U. of I. to launch tech research center in Chicago

Plans to launch a University of Illinois-affiliated technology research center in Chicago will be unveiled Thursday — the latest regional effort to stem an exodus of high-tech brainpower and entrepreneurship to the coasts.

A private, not-for-profit company, to be called UI Labs, is expected to open offices in or near the Loop to foster collaboration between the region's scientists and engineers from academia, industry and government.

The project, expected to be financed by private donations, corporate partnerships and federal grants, will be outlined for U. of I. trustees Thursday. The goal is to raise $20 million for first-year operations.

The aim is build a research and engineering powerhouse that will attract a range of industries to Chicago, along the lines of what the former Bell Labs did for the East Coast. The University of Illinois at Urbana-Champaign will offer up its vast tech resources, including the National Center for Supercomputing Applications and its Blue Waters supercomputer. It is anticipated other local universities and national research centers will participate.

"I was in India last week, talking with firms that were thinking of coming to Illinois to engage with university scientists," said U. of I. President Robert Easter. "And they say, 'We have a presence in Chicago or we're thinking of having a presence in Chicago, and it would be much more convenient if we could work with you there.'"

Or as project adviser James Duderstadt, president emeritus of the University of Michigan, put it, the U. of I. is among the top five universities in the nation in such high-tech fields as computer science and engineering, "but it's down there in the cornfields."

"All the pieces are there, but some of the things Chicago is lacking are things Urbana-Champaign has," he said.

The idea is to marry the two, helping Chicago attain the sort of direct scientific underpinnings that long have fostered tech hotbeds in Boston and the San Francisco Bay Area.

"This is an opportunity to essentially build some of the glue and connective tissue … and that's needed to keep students from leaving and, frankly, to grow some companies in Chicago," said Lesa Mitchell, vice president of innovation and networks for the Kansas City, Mo.-based Kauffman Foundation, which focuses on entrepreneurship.

Chicago faces intense competition nationwide, as many cities aim for technological prowess and growth. The start of the year brought the launch of a Cornell NYC Tech campus, for instance, a graduate program in applied sciences that will turn out high-level scientists in New York City.

In Illinois, the challenge is retaining talent. One telling statistic: 32 percent of computer science graduates from the U. of I. in Urbana-Champaign get jobs in California, said Larry Schook, the university's vice president for research.

Among U. of I. grads who made their names out West are Marc Andreessen, co-founder of Netscape; software entrepreneur Thomas Siebel, a major U. of I. donor; and Ray Ozzie, who recently retired as chief software architect for Microsoft Inc.

The goal of this project, supported by Gov. Pat Quinn and Mayor Rahm Emanuel, is to retain the next generation of Illinois-trained innovators.

The University of Illinois will have an affiliation agreement with the lab that would outline the flow of personnel, resources and services between them. The goal is to attract 250 faculty fellows during the first three years. Additionally, more than 1,000 undergraduate and graduate students are expected to participate in UI Labs training and entrepreneurial programs during the first five years.

"Some students and researchers prefer the city to a smaller community … so this could increase the quality of the faculty," said Bruce Rauner, a prominent Chicago venture capitalist who has worked on the development of this plan. "This can drive better research."

The intent is to develop a "junior year abroad program" as well, with the aim of attracting top students from overseas.

The UI Labs project will start within the next month or so, Schook said, with the naming of board members and a director search.

"We'd love to have … the smartest tech students in the world come to participate and stay here to create companies," Schook said.

Rauner, who made his fortune as co-founder of private equity firm GTCR and heads venture firm R8 Capital Partners, said he intends to participate in fundraising and to donate millions personally. Ultimately, to bring the center to world-class status, it may be necessary to raise a $300 million endowment, he said.

The University of Illinois has programs aimed at linking businesses to applicable academic research, including the University of Illinois at Chicago's Innovation Center and research parks at Chicago and Urbana. While those attempt to match faculty research with companies that could use it, the UI Labs model would aim for even deeper collaborative brainstorming, Easter said.

"A company struggling with a problem related to its technology could come in and sit with faculty who do theoretical work to see if those principles could lead to a solution," he said. "Out of that will come innovation, and that will drive economic growth."

kbergen@tribune.com

Twitter @kathy_bergen

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Firefighters battling extra-alarm fire in Bridgeport warehouse

Firefighers battle an extra-alarm blaze in Bridgeport Tuesday night. (WGN-TV / January 22, 2013)

Staff report

10:02 p.m. CST, January 22, 2013

An 5-11 alarm fire has engulfed two warehouse buildings, causing part of one to collapse, in the Bridgeport neighborhood Tuesday night.

A four-story building caught fire after 9 p.m. and then jumped to another building, according to the Chicago Fire Department. Extra alarms, bringing more fire equipment, firefighters and paramedics were called shortly after firefighters arrived.

The south wall of one of the buildings collapsed, according to authorities, and there is “extreme fire” throughout the buildings.

About 170 firefighters from 50 fire department companies responded to the fire.

Check back for more information.

lford@tribune.com
Twitter: @ltaford

pnickeas@tribune.com
Twitter: @peternickeas

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Google's fourth-quarter results shine after ad rate decline slows

SAN FRANCISCO (Reuters) - Revenue from Google Inc's core Internet business outpaced many analysts' expectations during the crucial holiday quarter and advertising rates fell less than in previous periods, pushing its shares up roughly 5 percent.

The world's largest Internet search company introduced new product listings during the fourth quarter - typically its strongest - and also benefited from business growth in international markets, analysts said.

Excluding traffic-acquisition costs, the business generated net revenue of $9.83 billion, up from $8.13 billion a year earlier, Google reported on Tuesday. That surpassed a $9.6 billion average forecast from six analysts polled by Reuters.

"Business looked really strong, especially from a profitability perspective. They really grew their margins in the core business," said Sameet Sinha, an analyst with B. Riley Caris. "Most of that strength seems to be coming from international markets which grew revenues quite substantially: up 23 percent year over year, versus the 15 percent growth in the third quarter."

Average cost-per-click, a critical metric that denotes the price advertisers pay Google, declined 6 percent from a year ago, the fifth consecutive quarter of decline but an improvement over the third quarter's 15 percent slide.

Google executives told analysts on a conference call that policy changes related to the quality and quantity of ads appearing on certain of its Web properties had helped shore-up click prices while lowering the overall growth rate of paid clicks in the holiday quarter.

"Click prices are still declining, but it's better than expected," said BGC Partners analyst Colin Gillis.

The decline in Google's click prices is partly a result of consumers' shift to smartphones, where Google's ad rates are lower than those on Google's standard website.

Google cited growing demand for its spectrum of online advertising services, including mobile ads, display ads, video ads and its newly-launched product listings, though the company did not provide specific financial results for the individual businesses.

"More small enterprises increasing their spending collectively on Google's various products," continues to drive Google's growth, said Pivotal Research Group Analyst Brian Wieser.

MOTOROLA MOBILITY "STILL LOSING MONEY"

Investors shrugged off another quarterly loss at the Motorola Mobility mobile phone business Google acquired last year, one of various "big bets" that Google Chief Executive Larry Page has made to better position the company for a changing technology landscape defined by mobile gadgets and social networking.

"We now live in a multi-screen world," said Page, adding that "we feel naked without our smartphone."

Page said that Google had work to do in "managing our supply better as well as building a great customer experience," but said Google remains squarely focused on opportunities around newfangled devices such as smartphones.

Asked about the potential threat from Facebook Inc's recently-launched social networking search product, Page cited Google's years of online search experience and innovations such as voice-based search.

Consolidated net income in the fourth quarter was $2.89 billion or $8.62 per share, compared with $2.71 billion, or $8.22 per share, in the year-ago period when Google had not yet acquired Motorola.

Excluding certain items, Google said it earned $10.65 per share in the fourth quarter.

"The core business is a great business and the fourth-quarter is always a time for Google to shine. However, Motorola is still losing money and click rates still declined. They only declined 6 percent, but go back four or five quarters and click prices were improving. So mobile is still pressuring click prices," Gillis said.

The company posted consolidated revenue - which includes its Motorola Mobility mobile phone business but not the television set-top box business it recently agreed to sell - off $14.42 billion on Tuesday.

Motorola Mobility had an operating loss of $353 million during the quarter.

Google Finance Chief Patrick Pichette warned of more fluctuations in Motorola's financial results in the coming quarters as Google continues to restructure that business.

And he noted that Google was working through 12 months to 18 months of product pipeline that Google inherited in the acquisition.

Google announced plans to sell the Motorola Home television set top box business to Arris Group Inc for $2.35 billion. The company also has said it is focused on developing a smaller line-up of products in the mobile phone business.

Shares of Google rose roughly 5 percent to $738.20 in after-hours trading on Tuesday.

(Reporting By Alexei Oreskovic; Editing by Bernard Orr)

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Djokovic getting the hang of winning in Australia

MELBOURNE, Australia (AP) — Novak Djokovic is really starting to get the hang of how to handle himself at the Australian Open.

An expression often used Down Under — "Keep your shirt on" — is designed to discourage anyone from becoming unnecessarily overexcited.

Djokovic took it literally after his 6-1, 4-6, 6-1, 6-4 win Tuesday night over fifth-seeded Tomas Berdych, advancing to the semifinals at an 11th consecutive Grand Slam tournament.

The 2-hour, 31-minute victory took exactly half the time of his five-set, fourth-round win two nights previously against Stanislas Wawrinka. In the early hours of Monday morning, Djokovic ripped his sweat-drenched shirt off and flexed his muscles, mimicking his victory celebration after the 5:53 victory over Rafael Nadal in the 2012 Australian Open final.

That was acceptable at the time to the Rod Laver Arena crowd, which was still abuzz at 1:40 a.m. following five sets of high-level tennis.

After the Berdych match, however, he realized there was no need to raise the roof. Djokovic calmly pumped his fist once and walked to the net; he later joked about the ice baths he'd taken in between matches on the advice of local hero Lleyton Hewitt.

"It was a great performance. I was hoping to have a shorter match ... just not to go over 5 hours," Djokovic said, in a comparatively subdued mood after a considerably more routine victory. "It's always going to be tough against Tomas; he's an established player. He has a big game, big serve. He can compete against anyone on any surface."

In the semifinals, Djokovic will meet No. 4-seeded David Ferrer.

Ferrer survived a quarterfinal battle with fellow Spaniard Nicolas Almagro. Almagro had three chances to serve for the match, but Ferrer broke each time.

A usually mild-mannered pro, Ferrer showed his aggression at times when he threatened to spike his racket and even smashed his water bottle in the changeover after he'd dropped serve in a frustrating fourth set that featured eight breaks of serve.

He'd never lost to Almagro in 12 previous meetings and, as the No. 1 Spaniard in the draw in the absence of 11-time major winner Rafael Nadal, felt a responsibility to reach the semis.

"It was (a) miracle I won this match," Ferrer said of his comeback 4-6, 4-6, 7-5, 7-6 (4), 6-2 win. "I tried to fight every point; that's my game. I always fight."

Ferrer survived once in the third set and twice in the fourth when Almagro was serving for the match, but held his nerve and finally advanced to his third semifinal in the last four Grand Slam events.

"In the important moments, I played more consistent in my game," Ferrer said. "Of course, in the next round, the semifinals, I need to play my best tennis, better than today."

Djokovic acknowledged Ferrer's work ethic, saying the 30-year-old Spaniard was "one of the most respected guys on the tour because he never gives up."

"He plays every single match of his career with 100 percent," Djokovic said.

"I'm expecting a long one," he added.

Ferrer has never been past a major semifinal.

There are only three men left in the draw who have won Grand Slam titles — Djokovic has won five, including the last two in Australia. He's aiming to be the first man in the Open era to win three consecutive Australian titles.

The other two are in action Wednesday, with 17-time Grand Slam winner Roger Federer against 2008 Australian finalist Jo-Wilfried Tsonga of France. Andy Murray, who broke the 76-year drought for British men at the major tournaments by winning the U.S. Open last year, will play Jeremy Chardy of France.

On the women's side, defending champion Victoria Azarenka faces Svetlana Kuznetsova, who has won the U.S. Open and the French Open, and 15-time major winner Serena Williams is against 19-year-old American Sloane Stephens, who is playing her first quarterfinal at a Grand Slam.

Maria Sharapova completed a career Grand Slam last year by winning the French Open, a few months after losing the Australian Open final to Azarenka. After her 6-2, 6-2 quarterfinal win over Ekatrina Makarova on Tuesday, she has conceded only nine games in five matches — a record in Australia.

"To be honest, those are not the stats you want to be known for," Sharapova said.

After opening with a pair of 6-0, 6-0 wins, Sharapova thrashed seven-time major winner Venus Williams 6-1, 6-3 in the third round and Belgian Kristen Flipkens 6-0, 6-1 in the fourth.

Li Na has reached the semifinals in three of the last four years at Melbourne Park after beating Agnieszka Radwanska 7-5, 6-3. The 30-year-old Chinese player lost the 2011 final in Australia to Kim Clijsters, then won her breakthrough Grand Slam at the French Open a few months later. She hasn't been back to a major final since.

Djokovic won his first major title in Australia in 2008, then didn't make another final in his next 11 Grand Slam events. He's won four since then and is the top-ranked man in tennis, crediting the lessons from his experiences back then.

"At the start of my career, I went through a lot of different kinds of challenges physically, mentally," he said. "Everybody makes mistakes. I was aware of the fact that I need to improve because I wasn't feeling well, especially in the heat. I had lots of health issues.

"I don't want to go through it again. I am aware of the importance of an everyday practice and recovery basis. So as long as it's like that, I think I'll be all right."

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Walhberg: Boy band union is strong for summer tour

NEW YORK (AP) — For Donnie Wahlberg it’s not a matter of why now, rather “why not?”

The recording artist-turned-actor was referring to the news of a major tour with his New Kids on the Block, who’ll be joined this summer on “The Package Tour” by 98 Degrees and Boyz II Men.

“The state of the boy band union is strong,” Wahlberg joked Tuesday. “Even though technically we’re not really boy bands, but we’re OK with that, so we’ll accept it.”

The three bands sold millions of records in the 1980s and ’90s and helped usher in a wave of vocal groups that continues today.

The Boston-based NKOTB formed in 1984 and amassed ten Top 20 hits. They broke up in 1994 but got back together after a 14-year hiatus. Wahlberg said he feels the break coincided with the maturation of their fan base.

“They needed time to have families and husbands and children and get jobs and live their life,” Wahlberg said.

But now he sees his band’s music as a complement to the fans’ adult lives.

“We created an outlet for them to feel good about themselves and tap into that youthfulness that had been put to bed for a long time … you may be 40, but the euphoria of it makes you feel 14 all over again,” Wahlberg said.

The band also announced a new single, “Remix (I Like The),” which will be released Jan. 28, and a new album, “10,” which is out April 2.

That music will be a bit more mature than some of the band’s previous material, member Joey McIntyre said.

“It is about the decisions that a grown man makes and goes through, as opposed to singing songs like ‘Popsicle,’” he said.

Nathan Morris, one of the members of Boyz II Men, known since the early 1990s for such hits as “I’ll Make Love to You” and “End of the Road,” said the tour is going to be all about performing.

“If the boy band thing is attached, it’s wonderful, but for all of us in here, we’re ready to get out there and sing and perform,” he said. “That’s just what we do.”

Though 98 Degrees is the youngest group on the bill, it has been apart the longest, 12 years.

“So we’re excited to get back together and doing what we do,” member Nick Lachey said. “We feel reinvigorated by our bond and by our group, so we’re very excited by that.”

Wahlberg, who stars as Detective Danny Reagan on the CBS television series “Blue Bloods,” said the boy bands’ tour, kicking off May 31 in Uncasville, Conn., and continuing into July with more than 30 dates, is going to be “great.”

“You have three acts that have lots of records, lots of fans,” he said. “Fans that are anxious to sing those records and anxious to sing other bands’ records, too.”

___

John Carucci covers entertainment for The Associated Press. Follow him at http://www.twitter.com/jcarucci_ap

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Flu season fuels debate over paid sick time laws

NEW YORK (AP) — Sniffling, groggy and afraid she had caught the flu, Diana Zavala dragged herself in to work anyway for a day she felt she couldn't afford to miss.

A school speech therapist who works as an independent contractor, she doesn't have paid sick days. So the mother of two reported to work and hoped for the best — and was aching, shivering and coughing by the end of the day. She stayed home the next day, then loaded up on medicine and returned to work.

"It's a balancing act" between physical health and financial well-being, she said.

An unusually early and vigorous flu season is drawing attention to a cause that has scored victories but also hit roadblocks in recent years: mandatory paid sick leave for a third of civilian workers — more than 40 million people — who don't have it.

Supporters and opponents are particularly watching New York City, where lawmakers are weighing a sick leave proposal amid a competitive mayoral race.

Pointing to a flu outbreak that the governor has called a public health emergency, dozens of doctors, nurses, lawmakers and activists — some in surgical masks — rallied Friday on the City Hall steps to call for passage of the measure, which has awaited a City Council vote for nearly three years. Two likely mayoral contenders have also pressed the point.

The flu spike is making people more aware of the argument for sick pay, said Ellen Bravo, executive director of Family Values at Work, which promotes paid sick time initiatives around the country. "There's people who say, 'OK, I get it — you don't want your server coughing on your food,'" she said.

Advocates have cast paid sick time as both a workforce issue akin to parental leave and "living wage" laws, and a public health priority.

But to some business owners, paid sick leave is an impractical and unfair burden for small operations. Critics also say the timing is bad, given the choppy economy and the hardships inflicted by Superstorm Sandy.

Michael Sinensky, an owner of seven bars and restaurants around the city, was against the sick time proposal before Sandy. And after the storm shut down four of his restaurants for days or weeks, costing hundreds of thousands of dollars that his insurers have yet to pay, "we're in survival mode."

"We're at the point, right now, where we cannot afford additional social initiatives," said Sinensky, whose roughly 500 employees switch shifts if they can't work, an arrangement that some restaurateurs say benefits workers because paid sick time wouldn't include tips.

Employees without sick days are more likely to go to work with a contagious illness, send an ill child to school or day care and use hospital emergency rooms for care, according to a 2010 survey by the University of Chicago's National Opinion Research Center. A 2011 study in the American Journal of Public Health estimated that a lack of sick time helped spread 5 million cases of flu-like illness during the 2009 swine flu outbreak.

To be sure, many employees entitled to sick time go to work ill anyway, out of dedication or at least a desire to project it. But the work-through-it ethic is shifting somewhat amid growing awareness about spreading sickness.

"Right now, where companies' incentives lie is butting right up against this concern over people coming into the workplace, infecting others and bringing productivity of a whole company down," said John A. Challenger, CEO of employer consulting firm Challenger, Gray & Christmas.

Paid sick day requirements are often popular in polls, but only four places have them: San Francisco, Seattle, Washington, D.C., and the state of Connecticut. The specific provisions vary.

Milwaukee voters approved a sick time requirement in 2008, but the state Legislature passed a law blocking it. Philadelphia's mayor vetoed a sick leave measure in 2011; lawmakers have since instituted a sick time requirement for businesses with city contracts. Voters rejected a paid sick day measure in Denver in 2011.

In New York, City Councilwoman Gale Brewer's proposal would require up to five paid sick days a year at businesses with at least five employees. It wouldn't include independent contractors, such as Zavala, who supports the idea nonetheless.

The idea boasts such supporters as feminist Gloria Steinem and "Sex and the City" actress Cynthia Nixon, as well as a majority of City Council members and a coalition of unions, women's groups and public health advocates. But it also faces influential opponents, including business groups, Mayor Michael Bloomberg and City Council Speaker Christine Quinn, who has virtually complete control over what matters come to a vote.

Quinn, who is expected to run for mayor, said she considers paid sick leave a worthy goal but doesn't think it would be wise to implement it in a sluggish economy. Two of her likely opponents, Public Advocate Bill de Blasio and Comptroller John Liu, have reiterated calls for paid sick leave in light of the flu season.

While the debate plays out, Emilio Palaguachi is recovering from the flu and looking for a job. The father of four was abruptly fired without explanation earlier this month from his job at a deli after taking a day off to go to a doctor, he said. His former employer couldn't be reached by telephone.

"I needed work," Palaguachi said after Friday's City Hall rally, but "I needed to see the doctor because I'm sick."

___

Associated Press writer Susan Haigh in Hartford, Conn., contributed to this report.

___

Follow Jennifer Peltz at http://twitter.com/jennpeltz

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Walhberg: Boy band union is strong for summer tour

NEW YORK (AP) — For Donnie Wahlberg it's not a matter of why now, rather "why not?"

The recording artist-turned-actor was referring to the news of a major tour with his New Kids on the Block, who'll be joined this summer on "The Package Tour" by 98 Degrees and Boyz II Men.

"The state of the boy band union is strong," Wahlberg joked Tuesday. "Even though technically we're not really boy bands, but we're OK with that, so we'll accept it."

The three bands sold millions of records in the 1980s and '90s and helped usher in a wave of vocal groups that continues today.

The Boston-based NKOTB formed in 1984 and amassed ten Top 20 hits. They broke up in 1994 but got back together after a 14-year hiatus. Wahlberg said he feels the break coincided with the maturation of their fan base.

"They needed time to have families and husbands and children and get jobs and live their life," Wahlberg said.

But now he sees his band's music as a complement to the fans' adult lives.

"We created an outlet for them to feel good about themselves and tap into that youthfulness that had been put to bed for a long time ... you may be 40, but the euphoria of it makes you feel 14 all over again," Wahlberg said.

The band also announced a new single, "Remix (I Like The)," which will be released Jan. 28, and a new album, "10," which is out April 2.

That music will be a bit more mature than some of the band's previous material, member Joey McIntyre said.

"It is about the decisions that a grown man makes and goes through, as opposed to singing songs like 'Popsicle,'" he said.

Nathan Morris, one of the members of Boyz II Men, known since the early 1990s for such hits as "I'll Make Love to You" and "End of the Road," said the tour is going to be all about performing.

"If the boy band thing is attached, it's wonderful, but for all of us in here, we're ready to get out there and sing and perform," he said. "That's just what we do."

Though 98 Degrees is the youngest group on the bill, it has been apart the longest, 12 years.

"So we're excited to get back together and doing what we do," member Nick Lachey said. "We feel reinvigorated by our bond and by our group, so we're very excited by that."

Wahlberg, who stars as Detective Danny Reagan on the CBS television series "Blue Bloods," said the boy bands' tour, kicking off May 31 in Uncasville, Conn., and continuing into July with more than 30 dates, is going to be "great."

"You have three acts that have lots of records, lots of fans," he said. "Fans that are anxious to sing those records and anxious to sing other bands' records, too."

___

John Carucci covers entertainment for The Associated Press. Follow him at http://www.twitter.com/jcarucci_ap

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Prosecutors: Peregrine Financial fraud loss exceeds $215M

Peregrine Financial Group's former chief executive stole more than $215 million from customers of his now-defunct futures brokerage and should be sentenced to the maximum 50 years in jail, U.S. prosecutors said Tuesday.

Russell Wasendorf Sr., 64, who founded the firm, has pleaded guilty to embezzlement but wants a lighter sentence, saying that the loss was less than $200 million and that he used "very basic, simple means" to carry out his fraud, according to documents filed by U.S. prosecutors.

Wasendorf, whose attempted suicide sent his firm into bankruptcy last July, is in jail in Iowa and will be sentenced Jan. 31.

U.S. prosecutors say the large loss, the sophisticated nature of the crime and the sheer number of victims -- more than 10,000 -- justify his spending the rest of his life behind bars.

"While some of defendant's individual acts might be characterized as simple in isolation, they were part of an exceedingly complex scheme whereby defendant's entire business was used as a mechanism to gather and purloin investor funds," prosecutors said in their sentencing memorandum, promising to fight any attempt by Wasendorf to receive a sentence of less than 50 years.

Prosecutors put the exact loss at $215,530,547, based on Peregrine's bank records, and will call Brenda Cuypers, the firm's chief financial officer, as a witness at the sentencing hearing next week.

They had previously pegged the embezzlement only at "more than $100 million," to which Wasendorf pleaded guilty.

Wasendorf's public defender has a policy of declining to comment on cases, and did not reply to an email from Reuters seeking comment.

The collapse last July of Peregrine Financial, known as PFGBest, dealt a blow to confidence in the U.S futures industry, already reeling from $1.6 billion hole in customer pockets left when giant brokerage MF Global failed nine months earlier.

Futures traders had never before suffered such large losses as a result of a brokerage failure.

"To see (Wasendorf) go to jail could give some people some hope," said James Koutoulas, co-head of the Commodity Customer Coalition, which fought to get customer money back in both bankruptcies. "In MF Global, justice hasn't been done."

No one has been charged with wrongdoing in MF Global's collapse.

Regulators have scrambled to patch perceived gaps in customer protections at brokerages and exchanges that handle contracts valued at some $2.5 trillion a day.

That figure is set to rise as new rules push over-the-counter swaps onto regulated trading venues.

The sentencing memorandum offers new details in the government's account of the fraud, which Wasendorf said in a July statement began in the early 1990s after he was hounded by an overzealous regulator.

The fraud began even earlier, prosecutors said in Tuesday's filing, when he stole at least $250,000 from customers' accounts to pay back the original financier of his brokerage, a person referred to in the document only by the initials "J.C."

"Using a copy machine, defendant fabricated a bank statement to conceal the theft of funds," the document said. For the next nearly 20 years, prosecutors said, he faked bank balances, fabricated deposits, and used a rented post office box in Cedar Falls, Iowa, to intercept letters from his auditors meant to check up on his balances at U.S. Bank.

He even went so far as to fly from Chicago, where his firm did most of its business, to Iowa to prevent the near-discovery of his fraud, ultimately convincing Peregrine and U.S. Bank employees that nothing was wrong, the document said.

All the while he worked to make Peregrine Financial seem much bigger and more successful than it was, they said.

Wasendorf believed that "if he could make himself appear rich, the auditors and regulators wouldn't be concerned with the state of his personal finances and not discover it was all a fraud," prosecutors quoted Wasendorf as saying in a sealed presentencing report.

But Peregrine was never actually profitable, even though by its demise investors had entrusted more than $376 million to him and his firm, they said.

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Obama lays out 2nd-term agenda

Watch a one-minute time-lapse of the entire presidential inauguration on Jan. 21, 2013, from the pre-dawn set-up to the end of the event. (Alex Garcia/Chicago Tribune)

A confident President Barack Obama kicked off his second term on Monday with an impassioned call for a more inclusive America that rejects partisan rancor and embraces immigration reform, gay rights and the fight against climate change.

Obama's ceremonial swearing-in at the U.S. Capitol was filled with traditional pomp and pageantry, but it was a scaled-back inauguration compared with the historic start of his presidency in 2009 when he swept into office on a mantle of hope and change as America's first black president.

Despite expectations tempered by lingering economic weakness and a politically divided Washington, Obama delivered a preview of the priorities he intends to pursue - essentially a reaffirmation of core liberal Democratic causes - declaring Americans “are made for this moment” and must “seize it together.”

His hair visibly gray after four years in office, Obama called for an end to the partisanship that marked much of his first term in the White House in bitter fights over the economy with Republicans.

“We cannot mistake absolutism for principle, or substitute spectacle for politics, or treat name-calling as reasoned debate,” Obama said from atop the Capitol steps overlooking the National Mall.

Looking out on a sea of flags, Obama addressed a crowd of hundreds of thousands of people that was smaller than the record 1.8 million who assembled on the mall four years ago.

Speaking in more specific terms than is customary in an inaugural address, he promised “hard choices” to reduce the federal deficit without shredding the social safety net and called for a revamping of the tax code and a remaking of government.

The Democrat arrived at his second inauguration on solid footing, with his poll numbers up, Republicans on the defensive and his first-term record boasting accomplishments such as a U.S. healthcare overhaul, financial regulatory reforms, the end of the war in Iraq and the killing of Osama bin Laden.

But fights are looming over budgets, gun control and immigration. Obama, however, has sounded more emboldened because he never again needs to run for election.

SECOND TIME TAKING OATH

When Obama raised his right hand and was sworn in by Chief Justice John Roberts, it was his second time taking the oath in 24 hours - but this time with tens of millions of people watching on television. As he spoke, the president beamed as chants of “Obama, Obama!” rang out from the crowd.

Obama had a formal swearing-in on Sunday at the White House because of a constitutional requirement that the president take the oath on Jan. 20. Rather than stage the full inauguration on a Sunday, the main public events were put off until Monday.

It was another political milestone for Obama, 51, the Hawaiian-born son of a black father from Kenya and a white mother from Kansas.

During a triumphant parade down Pennsylvania Avenue to the White House, the president and first lady Michelle Obama thrilled cheering onlookers by twice getting out of their armored limousine and walking part of the way on foot, as they had done four years ago. Secret Service agents kept close watch.

In the evening, the couple visited the two formal inaugural balls - down from 10 in 2009 - to celebrate with supporters. At both, Obama and the first lady danced to Al Green's “Let's Stay Together,” performed by singer Jennifer Hudson.

In his 20-minute inaugural speech, Obama sought to reassure Americans at the midpoint of his presidency and encourage them to help him take care of unfinished business. “Preserving our individual freedoms ultimately requires collective action,” he said.

The crowds on the National Mall were enthusiastic, but the euphoria of 2009 was gone.

“Four years ago, it was the first black president,” said local resident Greg Pearson, 42. “It doesn't have the same energy. It's more subdued. It's not quite the party it was four years ago. Our expectations are pretty low (this time): let's not default on the national debt, keep the government running.”

Organizers had given various estimates of the number of people they expected would jam the mall for the ceremony. An inauguration official estimated the crowd at about 1 million.

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Former Microsoft executive says CEO Ballmer culls internal rivals to retain power

SEATTLE (Reuters) - Microsoft Corp Chief Executive Steve Ballmer is not the right leader for the world's largest software company but holds his grip on it by systematically forcing out any rising manager who challenges his authority, claims a former senior executive who has written a book about his time at the company.

"For Microsoft to really get back in the game seriously, you need a big change in management," said Joachim Kempin, who worked at Microsoft between 1983 and 2002, overseeing the sales of Windows software to computer makers for part of that time. "As much as I respect Steve Ballmer, he may be part of that in the end."

As a senior vice president in charge of a crucial part of the company's business with direct access to co-founder Bill Gates, Kempin is the most senior former Microsoft executive to write a book critical of the company, which is famous for the loyalty of its ex-employees.

His criticism echoes that of investor David Einhorn of Greenlight Capital, who called for Ballmer to step down in 2011.

Kempin left Microsoft under a cloud in 2002 as some of the aggressive contracts he crafted with PC makers were seen as fodder for the U.S. government's antitrust prosecution of the company, which started in 1998 and was largely resolved by 2002.

His book, titled 'Resolve and Fortitude: Microsoft's "secret power broker" breaks his silence', is scheduled to be published on Tuesday. He talked with Reuters by phone on Monday.

DEFEND THE THRONE

Kempin charges Ballmer with purposefully ousting any executives with potential to wrest him from the CEO seat, which he has occupied since 2000.

He said he saw the process first with Richard Belluzzo, a former Hewlett-Packard executive credited with launching the Xbox game console who rose to chief operating officer at Microsoft but left after only 14 months in the post, in the same year Kempin left.

"He (Belluzzo) had no room to breathe on the top. When you work that directly with Ballmer and Ballmer believes 'maybe this guy could someday take over from me', my God, you will have less air to breathe, that's what it comes down to."

Microsoft representatives declined comment. Attempts to reach Belluzzo were not successful.

Several leading executives, touted by outsiders at one time or another as potential successors to Ballmer, have left the company in the last few years, most recently Windows unit chief Steven Sinofsky, who departed in November.

Before Sinofsky, Windows and online head Kevin Johnson went to run Juniper Networks Inc, Office chief Stephen Elop went to lead phone maker Nokia Oyj, while Ray Ozzie, the software guru Gates designated as Microsoft's big-picture thinker, left to start his own project.

"Ozzie is a great software guy, he knew what he was doing. But when you see Steve (Ballmer) and him on stage where he (Ozzie) opposed Steve, it was Steve's way or the highway," said Kempin.

Kempin said he spoke to Ballmer around two years ago and expressed his concerns about his management style and direction of the company, but has seen no changes since. He said he sent Ballmer and Gates copies of his new book but has yet to get a reply.

"Steve is a very good business guy, but make him a chief operating officer, not a CEO, and your business is going to go gangbusters," said Kempin. "I respect that guy (Ballmer), but there are some limitations in what he can and can't do and maybe he hasn't realized them himself."

MISSED OPPORTUNITIES

In his book, Kempin writes about how Microsoft foresaw the major moves in technology in the last decade, but bungled its entry into tablets, phones and social media, ceding leadership in the technology world to Apple Inc and others.

"They missed all the opportunities they were talking about when I was still in the company. Tablets, phones...we had a tablet going, we had tablet software when Windows XP came out, it was never followed up properly," said Kempin.

He also claims the decline of PCs is partly due to Microsoft's mismanagement of hardware makers, an area that Kempin oversaw at Microsoft.

"Just think about the insult of Microsoft coming out with a tablet themselves, trying to mimic Apple, and now they are going to come out with a notebook on top of it," said Kempin, referring to Microsoft's Surface RT tablet and soon-to-be-released Surface running Windows Pro.

Several PC makers went public with their unease about Microsoft's decision to make its own computers last year.

Kempin reserves his most pointed criticism for Ballmer.

"Is he a great CEO? I don't think so. Microsoft's board is a lame duck board, has been forever. They hire people to help them administer the company, but not to lead the company. That's the problem," said Kempin.

"They need somebody maybe 35-40 years old, a younger person who understands the Facebook Inc generation and this mobile community. They don't need this guy on stage with this fierce, aggressive look, announcing the next version of Windows and thinking he can score with that."

(Reporting By Bill Rigby; Editing by Matt Driskill)

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