Author tells businesses to be like Mike

CAPTIONS

MJ in 1982
Michael Jordan in his college days with teammates Matt Doherty (44) and Sam Perkins and coach Dean Smith. (AP photo by Robert Willett /October 14, 1982)

By Samantha Bomkamp




Tribune reporter

10:11 a.m. CST, February 27, 2013

An author of a new book has some sage advice for business leaders: Be more like Michael Jordan.

Bruce Piasecki, who penned "Doing More with Teams: The New Way to Winning," says Michael Jordan's long and storied career "is a shining example of how the best teams operate."

Jordan shouldn't be emulated just because of the Bulls star's individual success, the author says, but by the way he showed leadership and helped create a seemingly unstoppable team, meshing with different personalities such as the quiet Scottie Pippen and outrageous Dennis Rodman to create a basketball dynasty.

Those team dynamics are similar in the business world, the author says. And businesses are most successful when they are led by the right leaders and are composed of a mix of people with varying talents, he argues.

Jordan also is held up as an example in other tenets of good business teamwork the author describes.

-- Ego and individual goals have no place on teams.

"When we pin all our hopes on a single individual and ignore the context in which he or she operates, we will be disappointed," he says.

--  Failure is part of winning.

"Leaders must instill in teams a tolerance of losing," he said. "We must convey that failure is a part of life and thus a part of business."

Jordan, who helped the Chicago Bulls win six NBA championships, famously said "I've failed over and over and over again in my life, and that is why I succeed."

The book is set to be released next month but is available for pre-order on Amazon.com.

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Polls open to find likely successor to ex-Rep. Jackson Jr.

Election Day in Cicero and 2nd District. Polls open from 6 a.m. to 7 p.m.

Voters are headed to the polls today to pick the likely successor to disgraced former U.S. Rep. Jesse Jackson Jr. in a congressional district covering the South Side and south suburbs.

There are primaries for both political parties, but the 2nd District is so heavily Democratic that whoever emerges from the crowded Democratic field is expected to easily win the April 9 special general election. Polls are open from 6 a.m. to 7 p.m.

Today's voting follows weeks of candidate forums, an accelerated campaign schedule and a flurry of TV ads from the mayor of New York. While the top-tier candidates among the 14 Democrats vying for the primary nomination are known — former state Rep. Robin Kelly, former U.S. Rep. Debbie Halvorson and Chicago 9th Ward Ald. Anthony Beale — there also are some big unknowns. Voter turnout, already anticipated to be very low, could be exacerbated by nasty weather.

Kelly voted early. Beale and Halvorson planned to vote today. All three candidates have a slew of campaign stops scheduled before gearing up for evening parties where they'll watch the results come in.

The results of early voting held between Feb. 11 and Saturday demonstrated a lack of interest in the contest, despite its ramifications in deciding who will represent voters and their disparate interests in the vast district.

A majority of the district's Democratic voters live in suburban Cook County, with an additional one-third from the South Side. The district also includes parts of eastern Will County and all of Kankakee County, and together the two regions make up slightly less than 10 percent of the Democratic vote.

In suburban Cook, 4,459 early votes were cast, with 98 percent of those voters taking Democratic ballots. Of the 11 suburban early voting locations, Matteson Village Hall, in Kelly's hometown, had the most with 1,601 voters.

In Chicago, 98 percent of the 2,768 early voters cast Democratic ballots. Only 63 early votes were cast for Republicans.

In Will, 246 voters cast early ballots, all but 40 of them Democratic votes. Kankakee County officials reported 699 early ballots, with 533 voting Democrat and 166 Republican.

"I just think if it was a regular race, then they'd look a little bit different," Kelly said of the low early voting totals. "I also think because (the special primary) came so close to the November election that there's some (voter) fatigue."

But in a large field of candidates and questionable turnout, a nomination for Congress could be decided by mere hundreds of votes. Even as forecasters sounded warnings of a Tuesday smorgasbord of wintry weather, candidates sought to energize core supporters to help get out the vote.

In an email to supporters, Kelly's campaign pleaded for volunteers to help get voters to the polls and asked for money for its get-out-the-vote field operation.

Halvorson acknowledged the early voting numbers were "paltry" and that voter turnout would be a "huge" factor Tuesday. Halvorson said she believed turnout could be driven by the district's history of scandals — including last week's guilty plea by Jackson on federal charges of illegally converting about $750,000 in campaign cash to personal use.

"I think this race has gotten so much attention and people are so angry about what the 2nd Congressional District has had to deal with over the years that they're going to take a special interest to make sure they are going to vote for someone who is completely different than what they've seen," said Halvorson, of Crete.

Halvorson also has been the target of the most extensive advertising in the contest, more than $2.2 million worth of TV and mail attacks by New York Mayor Michael Bloomberg's super political action committee, centered on her past National Rifle Association support. Bloomberg's Independence USA PAC is backing Kelly.

Beale said the low number of early ballots puts all the more importance on Election Day field efforts. He said that well-established organizations in the six city wards in the district could serve as an advantage for his campaign.

"It's just slow across the board, and that just goes to show it is going to be a very low turnout," Beale said of the early votes. "We're just making sure we're targeting our core, solid voters, and we're going to get them out to the polls and be victorious Tuesday night."

rap30@aol.com
bruthhart@tribune.com

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Books: Gauging Faces and Bodies in the Botox Age

You never know what a little vanity will do for a person’s health. Some people bloom in their quest for physical improvement, others wither, and a few are completely destroyed. Despite centuries’ worth of efforts to penetrate the complicated thickets where health and beauty intertwine, there is always more to explore, as two new books make clear.

Dr. Eric Finzi, a dermatologist in the Washington area, has produced what may be the first authorized biography of botulinum toxin, the fearsome poison that, bottled into mild-mannered Botox, enhances foreheads everywhere. This little molecule does its good work by paralyzing muscles: In the forehead it inactivates the frown-producing corrugators, while used elsewhere on the head and body it can alleviate migraine headaches, stop problem sweating and ease the spasticity associated with a range of neurological diseases.

But even those who know all about the drug’s physical effects will be intrigued by Dr. Finzi’s narrative, because it turns out that cosmetic Botox may not be all about vanity after all. Research studies, including some by Dr. Finzi, have found that the substance appears to alleviate depression more safely and perhaps more effectively than the usual treatments.

That result at first seems trivial and obvious: If you stop frowning at people, they’ll like you more  and treat you better, and you won’t feel so blue. But the process turns out to be considerably more sophisticated and complicated, because it appears to apply even to people without visible frown lines.

Dr. Finzi calls it “noncosmetic cosmetic surgery” and traces the postulated mechanism to some of the lesser-known work of William James and Charles Darwin. Both thinkers argued that facial expressions are not just the outward manifestations of emotion, but vital links in the unconscious neurological processes that create emotion. In other words, if you cannot smile, you will never be as happy as if you could, and if you cannot frown, you will be unable to experience the full intensity of the negative emotions manifested by frowning, depression included.

This “facial feedback hypothesis” has found some modern confirmation in a study showing that injections of Botox into the forehead seem to inhibit activation of the amygdala, the brain structure thought to regulate all gut-wrenching emotion.

Dr. Finzi expands his narrative with a discussion of the subtleties of common facial expressions, including homage to interested parties like Norman Cousins and his idea that laughter could cure disease.

But the book’s major focus is the frown: Dr. Finzi offers anecdotes suggesting that taming overactive corrugators may save marriages and boost careers, and then, spinning some of the still largely debatable theories linking depression and anger with chronic disease, he postulates that Botox treatments may someday prove to help forestall heart disease and cancer.

That’s quite a set of achievements for one bad little molecule, gram for gram the most potent toxin we know. Dr. Finzi is no stylist, but the momentum of his argument keeps the reader with him for the duration (and undoubtedly quite a few overactive corrugators will be soothed into submission as a result).

The complexities of the face almost pale in comparison with those of the torso, as Abigail C. Saguy makes clear in “What’s Wrong With Fat?” “Once you put down this book you will never hear the word ‘obesity’ the same way again,” she promises, and she is absolutely correct.

Dr. Saguy, a sociologist at U.C.L.A., methodically teases out all the overtones of the loaded words we use to describe big bodies. These bodies are, after all, neither good nor bad, just big.

But “fat” often implies the coexistence of sloth, gluttony and self-indulgence. “Obesity” equals disease to medical professionals, while in the world of public health it is a raging epidemic with substantial global mortality. Those immersed in the conventional ideals of beauty see being overweight as an aesthetic disaster, but others find it sexually irresistible, and to activists “fat” has become a rallying cry, with weight-based discrimination a violation of social justice as deplorable as that stemming from race or gender.

In fact, the concept of bigness has become so laden with overtones good and bad — guilt, blame, fear, anger and desire, among others — that finding a value-free way to describe men and women who are larger than average has become almost impossible. “Heavy,” “plus-size,” “corpulent” and “fleshy” all carry weighty implications in one sphere or another.

Dr. Saguy analyzes it all, and asks why. She winds up paying particular attention to the debate in the medical world over the actual health consequences of being fat: Studies keep confounding the reigning supposition that thin is best with evidence that modestly overweight may be even better. Meanwhile, those who are larger than average are routinely blamed for their size, a phenomenon augmented by deplorably simplistic media coverage (unlike anorexia, interestingly enough, which is remarkably free of the same connotations of personal fault).

Much of Dr. Saguy’s text is academic and requires some determination to penetrate, but she also provides immensely readable nuggets, notably a brief discussion of her experiences attending an annual convention of the National Association to Advance Fat Acceptance, where, seven months pregnant, she underwent a funhouse-mirror body-image transformation worthy of Alice in Wonderland. Like Dr. Finzi’s narrative deficiencies, hers fade into unimportance in the face of fascinating and illuminating material.

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JPMorgan to eliminate 4,000 jobs in 2013

JPMorgan Chase & Co. plans to cut 3,000 to 4,000 jobs in its consumer bank in 2013, representing about 1.5 percent of the company's overall workforce, it said in a presentation to investors on Tuesday.

The cuts will come mainly through attrition, spokeswoman Kristin Lemkau said.

Additionally, Forbes reports that job cuts in its mortgage and community banking units could total 19,000.

JPMorgan Chase had 258,965 employees globally at the end of 2012. Its headcount rose following the financial crisis, to 262,882 in the second quarter of 2012 from 219,569 in the first quarter of 2009. Since last year's second quarter, staffing levels have drifted lower.

The bank has been building more branches even as competitors such as Bank of America Corp have scaled back. But its consumer bank business is also looking to reduce costs in its branches by staffing them more efficiently, JPMorgan Chase said in the presentation.

JPMorgan Chase had 5,614 branches at the end of 2012, making its network the second-biggest in the United States behind Wells Fargo & Co. JPMorgan is No. 3 in deposits, behind Bank of America and Wells Fargo.

The bank hopes to sell more services, such as wealth management, at its branches, and allow its automated teller machines to handle more routine transactions such as check deposits.

JPMorgan Chase said in its presentation that it is aiming to cut overall expenses by $1 billion in 2013.
 

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Boy, 16, charged with Bucktown home invasion, assault

Chicago Tribune reporter Adam Sege with Sunday's Chicago overnight crime report, including details on a sexual assault in Bucktown.

Staff report

9:16 a.m. CST, February 25, 2013

A 16-year-old boy is accused of breaking into a Bucktown home, sexually assaulting a woman at gunpoint, then forcing her into her own car and driving off, authorities said.

Marcos Cervantes eventually dropped off the 43-year-old woman and was later arrested when police traced a cell phone he had stolen from the victim, authorities said. The woman was treated at a hospital.

Cervantes has been charged as an adult with home invasion by armed force, aggravated criminal sexual assault with a weapon, aggravated kidnapping and aggravated vehicular hijacking, according to police and prosecutors. He was expected to appear in bond court today, prosecutors said.

The attack occurred shortly after noon Sunday in the 2100 block of West Moffat Street, Police News Affairs Officer Ron Gaines said.

The boy was arrested about 2:30 p.m. at West Roosevelt Road and South Western Avenue in the Douglas Park neighborhood.

chicagobreaking@tribune.com

Twitter: @ChicagoBreaking

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Mediterranean Diet Can Cut Heart Disease, Study Finds

About 30 percent of heart attacks, strokes and deaths from heart disease can be prevented in people at high risk if they switch to a Mediterranean diet rich in olive oil, nuts, beans, fish, fruits and vegetables, and even drink wine with meals, a large and rigorous new study found.

The findings, published on the New England Journal of Medicine’s Web site on Monday, were based on the first major clinical trial to measure the diet’s effect on heart risks. The magnitude of the diet’s benefits startled experts. The study ended early, after almost five years, because the results were so clear it was considered unethical to continue.

The diet helped those following it even though they did not lose weight and most of them were already taking statins, or blood pressure or diabetes drugs to lower their heart disease risk.

“Really impressive,” said Rachel Johnson, a professor of nutrition at the University of Vermont and a spokeswoman for the American Heart Association. “And the really important thing — the coolest thing — is that they used very meaningful end points. They did not look at risk factors like cholesterol of hypertension or weight. They looked at heart attacks and strokes and death. At the end of the day, that is what really matters.”

Until now, evidence that the Mediterranean diet reduced the risk of heart disease was weak, based mostly on studies showing that people from Mediterranean countries seemed to have lower rates of heart disease — a pattern that could have been attributed to factors other than diet.

And some experts had been skeptical that the effect of diet could be detected, if it existed at all, because so many people are already taking powerful drugs to reduce heart disease risk, while other experts hesitated to recommend the diet to people who already had weight problems, since oils and nuts have a lot of calories.

Heart disease experts said the study was a triumph because it showed that a diet is powerful in reducing heart disease risk, and it did so using the most rigorous methods. Scientists randomly assigned 7,447 people in Spain who were overweight, were smokers, had diabetes or other risk factors for heart disease to follow the Mediterranean diet or a low-fat one.

Low-fat diets have not been shown in any rigorous way to be helpful, and they are also very hard for patients to maintain — a reality born out in the new study, said Dr. Steven E. Nissen, chairman of the department of cardiovascular medicine at the Cleveland Clinic Foundation.

“Now along comes this group and does a gigantic study in Spain that says you can eat a nicely balanced diet with fruits and vegetables and olive oil and lower heart disease by 30 percent,” he said. “And you can actually enjoy life.”

The study, by Dr. Ramon Estruch, a professor of medicine at the University of Barcelona, and his colleagues, was long in the planning. The investigators traveled the world, seeking advice on how best to answer the question of whether a diet alone could make a big difference in heart disease risk. They visited the Harvard School of Public Health several times to consult Dr. Frank M. Sacks, a professor of cardiovascular disease prevention there.

In the end, they decided to randomly assign subjects at high risk of heart disease to three groups. One would be given a low-fat diet and counseled on how to follow it. The other two groups would be counseled to follow a Mediterranean diet. At first the Mediterranean dieters got more intense support. They met regularly with dietitians while the low-fat group just got an initial visit to train them in how to adhere to the diet followed by a leaflet each year on the diet. Then the researchers decided to add more intensive counseling for them, too, but they still had difficulty staying with the diet.

One group assigned to a Mediterranean diet was given extra virgin olive oil each week and was instructed to use at least 4 tablespoons a day. The other group got a combination of walnuts, almonds and hazelnuts and was instructed to eat about an ounce of them each day. An ounce of walnuts, for example, is about a quarter cup — a generous handful. The mainstays of the diet consisted of at least 3 servings a day of fruits and at least two servings of vegetables. Participants were to eat fish at least three times a week and legumes, which include beans, peas and lentils, at least three times a week. They were to eat white meat instead of red, and, for those accustomed to drinking, to have at least 7 glasses of wine a week with meals.

They were encouraged to avoid commercially made cookies, cakes and pastries and to limit their consumption of dairy products and processed meats.

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Horsemeat found in IKEA meatballs

Sweden's IKEA halted sales of its trademark Swedish meatballs in 13 European countries after tests in the Czech Republic on Monday showed the product contained horsemeat.

IKEA, the world's No. 1 furniture retailer and known also for its signature cafeterias in its huge out-of-town stores, said it had stopped sales of all meatballs from a batch implicated in the Czech tests.

The checks were carried out in response to a Europe-wide scandal that erupted last month when tests carried out in Ireland revealed some beef products contained horsemeat. This has triggered recalls of ready-made meals and damaged confidence in Europe's vast and complex food industry.

"We take this very seriously," said IKEA spokeswoman Ylva Magnusson at the company's headquarters in Helsingborg, southern Sweden. "We have stopped selling that specific batch of meatballs in all markets where they may have been sold."

The meatballs, pulled from shelves at IKEA's stores after Czech inspectors discovered they contained horsemeat, had been available in stores in several European countries, the company's Czech spokesman said on Monday.

Besides the Czech Republic, they had also been on sale in Britain, Portugal, Netherlands, Belgium, Slovakia, Hungary, France, Italy, Spain, Greece, Cyprus and Ireland, Magnusson said.

All IKEA's meatballs are produced in Sweden by supplier Familjen Dafgard, which said on its website it was investigating the situation and would receive further test results in the coming days.

IKEA's Magnusson said hopes were that test results would determine the percentage of horsemeat in the meatballs, and that there was is no indication any other batch had been affected.

In Italy, one of the countries where meatballs from the batch were withdrawn from sale, consumer rights group Codacons called for checks on all meat products sold by IKEA in Italy.

"We are ready to launch legal action and seek compensation not only against the companies who are responsible but also those whose duty it was to protect citizens," Codacons President Carlo Rienzi said in a statement.

The Czech State Veterinary Administration reported its findings to the EU's Rapid Alert System for Food and Feed, it said in a statement.

The inspectors took samples for DNA tests in IKEA's unit in the city of Brno from a product labelled as "beef and pork meatballs", the statement said.

Meatballs, a famous Swedish dish, have become a trademark for IKEA across its markets.

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Daytona 500 still a go despite accident that injured fans

DAYTONA BEACH, Fla. —

The Daytona 500 NASCAR race will go ahead on Sunday despite a crash on Saturday that injured more than 20 fans, questions over the safety of the famous speedway and the possibility of lawsuits.

Officials said they had repaired the fencing that was damaged after the pile-up which sent debris flying into the crowd and injuring fans on the final lap of Saturday's second-tier Nationwide race.

Halifax Health spokesman Byron Cogdell said that seven people were treated for injuries at their facility but two who had initially been listed as critical were now in a stable condition.

Another injured spectator was being treated at Florida Hospital Memorial Medical Center in Daytona Beach, but their condition was not available.

Fourteen other fans had been treated on site at the track before being released, said Daytona International Speedway president Joei Chitwood.

Chitwood said any fans in the affected area who were concerned about the safety of their seat position would be relocated.

"If fans are unhappy with...their seating location or if they have any incidents, we would relocate them. We will treat that area like we do every other of the grandstand.

"If a fan is not comfortable where they are sitting, we make every accommodation we can," he said.

NASCAR and the speedway could face millions of dollars' worth of claims from the injured, litigation that would likely center on the sturdiness of the safety fence that was supposed to keep fans from danger, according to several plaintiffs' lawyers.

"Maybe the fence should have been higher; maybe there should have been more spacing between the track and spectators," said Adam Levitt, a lawyer with Grant & Eisenhofer.

However, lawyers also said the auto-racing business would likely point to the disclaimers that it typically displays on tickets, which are designed to exempt NASCAR from any potential injury liability. They expected NASCAR would argue that fans knew what they were getting into when signing up for the race.

NEW FENCING

Both the speedway and NASCAR have said they will closely review the incident in search of any ways they could improve safety.

Chitwood said new, 22-feet-high (6.7 metres) fencing had been put in place three years ago following a review of a crash involving Colin Edwards at Talladega in 2009.

"If you look at our 55 years in the business, we have a pretty good safety track record. I think we are prepared today," said Chitwood.

However, three-times Indianapolis 500 winner Johnny Rutherford said a change might be needed.

"Maybe a double fence, one behind the other with some space in between to stop something like this," he told reporters.

"But there are a lot of things and NASCAR and Indy Car racing are looking at everything they can to make it safer.

"What happened yesterday was a terrible thing because we expect (danger) that is part of it, we have to roll the dice and move on but you don't want to involve the fans," he said.

NASCAR's senior vice-president of racing operations Steve O'Donnell said he would tell any nervous fans that organisers were confident of their safety.

"I would tell them that the fans are our first priority. Obviously we want everyone to be safe at an event," he told reporters.

"We've talked to the speedway. We are confident in what's in place at today's event. Certainly still thinking about those affected but we are confident to move forward for this race," he added.

Fans streamed into the 167,000-capacity venue on Sunday and there was little indication of concern over safety.

"I feel safe. I think anywhere you go you run the risk of being injured but NASCAR does everything they can to protect the fans. They treat the fans like royalty here, it is amazing," said Vinny Nigro of New York City.

Another fan, Brad Stefka from Springfield, Missouri, said that while not particularly worried he would avoid the seating closest to the track.

"I just won't get down low. I would imagine that everyone who comes knows there is some element of danger if the cars are going that fast, if there is going to be a serious impact," he said.

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The Texas Tribune: Advocates Seek Mental Health Changes, Including Power to Detain

Matt Rainwaters for Texas Monthly

The Sherman grave of Andre Thomas’s victims.

SHERMAN — A worried call from his daughter’s boyfriend sent Paul Boren rushing to her apartment on the morning of March 27, 2004. He drove the eight blocks to her apartment, peering into his neighbors’ yards, searching for Andre Thomas, Laura Boren’s estranged husband.

Expanded coverage of Texas is produced by The Texas Tribune, a nonprofit news organization. To join the conversation about this article, go to texastribune.org.

For more articles on mental health and criminal justice in Texas, as well as a timeline of the Andre Thomas case: texastribune.org

Matt Rainwaters for Texas Monthly

Laura Boren

He drove past the brightly colored slides, swings and bouncy plastic animals in Fairview Park across the street from the apartment where Ms. Boren, 20, and her two children lived. He pulled into a parking spot below and immediately saw that her door was broken. As his heart raced, Mr. Boren, a white-haired giant of a man, bounded up the stairwell, calling out for his daughter.

He found her on the white carpet, smeared with blood, a gaping hole in her chest. Beside her left leg, a one-dollar bill was folded lengthwise, the radiating eye of the pyramid facing up. Mr. Boren knew she was gone.

In a panic, he rushed past the stuffed animals, dolls and plastic toys strewn along the hallway to the bedroom shared by his two grandchildren. The body of 13-month-old Leyha Hughes lay on the floor next to a blood-spattered doll nearly as big as she was.

Andre Boren, 4, lay on his back in his white children’s bed just above Leyha. He looked as if he could have been sleeping — a moment away from revealing the toothy grin that typically spread from one of his round cheeks to the other — except for the massive chest wound that matched the ones his father, Andre Thomas (the boy was also known as Andre Jr.), had inflicted on his mother and his half-sister as he tried to remove their hearts.

“You just can’t believe that it’s real,” said Sherry Boren, Laura Boren’s mother. “You’re hoping that it’s not, that it’s a dream or something, that you’re going to wake up at any minute.”

Mr. Thomas, who confessed to the murders of his wife, their son and her daughter by another man, was convicted in 2005 and sentenced to death at age 21. While awaiting trial in 2004, he gouged out one of his eyes, and in 2008 on death row, he removed the other and ate it.

At least twice in the three weeks before the crime, Mr. Thomas had sought mental health treatment, babbling illogically and threatening to commit suicide. On two occasions, staff members at the medical facilities were so worried that his psychosis made him a threat to himself or others that they sought emergency detention warrants for him.

Despite talk of suicide and bizarre biblical delusions, he was not detained for treatment. Mr. Thomas later told the police that he was convinced that Ms. Boren was the wicked Jezebel from the Bible, that his own son was the Antichrist and that Leyha was involved in an evil conspiracy with them.

He was on a mission from God, he said, to free their hearts of demons.

Hospitals do not have legal authority to detain people who voluntarily enter their facilities in search of mental health care but then decide to leave. It is one of many holes in the state’s nearly 30-year-old mental health code that advocates, police officers and judges say lawmakers need to fix. In a report last year, Texas Appleseed, a nonprofit advocacy organization, called on lawmakers to replace the existing code with one that reflects contemporary mental health needs.

“It was last fully revised in 1985, and clearly the mental health system has changed drastically since then,” said Susan Stone, a lawyer and psychiatrist who led the two-year Texas Appleseed project to study and recommend reforms to the code. Lawmakers have said that although the code may need to be revamped, it will not happen in this year’s legislative session. Such an undertaking requires legislative studies that have not been conducted. But advocates are urging legislators to make a few critical changes that they say could prevent tragedies, including giving hospitals the right to detain someone who is having a mental health crisis.

From the time Mr. Thomas was 10, he had told friends he heard demons in his head instructing him to do bad things. The cacophony drove him to attempt suicide repeatedly as an adolescent, according to court records. He drank and abused drugs to try to quiet the noise.

bgrissom@texastribune.org

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Promise, peril seen for crowd-funding investors

Crowd funding is widely seen as a revolutionary idea.

A 2012 federal law known as the JOBS Act opens the door to allowing small, privately owned businesses to market ownership stakes in their ventures to people over the Internet.

Companies will be able to sell up to $1 million in equity a year to ordinary investors without having to register the offering with the Securities and Exchange Commission or state regulators.

Before the average person can use crowd funding to stake a claim in a startup, the SEC still must draft rules that the Obama administration hopes will result in U.S. businesses growing and adding jobs. At the same time, the securities cop needs to include safeguards that protect less sophisticated individual investors drawn to inherently risky startups.

That's why equity crowd funding under JOBS, or Jumpstart our Business Startups, has some longtime regulators and securities lawyers squirming.

"It can be an invitation for fraudsters to steal money," Matthew Brown, a Katten Muchin Rosenman lawyer, said last month at a CFA Society of Chicago event at 1871, a center for digital startups in Chicago.

But Brown also noted that equity crowd funding also democratizes small-business financing, a process that historically has given access mostly to wealthier — or, as they're known in high-finance circles, "accredited" — investors.

"The world has changed dramatically, and who's to say who is smarter than anyone else?" Brown added.

Many existing crowd-funding platforms such as Kickstarter don't sell equity stakes in businesses to average investors. Rather, they give consumers the chance to donate money to an enterprise or to get an early or discounted crack at a new product. Since Kickstarter's launch in April 2009, more than $450 million has been pledged by more than 3 million people funding more than 35,000 projects, the New York-based company's website says.

Their acceptance suggests that consumers are willing to engage with companies on a deeper level. As such, enabling unaccredited consumers to invest in companies in small increments online has promise and could become part of the fundraising "ecosystem," says one Chicago entrepreneur.

Abe's Market, a Chicago-based e-commerce site selling natural and organic products from more than 1,000 suppliers, said it would consider crowd funding under the JOBS Act, saying it and its vendors have "die-hard fans" and "a core group of customers" who might like to invest in their vision.

Last month, Abe's raised $5 million from Carmel Ventures, Index Ventures, Beringea and Accel Partners, a Groupon backer. New backers include OurCrowd, a crowd-funding site for accredited investors.

"If you can get passionate people to invest in your business, you're not just gaining investors, you're gaining evangelists," Abe's Chief Executive Richard Demb said. "The challenge for any consumer brand is: How do you find not just customers, but the right customers who are going to tell their friends?"

But there would also be potential headaches for companies raising equity financing through crowd funding, he said.

"You have to make sure that expectations would be set fairly, that no one is putting their life savings into the investment, and that they don't also come back and become a challenge to manage as the business grows," Demb said. "You don't want someone who invested $250 to come back and say, 'I don't think we should expand to the West Coast.'"

Safeguards for average investors exist in the JOBS Act. They include capping nonaccredited individuals' crowd-funding investments at $2,000, or 5 percent of annual income or net worth of less than $100,000, whichever is greater.

Snapclass, launched a few weeks ago at 1871, provides software enabling businesses to provide training online. Co-founder Scott Mandel, who has financed the company himself, doesn't expect to take advantage of equity crowd funding in the future and instead would seek, say, venture capital funding.

"Not all checks are the same," said Mandel, previously a trader and professional poker player. "I'd want someone who could add more than just the cash, such as connections and experience and help with things that I'm not an expert in."

One of 1871's fastest-growing startups is MarkITx. It recently raised $1.2 million from wealthy individuals in its first fundraising round, has seven employees and is looking to add sales jobs. It's an online exchange for businesses wanting to buy and sell used information technology equipment, from iPads to Oracle servers.

"For us, it wouldn't be the sole way to raise money, but it definitely is a viable vehicle to look at raising money," MarkITx partner Marc Brooks said of equity crowd funding under the JOBS Act.

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