Gift cards that kept on taking

A gift card scheme contributed to the demise of a local salon and offers retailers a lesson in betrayal.
0521 Businessdynamic Issue 1 1

Debi Offerdahl, 58, was a go-to stylist for political dignitaries and ESPN on-air talent, and her bustling salon and spa, known then as the Ultimate Spa Salon, employed about 70 people and brought in about $2.5 million a year.

Then things went awry.

In early October 2014, the salon closed without warning with only a handwritten note taped to the front door.

Several months later, Offerdahl re-emerged and reopened under the name Ultimate Veritas Spa Salon. Veritas, she explains, is Spanish for truth.

Fraud is its polar opposite.

Back story blues

Offerdahl was just 21 years old when she and her siblings tragically lost their parents in 1984. “They were the best people ever,” she says, emotion cracking in her voice.

Her dad was her hero, attending every sporting match his athletic daughter competed in at Robert M. LaFollette High School, where she earned several Presidential Physical Fitness Awards. Her mother, Edna, was a talented cosmetologist but urged her daughter to get a college education rather than follow in her own haircutting footsteps.

But at 18, Offerdahl saw things differently. She had watched and helped her mother cut hair for years and loved everything about making people beautiful, so she enrolled in cosmetology school before informing her parents, and then earned a business administration degree from Madison Area Technical College.

In 1986, she purchased the building at 5713 Monona Drive and renovations began. “I insisted that each of the 22 stylist stations have their own sink,” she says. “The plumbers thought I was crazy.” Decades later, that foresight proved especially valuable during the COVID-19 pandemic.

Then a not-so-funny thing happened on the way to ultimate success: Offerdahl lost sight of the business and trusted some employees too much.

“I was cutting hair about 60 hours a week. I had two assistants and three office managers. I didn’t realize what was going on under my nose,” Offerdahl admits now.

She would soon learn that the Ultimate Spa Salon was bleeding cash from a complicated gift-card scheme.

Milking a cash cow

As Offerdahl describes, after receiving services at the business one day, a client’s older $200 gift card came up with a zero balance. Soon other issues around gift card balances began surfacing. She started combing through sales reports at night and at home and found evidence of tampering in “hundreds of gift-card transactions” dating back 15 or 20 years. Unused amounts left on older cards, no matter how small, were being pooled to purchase new gift cards in a highly complex scheme.

Frequently, client names were not entered into the salon’s point-of-sale system. Instead, information was often being generically assigned to “gift card holder” or “gift card purchaser.”

Digging further, Offerdahl noticed a pattern. The tampering was occurring on specific days of the week, making it easier to pinpoint those involved based on their work schedules.

Over the course of six to eight years, the business lost hundreds of thousands of dollars at the hands of a few.

“We were selling thousands of dollars in gift cards every day. It was like milking a cash cow,” Offerdahl remarks.

“When you bring in $8,000 or $10,000 a day, it’s easy to hide $600. They sucked every unused penny out of every gift card we’d ever sold.”

Already going through a particularly difficult time in her personal life, she says she was devastated.

“It crushed me, but what was worse was that so many people I confided in didn’t believe me. I just shut down. I had to take time off emotionally.

“Besides that, my staff had been quitting because I just hadn’t been in a healthy place for a while. I made some bad choices too,” she admits, a contributing factor.

Rumors swirled.

In Business corroborated Offerdahl’s story with her accountant, Theran Welsh, shareholder at SVA Certified Public Accountants S.C., and Hal Harlowe of Murphy Desmond S.C, a former three-term district attorney in Dane County. Harlowe had also hired a forensic accountant from the Internal Revenue Service to investigate the matter.

She spent thousands proving her suspicions, but in the end the perpetrators walked.

Offerdahl says she didn’t press charges against those involved because the projected costs of doing so were prohibitive at the time, so she closed down temporarily and reopened in January 2015.

“What matters is that I know what happened and it was confirmed,” she states. “Facts don’t lie. This had been going on for years and I have the reports to prove it.

“They know who they are and they have to live with their guilt. I challenge any of them to atone for what they did.

“I knew them and trusted them, but they stole from me,” she charges.

“My grandmother always said, ‘the proof is in the pudding,’ and I have a big bowl of pudding.”

Moving on

These days, the Ultimate Veritas Spa Salon is a shell of what it once was, with five employees including a massage therapist, but Offerdahl is rebuilding.

She takes the blame for losing sight of the business. “I fell from grace and learned there is no answer in a bottle of wine, but I’m back,” she insists.

“There are rumors everywhere. People can tell mean-girl stories all they want, and it will either ruin you or make you rise to a higher level. That’s what I did. I’m totally past it now.”

She says she’s clear-headed, healthy, and focusing on cutting hair and helping people look their best. She’s launched an “Independent Masters” program hoping to attract entrepreneurial stylists interested in leasing chairs in the salon for just $300 a month. “Good stylists can make more than that in a day,” she states.

“Cosmetologists are social beings. They don’t want to be cooped up in a small box or room by themselves. Here they can learn from seasoned professionals almost through osmosis in this beautiful space.”

As Independent Masters, the stylists will become independent contractors, schedule their own appointments, and generate their own income.

“I can help them file their own taxes and grow their businesses so they can venture out on their own one day,” Offerdahl notes. “There’s no crossover between my appointment book and theirs.”

Directly behind the salon in a 130-year-old home, Offerdahl also manages the Secret Garden Wig Boutique, an appointment-only sanctuary where cancer victims or others struggling with hair loss can receive compassionate hair care in a discreet setting as they try on, get measured for, or purchase wigs.

At the end each day, she is happy to curl up with her dog, Apollo, or check in with her two grown and successful children, who live nearby.

“They are truly my greatest accomplishment,” she boasts.

Once known for countless donations to area causes and events, Offerdahl says she has an interest in community service, but one thing at a time.

It may be a while, if ever, before she relinquishes complete oversight of the salon’s business transactions to others — especially gift card purchases.

“If that means I work 14 hours a day, so what? I trust my current staff, I love what I do, and it keeps me young.”

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