Alex Mascioli update

As solid as a Greenwich address

As solid as a Greenwich address

Back in May, 2012, a local fraudster made a “bid” for Winnebago, the RV people, and the business press; Bloomberg, WSJ,reported it with a straight face. I suspected otherwise, and said so the same day (some) Wall Street hedge funds were piling into the company, accumulating shares. Then, in September, 2013, I asked whatever happened to the man because, aside from a few angry phone calls I’d received from Mascioli himself, I’d heard nothing further about the matter.

Last night, a reader sent me this story about the ultimate denouement of “North Street Capital” and its principal, Alex: It’s behind a pay wall, but here are the relevant parts:

The Securities and Exchange Commission has settled securities fraud charges against Alexander Mascioli and his “alter-ego”—North Street Capital—for making a fraudulent offer to acquire all of the outstanding shares of Winnebago Industries Inc., according to Thomas Gorman, a partner at Dorsey & Whitney who focuses on defending SEC, U.S. Commodity Futures Trading Commission and other regulatory investigations.
Mascioli of Greenwich, Conn. set up NSC as a hedge fund in June 2011, and also launched an accompanying website, which was rife with false information.
“NSC’s website emphasized NSC’s specialization in leveraged buyouts (“LBO”) even though NSC had never participated in an LBO,” the SEC complaint reads. “NSC’s website also included statements that its core markets were automotive, consumer retail, and business services, even though NSC had not engaged in a single transaction in any of those markets.”
On April 10, 2012, Mascioli telephoned Winnebago’s then-general counsel, making an offer on behalf of NSC to acquire all outstanding Winnebago shares. He then followed up with an offer letter, on NSC company letterhead, stating the hedge fund’s desire to purchase the stock for $10.25 per share, or just short of $300 million in total.
Following a back and forth between the two parties over NSC’s ability to complete the transaction, Winnebago ultimately rejected the offer. In the meantime, Mascioli had made several efforts to enlist a financial backer, but to no avail, Gorman reports.
Undeterred, Mascioli and NSC sent a second offer letter on May 9 with improved terms, offering to purchase the shares in cash for $11 per share, or around $321 million in total.
“In the May 9, 2012 offer letter, Mascioli wrote on behalf of NSC that its offer was not conditioned on any financing requirements, that NSC was prepared to move forward immediately, and that NSC could complete the process in approximately two weeks,” the SEC complaint reads. “Mascioli and, through him, NSC knew or were reckless in not knowing that each of these statements was materially false and misleading.”
Mascioli’s and NSC’s financial situation, the complaint goes on to say, remained unchanged. Neither had assets and they were unable to go through with the deal without financing from a third party.
On May 17, 2012, before receiving a response, Mascioli sent a copy of the second offer letter to Bloomberg which, according to a SEC press release, had been altered to look like an NSC press release. Bloomberg published the letter on its website, which caused Winnebago’s stock price and trading volume to sky-rocket, Gorman reports.
When trading opened on May 18, Winnebago stock had increased almost 15 percent, and almost 700,000 shares had been traded in pre-market trading in a startling contrast to the very low volume over the previous four trading days.
Winnebago notified the NYSE prior to the open, and trading was halted for an hour while the company issued a press release stating that the NSC offer was “highly conditional,” according to the SEC complaint. A New York hedge fund had decided to cover the majority of a large short position it held in Winnebago and incurred a loss in the process.
Mascioli and NSC have received sanctions from the SEC, including an order to pay, jointly and severally, a $100,000 civil penalty. Mascioli has also been barred from serving as an officer or director of a public company, Gorman reports.

Sometimes I question the intelligence of some of the people in some of these hedge funds.

9 Comments

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9 responses to “Alex Mascioli update

  1. BigMike

    Hey Alex,
    Looks like you’re headed back to Mavis for employment.
    That is, if Ed will take you.

  2. Captain Morgan

    Here is the official SEC filing: http://www.sec.gov/litigation/complaints/2014/comp22941.pdf
    he even made up fake employees to his imaginary company. fascinating!

    Do you think SEC will go after Alexander Mascioli for the exact same thing he did with Saab/ Spyker a year earlier? article: http://dealbook.nytimes.com/2011/09/29/north-street-capital-buys-spyker-for-43-5-million/?_php=true&_type=blogs&_r=0

    Also he still has the fake North Street Capital website up, SEC determined was a fraud in the findings… And the wikipedia he created…so wikipedia has no rules? anyone can be whoever they want? how does that work?

  3. Inagua

    In defense of the hedge funds who bought Winnebago on the news of the fraudulent announcement, please remember that merger arbitrage is one of the easiest ways to make money that ever existed. I retired from it many years ago, and at the time about 97% of all announced deals went through. And the annualized rates of return were about 20% pre-leverage. It was a very simple business — buy all announced deals on the first day and hold for completion. Perhaps all this has changed in the last 30 years, but I doubt it.

    • But wouldn’t you spend 2 minutes checking the background of the people making the bid?

      • Inagua

        Almost all announced deals close, so why bother? I know it sounds lazy and incompetent, but that how most Arbs were in my day. The only other types of Arbs I knew were even worse, the blatantly dishonest ones like Boesky.

  4. Mark

    A couple of years ago Mr. Mascioli advised the owner of a financially troubled construction company to stop paying the company’s bills, the employees’ union benefits and the owner wanting to believe in Mascioli followed his advice. Eventually Mascioli got money out of the owner as an advisor in stead of Mascioli inputting money as an investor. I saw through this criminal and when I called him out on it, he vanished. Eventually, so did the construction company. Mascioli preys on the weak and those who want to grasp at any glimmer of hope. Mascioli said he owned a Lotus, several Saabs and a Bentley, but he drove his gf’s Tourag to the office.

  5. He will know who I am

    Oh and we had to pay his cell phone bill, move him into his new apartment in Brooklyn. Total user !!!

  6. BigMike

    I remember when I had some new Pirelli scorpion p zero’s put on my truck (more than a few years ago)
    Alex was one of the “installers” at Mavis.
    It was a “side job” bc he just “loved cars so much”
    His “true passion was racing Ferrari’s on the weekends up at limerock.”
    I tried and tried to put two and two together, then I saw him driving away from work a few days later….
    It was some POS that could never be mistaken for any car manufacture that ended in the letter “I”.
    In Alex’s case, 2+2= pathological lying douchebag.

    • Tyrell Washburn

      Alex has been scamming women for years. He hangs out in the fancy bars in Greenwich and meets loney wealthy desperate women. He then plays the same game every time: lying to them, and somehow convinces them to give him access to their cars and credit cards, etc. He drains them for a few months and then moves on. He changed my tires at Mavis also!
      But the odd thing is that I saw this guy in manhattan late one night in December walking hand in hand with another guy and they stopped at the street corner and totally started making out. Tongues wagging and everything. And Alex is a sight for sore eyes these days…It was horrible and i almost got sick. Alex Mascioli is a real wierdo. He rips women off during the day, and at night he parties in the city with his boyfriends or whatever they are.