The fine line between legitimate businesses and pyramid schemes

Controversy is again casting a shadow over the multilevel marketing industry, as nutritional supplement company Herbalife Inc., which has thousands of distributors in the Chicago region, has been publicly called a pyramid scheme by a prominent investor — an allegation the company vigorously denies.

Meanwhile, a different multilevel marketer, Fortune Hi-Tech Marketing, was shut down in recent weeks after a lawsuit was brought by regulators and several states, including Illinois, alleging the company scammed consumers out of $169 million. The scheme affected an estimated 100,000 Americans, including some in Chicago, where it targeted Spanish-speaking consumers, the Federal Trade Commission alleged.

Most people outside the industry might have only a vague notion about multilevel marketing, also called network marketing and direct selling. It often involves personal sales of cosmetics, wellness products or home decor items — or as critics flippantly call it, "pills, potions and lotions" — usually sold through product parties hosted by friends or relatives.

For sellers, the companies offer the appeal of starting a business on the cheap with little training, working from home and being their own boss, if only for part-time money. Some might recruit friends and family to become sellers, which augments their own commissions and gives them a shot at the six-figure compensation many such marketing companies tout but few distributors attain.

The largest multilevel marketing companies, often known as MLMs, are household names: Avon, Mary Kay, Pampered Chef and Amway. MLMs have annual sales of about $30 billion, with about 16 million people in the United States selling their products, according to the industry group Direct Selling Association, which represents these firms and others.

The recent controversies might raise the question: What's the difference between a legitimate multilevel marketing company and an illegal pyramid scheme, in which only people who get in first — at the top of the pyramid-like structure — make money and everyone else is a dupe?

The harshest critics maintain there is no difference, that there's no such thing as a legitimate MLM and that the industry's secrets stay safe because of a cultlike mentality and a blind eye of regulators.

Jon M. Taylor, who was once a seller for an MLM company, said he has studied the industry for 18 years and analyzed more than 500 MLM companies. He maintains the website MLM-thetruth.com and offers a free e-book there.

"I have not yet found a good MLM — a good MLM is an oxymoron," Taylor said.

He said all MLM companies have the same flaw: They depend on endless chains of recruiting new members.  "There is no more unfair and deceptive practice than multilevel marketing," Taylor said.

Tracy Coenen, a forensic accountant and fraud investigator with Sequence Inc. in Chicago and Milwaukee, is author of the Fraud Files Blog. She is also a critic.

"Multilevel marketing companies are pyramid schemes that the government allows to operate," said Coenen. "The only difference is that Herbalife, or any multilevel marketing company, has a tangible product that they use to make their pyramid appear legitimate."

The Direct Selling Association says MLMs are legitimate businesses, and that the group has about 200 members carefully screened by the organization to ensure they are not pyramid schemes and don't use deceptive practices.

The Federal Trade Commission agrees there are legitimate MLMs. The difference between a legitimate business and pyramid scheme comes down to products.

If the company and its distributors make money primarily from the sale of products to end-users (and not boxes of product accumulating in a distributor's garage), it's OK.

By contrast, a pyramid scheme compensates those at the top of the pyramid with participation fees paid by those recruited at the bottom. It eventually collapses when the scheme can't recruit more people.

But identifying a pyramid scheme can be difficult because MLMs typically have product sales, along with recruitment fees and recruitment incentives.

"It gets cloudy when you have a situation where you have fees being paid for both," said Monica Vaca, assistant director of the FTC's division of marketing practices. "It's very nuanced."

While prosecuting an MLM can seem somewhat of a judgment call, cases have a common factor: deceptive promises about how much money distributors will earn, Vaca said.

In the Fortune Hi-Tech Marketing case filed last month, C. Steven Baker, director of the FTC's Midwest region, said, "These defendants were promising people that if they worked hard they could make lots of money. But it was a rigged game, and the vast majority of people lost money."

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Blizzard hits Northeast closing roads, cancelling flights

A blizzard slammed into the northeastern United States on Friday, snarling traffic, disrupting thousands of flights and prompting five governors to declare states of emergency in the face of a fearsome snowstorm.

Massachusetts Governor Deval Patrick announced a ban on most car travel starting Friday afternoon, while in Connecticut Governor Dannel Malloy closed the state's highways to all but emergency vehicles.

Winds were blowing at 35 to 40 miles per hour (56 to 64 km per hour) by Friday afternoon and forecasters expected gusts up to 60 mph as the evening wore on.

The blizzard left about 10,000 customers along the East Coast without power, and almost 3,500 flights were canceled.

Forecasters warned that about 2 feet of snow would blanket most of the Boston area with some spots getting as much as 30 inches. New York was due to get about a foot in some areas, while heavy snowfall was also expected in Connecticut and Maine.

"We're seeing heavier snow overspread the region from south to north," said Lance Franck, a meteorologist with the National Weather Service in Taunton, Massachusetts, outside Boston. "As the snow picks up in intensity, we're expecting it to fall at a rate of upwards of two to three inches per hour."

Early Friday evening, officials warned that the storm was just ramping up to full strength, and that heavy snow and high winds would continue through midday on Saturday. The governors of Massachusetts, Rhode Island, Connecticut, New York and Maine declared states of emergency and issued bans on driving by early Friday afternoon.

In many cases, authorities ordered non-essential government workers to stay home, urged private employers to do the same, told people to prepare for power outages and encouraged them to check on elderly or disabled neighbors.

People appeared to take the warnings seriously. Traffic on streets and ridership on public transportation was significantly lighter than usual on Friday.

"This is a very large and powerful storm, however we are encouraged by the numbers of people who stayed home today," Boston Mayor Thomas Menino told reporters.

In New York City, Mayor Michael Bloomberg suggested the storm created an opportunity to relax and catch up on sleep.

Even so, the storm caused a few accidents, including a 19-vehicle pile-up outside Portland, Maine, that sent one person to the hospital.

In addition to Friday's cancellations, more than 1,200 flights scheduled for Saturday were scratched, according to the website FlightAware.com.

The storm also posed a risk of flooding at high tide to areas still recovering from Superstorm Sandy last October.

"Many of the same communities that were inundated by Hurricane Sandy's tidal surge just about 100 days ago are likely to see some moderate coastal flooding this evening," said Bloomberg.

Brick Township in New Jersey had crews out building up sand dunes and berms ahead of a forecast storm surge, said Mayor Stephen Acropolis.

Travel became more difficult as the day progressed.

Amtrak suspended railroad service between New York, Boston and points north on Friday afternoon.

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Humble Damon cheers Oscar hopeful, friend Ben Affleck

BERLIN (Reuters) – It seems that wherever Matt Damon goes to promote his movies he is asked about something else altogether – his old friend and collaborator Ben Affleck, whose Iranian hostage drama “Argo” is in the running for a Best Picture Oscar.

Damon shared a screenplay Academy Award with Affleck for the 1997 film “Good Will Hunting” and has gone on to become one of the biggest stars in Hollywood, with blockbusters including the “Ocean’s Eleven” and “Bourne Identity” series.

He was in Berlin on Friday for the festival premiere of “Promised Land”, a tale set in rural America that tackles the controversial gas extraction technique known as “fracking”.

At a news conference following the press screening, the 42-year-old did not have to wait long for a question about Affleck, and, once again, he lavished praise on an actor who he said had endured his share of tough times.

“His life is so interesting that I kind of never get tired of talking (about it),” Damon joked.

Of the critical acclaim and string of awards for “Argo,” he said: “I’m really happy for him. He certainly deserves it.”

“He’s worked so hard and he’s taken it on the chin for years from the press and just from everywhere. He was really in a rough spot 10 years ago,” Damon told reporters, referring to the ridicule Affleck suffered during his romance with Jennifer Lopez and their 2003 movie flop “Gigli.”

The actor recalled Affleck once telling him he was “in the worst place you could be career-wise: I sell magazines and I don’t sell movie tickets’.”

Damon singled out some “fantastic” performances by Affleck in recent years: “Hollywoodland,” “The Town” and “Argo” itself, the last two of which he also directed.

He would not, however, be drawn on the chances of “Argo” landing the big prize at the Oscars on February 24.

PROMISED LAND “BOMBS”

Less successful has been “Promised Land,” which Damon readily admitted had “bombed” in the United States. It opens across Europe in February, March and April.

According to Boxofficemojo.com, the movie earned just $ 7.6 million at the North American box office.

“I’m leery of becoming one of those people who lives so much in a bubble that I just think everything I do is great,” he said. “I try to be mindful of that and listen.

“I’ve had a lot of movies that … haven’t been well received by an audience and I’m realistic about that, but with this one I just really love it and a big part of my heart is in it and I don’t understand what I’m hearing back.”

He said it was possible that “Promised Land,” also starring Frances McDormand and directed by “Good Will Hunting” filmmaker Gus Van Sant, would be appreciated more in the future.

“I’ve had movies bomb worse than this one and then actually make their money back.”

“Promised Land” is one of 19 movies in the main competition at the Berlin film festival running from Thursday to February 17.

Also screening on Friday were Polish entry “In the Name of” and Austrian director Ulrich Seidl’s “Paradise: Hope,” the final part in a trilogy looking at the lives of a single family, in this case an overweight teenager sent to a diet camp.

(Reporting by Mike Collett-White, editing by Jill Serjeant and Doina Chiacu)

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Well: Think Like a Doctor: A Confused and Terrified Patient

The Challenge: Can you solve the mystery of a middle-aged man recovering from a serious illness who suddenly becomes frightened and confused?

Every month the Diagnosis column of The New York Times Magazine asks Well readers to sift through a difficult case and solve a diagnostic riddle. Below you will find a summary of a case involving a 55-year-old man well on his way to recovering from a series of illnesses when he suddenly becomes confused and paranoid. I will provide you with the main medical notes, labs and imaging results available to the doctor who made the diagnosis.

The first reader to figure out this case will get a signed copy of my book, “Every Patient Tells a Story,” along with the satisfaction of knowing you solved a case of Sherlockian complexity. Good luck.

The Presenting Problem:

A 55-year-old man who is recovering from a devastating injury in a rehabilitation facility suddenly becomes confused, frightened and paranoid.

The Patient’s Story:

The patient, who was recovering from a terrible injury and was too weak to walk, had been found on the floor of his room at the extended care facility, raving that there were people out to get him. He was taken to the emergency room at the Waterbury Hospital in Connecticut, where he was diagnosed with a urinary tract infection and admitted to the hospital for treatment. Doctors thought his delirium was caused by the infection, but after 24 hours, despite receiving the appropriate antibiotics, the patient remained disoriented and frightened.

A Sister’s Visit:

The man’s sister came to visit him on his second day in the hospital. As she walked into the room she was immediately struck by her brother’s distress.

“Get me out of here!” the man shouted from his hospital bed. “They are coming to get me. I gotta get out of here!”

His brown eyes darted from side to side as if searching for his would-be attackers. His arms and legs shook with fear. He looked terrified.

For the past few months, the man had been in and out of the hospital, but he had been getting better — at least he had been improving the last time his sister saw him, the week before. She hurried into the bustling hallway and found a nurse. “What the hell is going on with my brother?” she demanded.

A Long Series of Illnesses:

Three months earlier, the patient had been admitted to that same hospital with delirium tremens. After years of alcohol abuse, he had suddenly stopped drinking a couple of days before, and his body was wracked by the sudden loss of the chemical he had become addicted to. He’d spent an entire week in the hospital but finally recovered. He was sent home, but he didn’t stay there for long.

The following week, when his sister hadn’t heard from him for a couple of days, she forced her way into his home. There she found him, unconscious, in the basement, at the bottom of his staircase. He had fallen, and it looked as if he may have been there for two, possibly three, days. He was close to death. Indeed, in the ambulance on the way to the hospital, his heart had stopped. Rapid action by the E.M.T.’s brought his heart back to life, and he made it to the hospital.

There the extent of the damage became clear. The man’s kidneys had stopped working, and his body chemistry was completely out of whack. He had a severe concussion. And he’d had a heart attack.

He remained in the intensive care unit for nearly three weeks, and in the hospital another two weeks. Even after these weeks of care and recovery, the toll of his injury was terrible. His kidneys were not working, so he required dialysis three times a week. He had needed a machine to help him breathe for so long that he now had to get oxygen through a hole that had been cut into his throat. His arms and legs were so weak that he could not even lift them, and because he was unable even to swallow, he had to be fed through a tube that went directly into his stomach.

Finally, after five weeks in the hospital, he was well enough to be moved to a short-term rehabilitation hospital to complete the long road to recovery. But he was still far from healthy. The laughing, swaggering, Harley-riding man his sister had known until that terrible fall seemed a distant memory, though she saw that he was slowly getting better. He had even started to smile and make jokes. He was confident, he had told her, that with a lot of hard work he could get back to normal. So was she; she knew he was tough.

Back to the Hospital:

The patient had been at the rehab facility for just over two weeks when the staff noticed a sudden change in him. He had stopped smiling and was no longer making jokes. Instead, he talked about people that no one else could see. And he was worried that they wanted to harm him. When he remained confused for a second day, they sent him to the emergency room.

You can see the records from that E.R. visit here.

The man told the E.R. doctor that he knew he was having hallucinations. He thought they had started when he had begun taking a pill to help him sleep a couple of days earlier. It seemed a reasonable explanation, since the medication was known to cause delirium in some people. The hospital psychiatrist took him off that medication and sent him back to rehab that evening with a different sleeping pill.

Back to the Hospital, Again:

Two days later, the patient was back in the emergency room. He was still seeing things that weren’t there, but now he was quite confused as well. He knew his name but couldn’t remember what day or month it was, or even what year. And he had no idea where he was, or where he had just come from.

When the medical team saw the patient after he had been admitted, he was unable to provide any useful medical history. His medical records outlined his earlier hospitalizations, and records from the nursing home filled in additional details. The patient had a history of high blood pressure, depression and alcoholism. He was on a long list of medications. And he had been confused for the past several days.

On examination, he had no fever, although a couple of hours earlier his temperature had been 100.0 degrees. His heart was racing, and his blood pressure was sky high. His arms and legs were weak and swollen. His legs were shaking, and his reflexes were very brisk. Indeed, when his ankle was flexed suddenly, it continued to jerk back and forth on its own three or four times before stopping, a phenomenon known as clonus.

His labs were unchanged from the previous visit except for his urine, which showed signs of a serious infection. A CT scan of the brain was unremarkable, as was a chest X-ray. He was started on an intravenous antibiotic to treat the infection. The thinking was that perhaps the infection was causing the patient’s confusion.

You can see the notes from that second hospital visit here.

His sister had come to visit him the next day, when he was as confused as he had ever been. He was now trembling all over and looked scared to death, terrified. He was certain he was being pursued.

That is when she confronted the nurse, demanding to know what was going on with her brother. The nurse didn’t know. No one did. His urinary tract infection was being treated with antibiotics, but he continued to have a rapid heart rate and elevated blood pressure, along with terrifying hallucinations.

Solving the Mystery:

Can you figure out why this man was so confused and tremulous? I have provided you with all the data available to the doctor who made the diagnosis. The case is not easy — that is why it is here. I’ll post the answer on Friday.

Friday Feb. 8 4:13 p.m. | Updated Thanks for all your responses. You can read about the winner at “Think Like a Doctor: A Confused and Terrified Patient Solved.”

---

Rules and Regulations: Post your questions and diagnosis in the comments section below.. The correct answer will appear Friday on Well. The winner will be contacted. Reader comments may also appear in a coming issue of The New York Times Magazine.

Correction: The patient’s eyes were brown, not blue.

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S&C relay at center of Super Bowl outage

An electrical relay device supplied by Rogers Park's S&C Electric Co. was found to be at the center of the Super Bowl power outage in New Orleans, the company said Friday.

S&C Electric Co. said the outage, which lasted for more than 30 minutes at Sunday's game, happened when the demand for Superdome power exceeding a "trip setting" for its electrical relay.

But the device didn't malfunction, S&C said. Instead, it said it found in testing that system operators didn't account for the amount of power needed at the Superdome. S&C doesn't control the power settings on its equipment.

S&C wouldn't go into more details, but the power provider for Sunday's game was Entergy New Orleans, a unit of Entergy Corp.

In a statement, Entergy said the relay device had functioned properly at other high-profile sporting events, including the Sugar Bowl.

The relay was designed to prevent an outage if a cable connection to the stadium failed.

"S&C continues to work with all those involved to get the system back online, and our customers can continue to rely on the quality and performance of our products," Spokesman Michael Edmonds said in a statement.

S&C equipment is commonly used where high reliability is critical, he said, including data centers for United Parcel Service Inc., drug manufacturing centers and hospitals. The company also works with other stadiums throughout the U.S. and Canada.

Entergy said in a statement that the Superdome relay has been removed and replacement equipment is being examined.

That statement came before a special meeting of the New Orleans City Council's Utility Committee Friday morning to discuss the root cause of the outage.

Immediately after the game, Entergy indicated its equipment was functional and the problem must have come from the Superdome, but later said it was launching an investigation to determine the source of the problem.

"While some further analysis remains, we believe we have identified and remedied the cause of the power outage and regret the interruption that occurred during what was a showcase event for the city and state," Entergy New Orleans President and CEO Charles Rice said.

sbomkamp@tribune.com | Twitter: @SamWillTravel

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Chicago area could get up to 5 inches of snow

A winter storm dumped almost 9 inches of heavy, wet snow in some far northern suburbs before tapering off this evening.

A winter storm warning was set to expire at midnight for Lake and McHenry counties, with Cook, DuPage and DeKalb counties under a winter weather advisory until midnight.

Some areas, such as near Beach Park, had 8.5 inches by this evening, with suburbs in Lake and McHenry counties expected to get a total of at least 6 inches, according to the National Weather Service. By this evening, Elgin recorded 4 inches, while Hanover Park saw 3.2 inches and Evanston 2.1 inches, according to the weather service.

Chicago sent out 199 of its snow and salt trucks and expected to patrol main streets throughout the evening rush.

The Illinois Tollway mobilized its full fleet of 182 snowplows during rush hour and throughout the evening across the 286-mile system, according to a release.

North and northwest suburbs saw numerous accidents, from Barrington to Antioch, according to Traffic.com.

In McHenry County, police warned motorists to avoid U.S. Route 31 between Crystal Lake and McHenry because the road was "impassable" where it crosses over a hill.

The Weather Service warned that today's storm produced what's "often referred to as a heart attack snow" because wet snow can cause people to overexert themselves, causing heart attacks.

"Be sure to take frequent breaks while shoveling so as not to overdo it," the weather service warned.

Some snow accumulation is possible into the early morning hours, with up to an inch in northern suburbs, according to the weather service. After a possibility of flurries Friday morning, the day will turn sunny and temperatures will go up to the low 30s. There will be gusty winds of up to 35 mph in the afternoon. Saturday is expected to be sunny and in the mid-30s. A high in the mid-40s is expected Sunday, with rain.

Photos: Chicago winter 2012-13

Still, the storm was nothing like the one barreling toward New England with forecasts of up to two feet of snow. A blizzard warning has been issued for New York City, Connecticut and the Boston area.

Forecasters warned the snow would begin lightly on Friday morning but ramp up to blizzard conditions by afternoon, leading Boston Mayor Thomas Menino to order the city's schools closed Friday. He asked businesses to consider allowing staff to stay home.

"We are hardy New Englanders, let me tell you, and used to these types of storms. But I also want to remind everyone to use common sense and stay off the streets of our city. Basically, stay home," Menino told reporters. "Stay put after noontime tomorrow."

The National Weather Service said Boston could get one to two feet of snow on Friday and Saturday, which would be its first major snow fall in about two years. Light snow is expected to begin falling around 7 a.m. EST on Friday, with heavier snow and winds gusting as high as 60 to 75 miles per hour as the day progresses.

"It's the afternoon rush-hour time frame into the evening and overnight when the height of the storm will be," said Kim Buttrick, a meteorologist at the National Weather Service in Taunton, Massachusetts. "That's when we expect the storm to begin in earnest."

The heaviest snow was expected around Boston, the region's most populous city, with cities from Hartford, Connecticut to Portland, Maine, expected to see at least a foot.

If more than 18.2 inches of snow fall in Boston, the storm will rank among the 10 biggest snowfalls on record in the city. The heaviest snowfall ever recorded in Boston was a 27.6 inch dump that accompanied the blizzard of February 17-18, 2003.

The storm's timing brought back memories of the blizzard of 1978, Boston's second-heaviest recorded snow fall, which roared in on an afternoon, dropping 27.1 inches of snow, trapping commuters on roadways and leaving dozens dead across the region, largely as a result of downed electrical lines.

Peter Judge, a spokesman for the Massachusetts Emergency Management Agency, said one of the state's biggest worry is power outages.

"It being winter, folks losing their power means they're also losing their heat, and if you lose heat during the middle of the storm, you're not going to be able to go out to get to a shelter," he said, adding that the agency would begin 24-hour operations at its emergency compound at noon (1700 GMT) on Friday and would be in close contact with local utilities.

Unlike the 1978 blizzard, which had been forecast to drop far less snow than it actually did, he said he hoped several days of news coverage about this storm would prompt people to stay off the roads.

"People have been warned, they have been told what the issues are," Judge said. "We don't expect people to be surprised."

Reuters contributed to this report.

chicagobreaking@tribune.com

Twitter: @chicagobreaking

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California boy to be arraigned in “swatting” prank on actor Kutcher

LOS ANGELES (Reuters) – Prosecutors charged a 12-year-old boy on Thursday with making a false emergency call that sent police swarming to the home of actor Ashton Kutcher in a “swatting” prank.

The name of the boy, who was arrested by Los Angeles police in December, was withheld due to his age. He was scheduled to be arraigned in a juvenile court in Los Angeles on Friday.

The trend toward placing false emergency calls is known as “swatting” because SWAT (Special Weapons and Tactics) officers often are sent to the purported crime scenes. Authorities say such situations can be dangerous due to the risk of a misunderstanding between police and occupants of a building.

The boy has been charged with two felony counts each of making false bomb threats and computer intrusion in connection with the October 3 emergency call that drew police to the Hollywood Hills home of Kutcher, star of the sitcom “Two and a Half Men,” and a similar call on October 10 that sent police to a Wells Fargo Bank.

Authorities have accused the boy of having reported men armed with guns and explosives in Kutcher’s home and that several people had been shot. Dozens of emergency personnel were sent to the house. Kutcher was not home at the time.

Swatting calls in recent months have also sent police to the homes of singers Justin Bieber and Miley Cyrus.

(Reporting by Alex Dobuzinskis; Editing by Bill Trott)

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Daniel Doctoroff Enlists Bloomberg in A.L.S. Research

Nicole Bengiveno/The New York Times

Daniel L. Doctoroff, second from right, chief executive of Bloomberg L.P., at Columbia University’s Motor Neuron Center.

Daniel L. Doctoroff watched in pain as his father developed a limp one day, was found to have Lou Gehrig’s disease, and died within two years. Then an uncle also developed symptoms of the same disease, and died soon after.

Now Mr. Doctoroff, like many other relatives of Lou Gehrig’s disease victims, worries that he or his children may someday develop the illness.

But unlike many, he is in a position to try to do something about it. At a time when scientists are making rapid gains in the genetic roots of many diseases, Mr. Doctoroff, a former deputy mayor and private equity investor, is working with Mayor Michael R. Bloomberg and a private equity director, David M. Rubenstein, to put together a $25 million package of donations to support research to try to cure this rare and usually fatal degenerative neurological illness.

“This is a devastating disease,” Mr. Doctoroff said in an interview this week in the glass high-rise on the Upper East Side that houses Bloomberg L.P., the mayor’s media and financial information company, where Mr. Doctoroff is now chief executive. “Up to now, there’s been basically no hope. I have the resources, and I think it’s my obligation to do that.”

The gift is part of a wave of investment based on the booming field of genomic analysis. The money will go to a project called Target A.L.S., a consortium of at least 18 laboratories, including ones at Columbia and at Johns Hopkins, the mayor’s alma mater, working to find biological “targets,” like gene mutations, and the biochemical changes they cause in the spinal cord, that could be used to test potential drug therapies for the disease, formally known as amyotrophic lateral sclerosis.

It comes on top of a previous $15 million gift by Mr. Doctoroff, Bloomberg Philanthropies and other donors. By comparison, the National Institutes of Health, the single largest source of research financing for the disease, expects to give $44 million in 2013.

This is not Mr. Bloomberg’s first time supporting charitable causes that are dear to his close associates. The mayor quietly gave at least $1 million to put the name of his top deputy mayor, Patricia E. Harris, on a new academic center at her alma mater, Franklin & Marshall College in Lancaster, Pa.

Mr. Doctoroff said the conversation about A.L.S. in which he got Mr. Bloomberg involved “lasted about five seconds.” He declined to say what share of the money each of the three donors was giving.

Mr. Rubenstein, a founder of the Carlyle Group, said Wednesday that he had long been fascinated with A.L.S. because of its association with Gehrig, the baseball player who died of it. He wondered why more than 70 years later so little progress had been made in treating it.

He said he jumped at the chance to join in because he thought that A.L.S. research was underfinanced owing to the rarity of the disease, and that even a small amount of money could make a big difference.

In the Bloomberg administration, where he was deputy mayor for economic development and rebuilding from 2002 to 2008, Mr. Doctoroff was best known for his dogged — and ultimately dashed — attempt to bring the 2012 Olympics to New York City. (London got the Games.) Now that he has left City Hall, he no longer rides his bike to work — he says the 2.6-mile route from the Upper West Side to his office is too short — but he sometimes runs.

At Bloomberg, he sits in front of a conference room with walls of hot-pink glass, while carp swim in a giant fish tank nearby. He keeps no family photos or other personal mementos on his desk, and talking about his family’s disease history does not seem easy for him.

A.L.S. is rare, with about 2 new cases diagnosed a year per 100,000 people, according to the A.L.S. Association. A vast majority of cases are “sporadic,” in people who have no family history, while only 5 to 10 percent of cases are inherited. There appear to be no racial, ethnic or socioeconomic predispositions.

There is some speculation about environmental factors, like exposure to toxic chemicals and high physical activity that athletes might endure, “but nothing firm,” said Christopher E. Henderson, a researcher at Columbia and the Target A.L.S. project’s scientific director. Some researchers suspect a link between A.L.S. and head trauma suffered by professional football players.

Mr. Doctoroff’s father, Martin, an appeals court judge in Michigan, received the diagnosis in 2000 and died in 2002. One of Martin Doctoroff’s brothers, Michael, was found to have the disease in 2009 and died in 2010.

“When my father contracted the disease and passed away, it was very easy to chalk it up to bad luck,” Mr. Doctoroff said. “When my uncle got it, it obviously had broader implications.”

Given his family history, Mr. Doctoroff estimates that there is a 50-50 chance that he has the gene, C9orf72, that could lead to A.L.S. But he has chosen not to be tested, which would have implications not just for him but for his three children. “It’s very personal, but I’m not sure that I want to know,” he said.

Even when family members develop the disease, it can occur at vastly different ages, so he could still be in suspense even after testing. “Assuming you have the gene, you don’t know when you would actually get the disease,” he said. His uncle was 71. His father was 66. He is now 54.

Sheelagh McNeill contributed reporting.

This article has been revised to reflect the following correction:

Correction: February 8, 2013

Because of an editing error, a picture caption on Thursday with an article about efforts by Daniel L. Doctoroff, a former deputy mayor of New York, to research Lou Gehrig’s disease misstated his title at Bloomberg L.P. in some editions. He is the chief executive, not the executive director.

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Justice weighs action against Moody's

(Reuters) - The Justice Department and multiple states are discussing also suing Moody's Corp for defrauding investors, according to people familiar with the matter, but any such move will likely wait until a similar lawsuit against rival Standard and Poor's is tested in the courts.

Inquiries into Moody's are in the early stages, largely because state and federal authorities have dedicated more resources to the S&P lawsuit, said the sources, who were not authorized to speak publicly about enforcement discussions.

Moody's spokesman Michael Adler and Justice Department spokeswoman Adora Andy declined to comment for this story.

Moody's in the past has defended itself against similar allegations, including a 2011 congressional report that concluded the major ratings agencies manipulated ratings to drive business.

The firm previously said Moody's takes the quality of its ratings and the integrity of the ratings process very seriously. It also said the firm has protections in place to separate the commercial and analytical aspects of its business.

The U.S. Justice Department filed a $5 billion lawsuit against S&P late on Monday and accused it of an egregious scheme to defraud investors in the run-up to the financial crisis, fueled by a desire to gain more business.

Shares of McGraw Hill Cos Inc , which owns S&P, have fallen more than 25 percent since news of the lawsuits. Moody's shares have fallen about 15 percent, even though it was not named in any of this week's actions.

"Don't think Moody's is off the hook," said one law enforcement official.

Another rival, Fimalac SA's Fitch Ratings, is unlikely to face similar action, the sources said, since it is a much smaller player in the U.S. ratings industry. The firm also escaped the brunt of scrutiny from congressional investigators.

In a sign of just how high-stakes the battle is, S&P hired prominent defense attorney John Keker, who has represented everyone from cyclist Lance Armstrong to Enron's Andrew Fastow.

S&P said in a statement on Tuesday that the lawsuit is meritless and said it will vigorously defend itself.

A similar coordinated federal-state action against Moody's would follow lawsuits two states have already filed against the ratings firm. Connecticut, which led the states in this week's actions, sued Moody's and S&P in March 2010.

In January a state court in Hartford denied the last of the preliminary motions Moody's had filed to have the case thrown out. That case and the one against S&P are proceeding to trial in the second half of 2014.

Democratic Senator Richard Blumenthal of Connecticut, who as then-attorney general brought the cases against S&P and Moody's in 2010, said he found rampant abuse across the credit rating industry.

"The difference is one of degree and scale rather than essential modus operandi," Blumenthal said in an interview. "S&P is the largest and they did the most sizeable amount of ratings with the largest profits."

CASE THEORY

Those earlier cases and the more recent ones against S&P are based on a theory that the firms misled investors by stating that their ratings on mortgage products were objective and not influenced by conflicts of interest.

Instead, the lawsuits contend, the firms inflated ratings and understated risks as the housing bubble started to burst, driven by a desire to gain more business from the investment banks that issued mortgage securities.

Framing the cases in that manner steers clear of attacking individual ratings, which have largely been shielded under free speech protections. Instead, the focus is on proving false just one statement S&P made - that its ratings were objective.

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Postal unions angry, customers unfazed about Saturday cut

Chicago Tribune reporter Rob Manker gathers some reactions to the recent news that the U.S. Postal Service plans to drop Saturday delivery of first-class mail by August. (Posted on: Feb. 6, 2013.)

The U.S. Postal Service's plan to end Saturday first-class delivery in August angered unions that stand to lose jobs and faces an uncertain fate in Congress.

But the decision, which the Postal Service says will save $2 billion a year, barely fazed a number of people interviewed at Chicago-area post offices.

"No one really sends letters anymore," said David Braunschweig, 63, who was at the Arlington Heights post office to mail a gift. "Putting away mail (both Saturday and Sunday), it won't kill anyone."

Hammered by competition that includes the Internet, the Postal Service lost nearly $16 billion last year and said doing away with first-class mail on Saturdays is essential to its recovery plan.

"It's an important part of our return to profitability and financial stability," Postmaster General and CEO Patrick Donahoe said at a news conference Wednesday in Washington. "Our financial condition is urgent."

The agency will continue delivering packages and filling post office boxes six days a week, and all offices that already were operating on Saturdays will continue to do so. Package volume is one bright spot for the Postal Service. It's up 14 percent since 2010, which officials attribute to the growth of online commerce.

The end of Saturday delivery would be the biggest change to mail service since the end of twice-daily delivery in the 1950s. Overall mail volume dropped by more than 25 percent from 2006 to 2011, which could explain the shrugs from several Chicago-area postal customers.

"I was accustomed to getting mail on Saturdays, but we will get accustomed to not getting it as well," Rich Klimczak, 74, said outside the Tinley Park post office. "The only thing I would not like to see is (postal workers) losing their jobs."

The move, which would take effect Aug. 5, aims to reduce the postal workforce by at least 20,000 more employees through reassignment and attrition. It would also significantly reduce overtime payments.

Local union officials estimated that 10,000 postal workers will have their workweek reduced because of the move. On Wednesday afternoon, the Chicago branch of the National Association of Letter Carriers called for Donahoe's resignation.

"USPS executives cannot save the Postal Service by tearing it apart," Cliff Guffey, president of the American Postal Workers Union, said in a statement. "These across-the-board cutbacks will weaken the nation's mail system and put it on a path to privatization."

The National Rural Letter Carriers' Association, which has about 1,500 members in the Chicago suburbs, said the elimination of Saturday service puts the Postal Service in a "death spiral."

Although the Postal Service no longer receives taxpayer money, it remains subject to oversight by Congress, which since 1983 has repeatedly passed measures requiring six-day delivery. Donahoe's announcement appeared to be an effort to force action in Congress after comprehensive postal reform legislation stalled last year.

While many members of Congress insist they would have to approve the cutback, Donahoe told reporters that the agency believes it can move forward unilaterally. The current mandate for six-day delivery is part of a government funding measure that expires in late March.

"There's plenty of time in there so if there is some disagreement" with lawmakers, "we can get that resolved," he said.

The divide among lawmakers on the issue does not break cleanly along party lines. Lawmakers who represent rural areas, who tend to be Republicans, generally have opposed service cutbacks. So have those with strong backing from postal labor unions, mostly Democrats.

Last year, the Senate approved a bill that would have allowed the Postal Service to end Saturday delivery after a two-year period to evaluate the potential effects. Similar legislation in the House never came up for a vote.

The Obama administration had included a proposal for five-day mail delivery in its 2013 budget plan. White House officials, however, had said they supported that change only in concert with other reforms. White House spokesman Jay Carney said Wednesday that officials had not yet studied the latest plan.

Sen. Tom Carper, D-Del., the new chairman of the Senate Homeland Security and Governmental Affairs Committee, expressed concern that the Postal Service's unilateral announcement could complicate his plans for overall reform.

However, he added, "It's hard to condemn the postmaster general for moving aggressively to do what he believes he can and must do to keep the lights on."

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