his firm has been doing for more than 35 years, with a UL-listed monitoring center in Wood Dale, Ill., and then Konjuch started asking for small gifts--$200 here, help with paying for a wedding there--with the implication that the continuing contract depended on it. "When do you say 'no' to somebody who says what business you get and what business you don't get?" wondered Smith. "When it got to $40,000 a month, Navarrete wondered, 'How do I get out of this?' at which point all hell breaks loose."
Unfortunately, that argument didn't sway a jury. Navarette was convicted of bank fraud, bribery and illegally hiding bank transactions in July and is now in jail. Navarette at least never wavered in his story:
Navarrete admitted paying $1.3 million to George Konjuch, vice president of physical security at LaSalle Bank in Chicago. The cash payments in envelopes came from multiple withdrawals to avoid required disclosure of transactions over $10,000. In addition, prosecutors said, Navarrete gave Konjuch $20,000 in free security equipment at his home, $15,000 in free landscaping and snow removal, a $10,000 cashier's check for his daughter's wedding, and paid his way to Las Vegas for joint gambling junkets. But Navarrete testified that Konjuch extorted him, demanding the money or threatening to cut off his business.
Konjuch wasn't shy, that's for sure. Unfortunately for Navarrete, of the $45 million he billed out to Konjuch, "A witness for the prosecution compared the invoices to those of other companies and INS bills to other banks, and testified that $30 million of the payments were unjustified." Oops. Part of me feels for Navarrete, though, especially after reading this paragraph:
His client is a Cuban immigrant who served five years in the U.S. Air Force, then worked on jet fighters for Lockheed, before getting a job as a cash machine technician with INS, then becoming operations manager and buying the company in 1997.
The guy pulled himself up by his bootstraps. Unfortunately, it seems like maybe he got accustomed to those bootstraps being of the finest leather and went a little too far in his quest for the American dream. If we're going to grade these guys as scumbags, I'm giving Konjuch a solid 10 (after all, he's in charge of protecting people and assets, and he used that position to illegally pay for his daughter's wedding! Is this guy auditioning for the dad role in Say Anything 2?), but Navarrete is only a 7 at most. Offering a bribe is bad, but taking it is worse.

Who's the awesomest person in Arizona security?

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Friday, October 2, 2009
I just got a release from COPS Monitoring. It appears one of their own--Maria Malice, vice president of special projects--has won the prestigious Alarm Person of the Year award from the Public Safety Committee of the Arizona Alarm Association (AzAA) for the second year in a row. Here's the release:
Maria Malice, vice president of special projects at COPS Monitoring was voted Alarm Person of the Year by the Public Safety Committee of the Arizona Alarm Association (AzAA) for the second year in a row. According to the voting criteria, the person should present a professional image as well as offer positive contributions including ideas, time spent, dedication to the false alarm prevention program and implementation and completion of tasks in conjunction with the Public Safety Committee. Malice has been instrumental in the planning and set up of the Public Safety Days event, and has spent a lot of time on statewide licensing legislation that will be submitted for the next Legislative Session that starts in January. Held in September, the Public Safety Day event is specifically designed for alarm coordinators, security company owners and staff, monitoring station personnel and others in the security industry. The full schedule included a NICET Level I-II Test Prep Fire Alarm Class, various seminars and the Public Safety Appreciation Dinner. Malice, currently the Arizona Alarm Association president, was honored at the annual dinner, which was held at Don & Charlies’ Restaurant in Scottsdale. The dinner also provides the opportunity for alarm coordinators, their Chiefs of Police or Sheriffs, and alarm companies to discuss issues of concern. "It was truly a surprise to hear that I had been honored with this award a second time,” said Malice. “For me, working with the Public Safety Committee and serving the industry in the great state of Arizona is both an honor and a privilege.”
Congratulations Maria! Pictured below at the event are (left to right) Maria Malice, Becky Buchannon from Phoenix PD, Patty Rea from Phoenix PD, Jon Sargent from ADT, wearing his SIAC hat (and when I say "hat" I mean "shirt"), and Kathleen Schraufnagel from Broadview Security. maria-malice-wins-alarm-person-award-2nd-time

IndigoVision is growing, how 'bout you?

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Friday, October 2, 2009
Apropos of the discussion on Johnson Controls' numbers in security integration, IndigoVision just released their numbers for the year ended July 31 (why it took until Sept. 30 to get them together, I'm not sure, but much of the financial world is a mystery to me, frankly). And they look pretty good.
* Revenues up 43% to a record £26.4m * Operating profit up 59% to a record £3.26m * Adjusted basic earnings per share up 59% to 34.1p * Net cash more than doubled to £3.5m at 31 July 2009 * Maiden dividend of 5.0p per share
It gives some proof to the much-heard adage out there that video is growing faster than the rest of the market. I don't care how small or big you are, growing 43% organically is pretty solid. You can see the full numbers report here (pdf warning). In the full report, however, the numbers are slightly less rosy. Yes, revenues are up 43%, but net profit is actually down to 2,485,000 pounds from last year's 6,538,000 pounds. It may be because of a tax quirk, but it's reality. Also, cost of sales rose 76 percent while revenue grew 43 percent, so the company had to work harder to make its money this year (which makes sense). Regardless, if you start the year with 1,371,000 pounds and wind up with 3,551,000 in the bank, you've had a good year, especially in this economic climate. It's a good sign for IP video in general, too. Not only is the sector growing, but it's just starting to tap potential. Check this quote from IndigoVision CEO Oliver Vellacot:
Although the security market is moving from older analogue systems to IP, 90% of this transition has still to take place, giving IndigoVision a clear opportunity. In the current year we will be stepping up spend on research and product development to prepare IndigoVision for the next phase of growth.
There are only a few industries out there right now that can express such optimism.

Link round-up

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Thursday, October 1, 2009
I had a few minutes, so I wanted to point out a few semi-interesting things from around the web that came across my desk today: • I'm always interested in mainstream media representations of video surveillance, especially when they DON'T mention big brother. Here's a nice puff piece for the industry from Appleton, Wisc. Note the quote from Terry Kuehl, sales consultant for TECC Security Systems Inc. • Of course, video surveillance works both for and against the cops. This news report about cops getting caught on video surveillance playing Wii bowling while executing a search warrant was probably particularly embarrassing. • I found this video supplied by Schneider to promote the brand switch from TAC to be more than a little amusing in an awkward kind of way. But I'm always busting on security companies for not using videos, so I've got to give them their due for at least having a go at it. • I like this story about MotoLink, a GPS-tracking service, mostly because it reminds me how awesome Bermuda is. We should have TechSec in Bermuda. Stupid me.

Questions on the Johnson Controls story

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Wednesday, September 30, 2009
Because the comments to the stories can only run 500 words, I've moved a series of comments from John Honovich and I from the comments section of the Johnson Controls story here: John Honovich: Is this organic growth or based on acquisition? Who is the source of this statistic? Sam: The numbers are coming from Johnson Controls internally. I have no way of verifying them, so that's why I used phrases like "the company is reporting" and "saying it's moved from two percent to five percent." They say it is the result of their investments in generating organic growth. John: Organic growth from 2 to 5% market share sounds unlikely - even over a multiyear period. Assuming that the market size roughly stated the same, it implies that Johnson Controls increased revenue in this market 250%. Sam: That is a conclusion you can draw. However, the market may have shrank, allowing JC to grow market share simply by growing while others got smaller. That would contradict their predictions from last year, of course, so allow that it stayed the same: "As part of this initiative, Johnson Controls conducted a survey of security end users and came to the following conclusions: The market is growing at a 10 percent annual rate, with roughly $104 billion in annual spending; of that, $24 billion is being spent on integration alone, and that market is growing at a 17 percent annual rate. Asked from whom he sees JCI taking market share, Joel Lehman, JCI vice president of security & fire, said, "we'll take the 17 percent growth on that 24 billion dollars. That would be fine."" So, by their estimates, using the $24b number, JC's revenues went from 480,000,000 to $1.2b in security. JCI's 10k says total revenues in the efficiency unit as a whole were $9.2b for the nine months ending June 30, 2009. That was down 10 percent from 2008, but if it's true they shifted significant resources from "efficiency" and energy and focused on security, it seems reasonable to me that they could be projecting $1.2 billion in security in 2009. Even if they only mined their own current customers, only seven percent of whom (according to them) used them for security when they started the initiative, they should be able to grow pretty significantly on a global basis. -- I think comments on the blog can be longer, so if anybody else wants in, go ahead in the comments field. If you run into problems, email me directly.

NRTL NKOTB gaining momentum... watch out U.L. and FM

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Wednesday, September 30, 2009
I couldn't resist the turgid headline. As you may (or may not) recall from my first blog post, I'm fond of TLAs (or four- and five- letter acronyms, too, as the case may be). I just received a release from Mace Security International declaring its recently acquired monitoring center Mace CSSS had earned ETL Listing. Intertek/ETL, you'll recall from my cohort, Martha's, recent story is gaining in acceptance as an alternative to the other two main Nationally Recognized Training Labs, Underwriters Laboratories and Factory Mutual. Here's some of the release from Mace:
Mace Monitoring Center becomes one of the first U.S. central stations to earn the ETL Listing Mace Security International, Inc. ("Mace" or the “Company”) (Nasdaq Global:MACE) today announced that its subsidiary , Mace CSSS,Inc. has earned the ETL listing by Intertek, a testing laboratory recognized by the Occupational Safety and Health Administration (OSHA). The ETL listing indicates that Mace CSSS has been investigated and found to be in effective compliance with rigorous operational and safety standards and is eligible to use the ETL mark. This certification assures customers that their alarm monitoring center is maintained and tested annually by a nationally recognized testing laboratory to ensure full compliance with all federal, national, and local standard and codes.
It's nice that centrals now have more choice when it comes to NRTLs. Peter P. Giacalone, the recently hired president of Mace Security Services, said the listing was more proof of Mace's dedication to excellence. “We continue to strive to achieve the highest quality standards in the central station monitoring business," Giacalone said in the release. "The ETL listing combined with our UL standards listing places Mace CSSS on a standards level that only a handful of alarm monitoring companies have obtained.” In Martha's story from the October issue of SSN, CSAA officials said they expected members to vote for accepting listing from ETL. I emailed CSAA's VP marketing and programs Celia Besore to get a sense of how the voting was going, and she had this to say:
CSAA members will submit the final votes on the CSAA by-laws change at the Annual Meeting in few weeks. Some have submitted their votes by paper ballot, but the voting is not complete. The by-laws change will allow companies certified by any CSAA-approved Nationally Recognized Testing Laboratory (NRTL) to apply for CSAA membership. The only two NRTLs that are CSAA-approved currently are UL and FM. If and when the by-laws change occurs, a CSAA committee will review any NRTL applications to see which additional NRTLs to approve.
Sounds like U.L. and FM might have to make room.

Canadian fire manufacturer intros new apartment-building solution in U.S.

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Wednesday, September 30, 2009
Signalink Technologies, a developer of fire alarm systems that can be networked using a building's existing electrical wiring, sent out a press release yesterday introducing its UL-listed Fire-Link product to the U.S. market. Fire-Link II is a power line-based solution that allows existing fire alarm systems to be extended into the suites of apartment buildings that do not have in-suite alarms. The company says a complete installation can be achieved in a matter of hours, both cost effectively and with little impact to buildings or occupants. For more information, visit www.signalink.com. Here's the link to the press release.

LEED certification resources

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Wednesday, September 30, 2009
I just posted a story about Johnson Controls' reported success in growing market share, in which they attribute some of that success to their energy awareness and understanding of LEED certification. So, since LEED is still something of a new concept, I thought I'd supply some resources if you'd like to learn more about it. Here's the skinny on it from the US Green Building Council, which administers the program. Or, get your information on certification from the Green Building Certification Institute. Here's Reuters making a case for why LEED is important for commercial enterprises. And, just for the heck of it, here's a Dartmouth College student newspaper exploration of whether the LEED certification is actually worth a damn.

More Firetide funding

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Wednesday, September 30, 2009
I picked this up from the PEHub email, but there's nothing I can find to link to, as it was just a blurb in the body of the email, but:
Firetide Inc., a Los Gatos, Calif.-based provider of wireless mesh networking solutions, has raised around $8.59 million in fifth-round VC funding, according to a regulatory filing. It had previously raised $46 million since 2003, from firms like Coral Capital Management and Menlo Ventures.
I've got an email in to see if I can learn more from Firetide.

How'd that WSJ ad work out, anyway?

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Tuesday, September 29, 2009
I caught up with Jack Turley, VP of sales and marketing for Gallagher’s Cardax brand in the Americas, and asked him about his thoughts on the decision to take out the ad in the Wall Street Journal. It was a long discussion that went all over the place, but here are the relevant bits: Sam: What was the impact of the ad, in your opinion? Jack: There’s a lot of ways to measure that impact. The most analytical way would be the web hits, I guess. We got five times the traffic that we normally get, and the visitors were scattered all over the world, but predominantly from the U.S., so I think the trade show, coupled with the Wall Street Journal, brought some of the awareness we were hoping for. From the booth traffic, considering what I saw at other booths, and as a relatively new entrant to the U.S., our booth was as busy as anyone else’s and it was certainly up from last year. We certainly had our share of current GE dealers come to wonder what we’re all about. It was kind of interesting. Some of them came not exactly sure what to make of us. So we gave them the quick tour, had them sit down with the senior management—that’s one of the things that makes us different: [company CEO] Bill Gallagher attends just about every trade show and wants to meet everyone that comes into the booth, which is a different sort of company to work for. Bill Gallagher might be dealing with the ambassador to Germany one day and have a screwdriver in his hand the next day, showing a guy how to work a panel. What was a bit unexpected was a few GE employees coming and sniffing around, and two of them actually handing us business cards and asking to keep them in mind as the expansion increases. Based on all of that, the Wall Street ad has been extremely successful. I bet 400 people at the show came up to me and gave me the equivalent of a high five. Sam: Could that impact have been created with something other than an ad in the Wall Street Journal? Jack: There’s a place for the industry trades, sure, but what I see is other companies out there trying to sell black boxes, and we’re much more of a solutions business. And that comes down from Bill, who’s an inventor, but also somebody who really wants to solve problems. So, with the ad, we’re not talking just to security dealers, but starting a dialog with the business world as a whole.

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