Coupon boss climbed Everest amid investigation

October 28, 2016

(Photo: Angela Peterson / Milwaukee Journal Sentinel)

The boss of the nation's biggest coupon processing company faced a federal fraud investigation in 2006 and was feverishly working with staff inside the company to justify their questionable accounting practices.

But in spring of that year, Thomas "Chris" Balsiger, a high-flying Texas millionaire, had another pressing priority: climbing Mount Everest.

Balsiger went ahead with his plan to climb the world's highest peak even as his chief of staff and lawyers worked on a memo they hoped would get the FBI off their backs. It didn't work.

The federal investigation, launched out of Milwaukee, was alleging Balsiger's company, International Outsourcing Services had cheated companies across the nation of $250 million over 10 years. The case, charged in 2007 but delayed almost a decade, went to trial in Milwaukee earlier this month.

William Clark, who was Balsiger's right-hand man in the company, testified in federal court in Milwaukee Thursday that in March 2006 a memo was being created by International Outsourcing's chief financial officer acknowledging the accounting practices used by the company were irregular. But the memo, which was edited repeatedly by Balsiger, sought to direct the blame on underlings. There was a note on the draft by Balsiger to "date back" the memo to 1998.

Clark said Balsiger wanted the memo finished before he left for his planned ascent of Everest, but that did not happen. An avid mountain climber, Balsiger was financing a team to help him ascend the peak, to complete a "Seven Summits" campaign. An attorney from the company accompanied Balsiger to base camp.

Clark said after Balsiger and the others left for Nepal, outside attorneys representing the company in the federal investigation learned of the plan to create the accounting memo. They told them to stop and directed that they hand over all drafts of it. They also summoned the attorney who was with Balsiger back to the U.S. He was reportedly flown off Everest by helicopter.

Balsiger was turned back short of Everest's peak. His story was featured in an Outside magazine article from that year. According to the article, the effort featured "a dozen Sherpas, seven guides, a $400,000 budget, and only one client." That was Balsiger.

Balsiger, who is representing himself in the fraud trial, questioned Clark Thursday, noting that coupons were just a small part of International Outsourcing's business. Balsiger's argument during the case has been that federal authorities don't understand how the coupon processing business worked and that others were responsible for any fraud that occurred.

The trial started earlier this month but has been delayed twice as Balsiger, 63, has been taken to the hospital via ambulance for high blood pressure.

Balsiger faces 27 fraud-related counts. He is one of 11 people indicted in March 2007, with the others pleading guilty or having charges dismissed and have testified against Balsiger.

At its peak, International Outsourcing handled an estimated 3 billion coupons every year, taking them from the stores, sending them to the manufacturers for redemption and returning the money to the stores, collecting a fee for the service.

The alleged fraud came when employees accepted coupons that supposedly came from small stores but were really from "chop crews," which took newspaper inserts, cut out coupons and submitted them as if a customer had used them. They took pristine-looking coupons and made them look worn, at one point putting them through a concrete mixer in Mexico. The phony coupons were added into the batch of coupons that came from larger stores.

Prosecutors are expecting to wrap up their case Friday or Monday. Balsiger will then put on his case. There is no jury. U.S. District Judge Charles Clevert is presiding over the trial and will render a verdict.

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