Blast from the past.

• Author: Mildenberg, David
• Position: Disbarred lawyer Phillip Scott Scherrer - Cover Story

He's changed his tune. But Scott Scherrer's old record and recent gigs have people singing the blues.

Had Rollie Tillman known everything about Phillip Scott Scherrer's background, he probably wouldn't have hired him. After all, the prestigious Kenan Institute for Private Enterprise isn't the kind of place convicted embezzlers usually find work.

"Look, I got fooled," admits Tillman, the institute's first director. "The fact that he withheld that information would have soured any relationship we had. I'd consider it concealment, and I'd not have tolerated it." But like a lot of people, Tillman, a respected authority on entrepreneurs, was dazzled by Scherrer's confidence and charm. Based on that and work Scherrer had done toward his Ph.D. at Michigan State, Tillman dispatched a disbarred lawyer, it turns out, to gather information on how to turn around troubled companies.

If Scherrer, now 45, had told him the whole truth, it might have saved a lot of pain and suffering -- not just for Tillman but for all the others he has impressed since that day in 1987. He probably wouldn't have gotten the chance to teach at Carolina and N.C. State nor start the Turnaround Management Association. The State Licensing Board for General Contractors would have had second thoughts about the company he wound up controlling. So would Carolina Builders, a $700 million building-supply wholesaler and construction financier, which lent it more than $3 million.

"He came off as a very smug, aloof, self-confident person," Carolina Builders President Fenton Hord says. "I'd describe him as a very with-it person who has a string of degrees. You'd find him to be a very charming, extremely intelligent person."

"Scott comes on like someone who has a world of ability and influence," says Durham Realtor Milton Fisher, who lost much of the $67,500 he invested in a home builder Scherrer recommended.

Nobody who's been in touch with the Chapel Hill consultant these last few years doubts he's brilliant, engaging, charismatic. But those now questioning his credentials say he sells himself as more than that. Was he worth the $2 million his financial statement says he was when Carolina Builders lent the money? Has he really been involved in more than 100 turnarounds in the last two decades, a claim he's been making the last six years? Is he capable of running even a midsized business? Or is Dr. Scherrer's greatest skill self-promotion?

"There are no black and white people, and we're all a little gray," Rollie Tillman says. "Scott's a bright guy, a workaholic, but he's got this little quirk."

In the extensive press coverage he received as head of the Turnaround Management Association, little can be found about Scott Scherrer's early years. He wouldn't discuss specifics of his background -- or anything else -- for this story. He did say both parents are dead.

School records indicate he grew up the son of a plumber in what was then a predominantly white, middle-class neighborhood on the west side of Detroit. A memo prepared when he left TMA says Scherrer "had a difficult childhood and seems to have suffered from the symptoms that psychologists tell us about when that occurs." David B. Post, who wrote the memo as the association's interim director, says it was for internal use only. "There were a lot of rumors flying around then," he adds.

Scherrer graduated from Henry Ford High School in 1966 with better-than-satisfactory grades. In 1971, he earned a B.A. in classics from the University of Detroit, where he received his law degree three years later. His academic record picks up again in 1983, when he got an M.B.A. from Michigan State. He was working on his Ph.D. in marketing, which he would finish in 1989, when his wife moved to Chapel Hill for her psychiatric residency at UNC Hospitals in 1986. He approached Tillman about work at the Kenan Institute. After verifying his record at Michigan State, Tillman teamed him with Chapel Hill consultant Richard Matthews to develop a bibliography of press and academic reports on turnarounds. Then, in true academic fashion, Scherrer and Tillman organized a conference, which attracted 60 consultants and academics to the Kenan Center.

The Kenan Institute, though affiliated with UNC's Kenan-Flagler Business School, is a separate entity set up with funds from the William R. Kenan Jr. Charitable Trust and the William R. Kenan Jr. Fund. Its goal is to strengthen private enterprise through better understanding among the business, government and university communities.

"I thought that turnaround management was a real niche for the business school," says Tillman, who is now chairman of the institute and a professor in the business school. The conference was so successful that attendees started their own trade group, the Turnaround Management...