MILWAUKEE COUNTY

Former coupon boss guilty of fraud

John Diedrich
Milwaukee Journal Sentinel
Thomas "Chris" Balsiger, 63, former CEO of International Outsourcing Services.

The former CEO of the nation's largest coupon processing firm was found guilty Monday on a dozen fraud-related counts, in a sprawling case that dragged on in federal court in Milwaukee for nearly a decade.

U.S. District Judge Charles Clevert found Thomas '"Chris" Balsiger guilty on 12 counts including 10 fraud counts, one count of conspiracy to commit fraud and one count of attempted conspiracy. Balsiger was not guilty on the remaining 15 counts.

The trial, which stretched over five weeks earlier this fall, was presided over by Clevert instead of a jury.

Balsiger's sentencing is set for March 6. He faces 30 years to life in prison, according to Assistant U.S. Attorney Richard Frohling, one of the prosecutors in the case.

Balsiger, 63, will remain out of jail in the meantime but will be on electronic monitoring back in his home in El Paso, Texas.

Clevert rejected an argument by Frohling that Balsiger is a flight risk and a danger to the community and should be locked up prior to sentencing.

Frohling listed a litany of reasons why Balsiger should be locked up, noting he traveled internationally several times since charges were filed, including a one-day trip to Greece where he had business holdings. Balsiger lives near Mexico and often crosses the border for business, Frohling said.

Balsiger also has threatened to sue anyone who opposed him and implied to prosecutors that doing their job in the case would be a "life-altering event" and said they would be disbarred, Frohling said. Balsiger also sought to shake down prosecutors for money, Frohling said.

Balsiger said those comments were taken out of context.

In rejecting the government's argument, Clevert said the fact that Balsiger had come to court for all the hearings and is promising to appeal the conviction makes him a good bet to come back to court.

Balsiger, the former head of International Outsourcing Services, was portrayed in the trial as an iron-fisted boss who orchestrated a massive fraud and then sought to deflect blame on others.

Balsiger represented himself in the trial, which was halted twice when he went to the hospital with dangerously high blood pressure.

Balsiger claimed he was the victim of a plot by his competitors, and an overzealous investigation by FBI agents and federal prosecutors who didn't understand the coupon business. Balsiger was not available for comment after the verdicts were read as he went straight to the probation office.

The federal investigation, launched out of Milwaukee as a number of the victim businesses were in Wisconsin, alleged Balsiger's company, International Outsourcing, had cheated companies across the nation of $250 million over 10 years.

Balsiger was one of 11 people indicted in March 2007, with the others pleading guilty or having charges dismissed. Several of them 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 was when the firm 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, putting them in bins and 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 and sent in for payment.