Blog Publisher’s comments:
a)
I have no interest in Illinois
politics
I have no interest in Illinois
politics
b)
Rauner’s investment firm, GTCR,
was an investor in Lason, a company that purchased one sizeable “reprographics”
enterprise years ago. That company was
Consolidated Reprographics, then one of Orange County, CA’s two largest
reprographers (OCB Reprographics being the other.) After Lason purchased CR Reprographics and,
subsequently, went into bankruptcy, ARC Document Solutions purchased CR
Reprographics from Lason. ARC eventually
combined the operations of OCB Reprographics and CR Reprographics.
Rauner’s investment firm, GTCR,
was an investor in Lason, a company that purchased one sizeable “reprographics”
enterprise years ago. That company was
Consolidated Reprographics, then one of Orange County, CA’s two largest
reprographers (OCB Reprographics being the other.) After Lason purchased CR Reprographics and,
subsequently, went into bankruptcy, ARC Document Solutions purchased CR
Reprographics from Lason. ARC eventually
combined the operations of OCB Reprographics and CR Reprographics.
c)
Where the writers of the article
“knock” Rauner for a “black mark” on GTCR’s record, I can’t see where they came
to that conclusion! Rauner’s firm (GTCR)
earned megabucks on its investment in Lason.
The article states that GTCR received around $43 mil on three offerings
of Lason stock. I would be willing to
bet anyone that GTCR’s investment in Lason was a LOT LESS THAN $43 mil. The “losers” on Lason where those people (and
investment funds) that purchased Lason stock.
If you think that investment funds, investment companies, private equity
companies, etc. are ever remorseful about the fall of a company they were once
investors in, get real, that’s never the case.
Where the writers of the article
“knock” Rauner for a “black mark” on GTCR’s record, I can’t see where they came
to that conclusion! Rauner’s firm (GTCR)
earned megabucks on its investment in Lason.
The article states that GTCR received around $43 mil on three offerings
of Lason stock. I would be willing to
bet anyone that GTCR’s investment in Lason was a LOT LESS THAN $43 mil. The “losers” on Lason where those people (and
investment funds) that purchased Lason stock.
If you think that investment funds, investment companies, private equity
companies, etc. are ever remorseful about the fall of a company they were once
investors in, get real, that’s never the case.
d)
I’m not endorsing Rauner for
governor.
I’m not endorsing Rauner for
governor.
Chicago Tribune Editorial, October 10, 2014
For governor: The Tribune endorses Bruce Rauner, to
revive Illinois
revive Illinois
The following article appeared in the Chicago Tribune on January
20, 2104 ….
20, 2104 ….
GOP governor hopeful touts business savvy, but 1 investment leaves
a black mark on record
a black mark on record
January 20, 2014|By Bob Secter and Jeff Coen, Tribune reporters
In an August 1999 interview with The Wall Street Transcript, a
subscription newsletter that features interviews with business leaders, Rauner
hailed Lason as a “great company … doing quite well,” and went on to
describe an ownership philosophy at GTCR steeped in the kind of hands-on
involvement he now vows to bring to the governor’s office if elected.
subscription newsletter that features interviews with business leaders, Rauner
hailed Lason as a “great company … doing quite well,” and went on to
describe an ownership philosophy at GTCR steeped in the kind of hands-on
involvement he now vows to bring to the governor’s office if elected.
“We spend a lot of time living with our companies on a week-to-week
basis, understanding what’s going on, and being in the flow of information, so
we can be helpful and knowledgeable about the operation,” Rauner said.
basis, understanding what’s going on, and being in the flow of information, so
we can be helpful and knowledgeable about the operation,” Rauner said.
by buying up smaller ones in the same industry and rolling them together. And
that is exactly what happened at Lason, which under GTCR control gobbled up
more than 60 competitors in the U.S. and overseas markets in less than five
years, according to court records.
But the buying spree led to chaos, according to former Lason
President John Messinger, who described it as operating in “grab
mass” mode, according to a subsequent internal investigative report for
Lason that was included in federal criminal court records.
President John Messinger, who described it as operating in “grab
mass” mode, according to a subsequent internal investigative report for
Lason that was included in federal criminal court records.
Gary Monroe, Lason’s CEO and board chairman, said he was hired
with the backing of GTCR, whose goal was to grow the company through
acquisitions. Lason’s approach was “to do a lot of deals very fast and
create more size and revenue as quickly as possible,” investigators said
Monroe told them. They added “Monroe believes Lason did too much too
quickly.”
with the backing of GTCR, whose goal was to grow the company through
acquisitions. Lason’s approach was “to do a lot of deals very fast and
create more size and revenue as quickly as possible,” investigators said
Monroe told them. They added “Monroe believes Lason did too much too
quickly.”
Disorganization grew so acute that longtime customer General
Motors pulled much of its database management business from Lason after a
series of problems culminating in a weekslong disruption in 1998, according to
civil court documents.
Motors pulled much of its database management business from Lason after a
series of problems culminating in a weekslong disruption in 1998, according to
civil court documents.
Despite such problems, Lason reported record earnings quarter
after quarter, a feat that won it raves from stock analysts and boosted its
share price.
after quarter, a feat that won it raves from stock analysts and boosted its
share price.
Lason held an initial public offering of stock in October 1996,
a sale that netted $11.8 million for Rauner’s firm while reducing its ownership
stake to 30.7 percent, SEC records show.
a sale that netted $11.8 million for Rauner’s firm while reducing its ownership
stake to 30.7 percent, SEC records show.
A second public offering in August 1997 brought in another $19.5
million for GTCR while reducing its Lason stake to 15.1 percent, and a third
public offering in late summer 1998 reaped an additional $11.4 million for GTCR
while cutting its share of ownership to 3.4 percent. By the beginning of 1999,
GTCR owned two-tenths of 1 percent of Lason stock.
million for GTCR while reducing its Lason stake to 15.1 percent, and a third
public offering in late summer 1998 reaped an additional $11.4 million for GTCR
while cutting its share of ownership to 3.4 percent. By the beginning of 1999,
GTCR owned two-tenths of 1 percent of Lason stock.
Prosecutors alleged that for most of that time — from
approximately 1997 through early 2000 — Lason’s success was bolstered by
bookkeeping sleight of hand. The maneuver, referred to around the office as
“Tailwind,” was orchestrated primarily by William Rauwerdink, Lason’s
executive vice president and chief financial officer.
approximately 1997 through early 2000 — Lason’s success was bolstered by
bookkeeping sleight of hand. The maneuver, referred to around the office as
“Tailwind,” was orchestrated primarily by William Rauwerdink, Lason’s
executive vice president and chief financial officer.
Rauwerdink, who eventually became a company director as well,
was hired by Rauner and fellow board members in 1996 just months after he was
sanctioned and fined more than $200,000 by the SEC over insider trading
allegations at his previous job. He neither admitted nor denied the
allegations, Lason noted in an annual report to the SEC.
was hired by Rauner and fellow board members in 1996 just months after he was
sanctioned and fined more than $200,000 by the SEC over insider trading
allegations at his previous job. He neither admitted nor denied the
allegations, Lason noted in an annual report to the SEC.
Messinger told federal investigators the Tailwind scheme counted
on manipulating financial data from newly acquired companies to inflate Lason
earnings, driving up the stock price while masking Lason’s real financial
condition. But the scheme began to unravel as acquisitions slowed and it became
difficult to meet Wall Street expectations with accounting tricks alone.
on manipulating financial data from newly acquired companies to inflate Lason
earnings, driving up the stock price while masking Lason’s real financial
condition. But the scheme began to unravel as acquisitions slowed and it became
difficult to meet Wall Street expectations with accounting tricks alone.
The solution of the Lason conspirators was to make up $13
million in anticipated revenues from work that wasn’t real, according to court
records. To mislead investors and stock analysts, the false numbers were
highlighted in a company press release distributed in late October 1999. The
figures were also folded into an official report filed with the SEC on Nov. 15
that wrongly claimed operating income in the third quarter of 1999 had far
exceeded the same period the year before.
million in anticipated revenues from work that wasn’t real, according to court
records. To mislead investors and stock analysts, the false numbers were
highlighted in a company press release distributed in late October 1999. The
figures were also folded into an official report filed with the SEC on Nov. 15
that wrongly claimed operating income in the third quarter of 1999 had far
exceeded the same period the year before.
Amid those events, Rauner departed from the board. His
replacement took over Nov. 12, six months before the expiration of Rauner’s
last term.
replacement took over Nov. 12, six months before the expiration of Rauner’s
last term.
Lason’s stock began to slip in the face of market fears the
company would not meet its goals, tumbling from $39.50 on Nov. 8 to $20.75 on
Dec. 8. In response, Lason officials issued public statements declaring the
company sound and blaming the stock drop on unfounded rumors about earnings
problems.
company would not meet its goals, tumbling from $39.50 on Nov. 8 to $20.75 on
Dec. 8. In response, Lason officials issued public statements declaring the
company sound and blaming the stock drop on unfounded rumors about earnings
problems.
But on Dec. 17, the company did an about-face and issued a press
release acknowledging earnings were off. On the next trading day, the stock
price plunged 51 percent. It continued to drop as details of the alleged
financial chicanery began to emerge, reaching $2.50 a share by the time
investors’ complaints were consolidated into one civil lawsuit in June 2000.
release acknowledging earnings were off. On the next trading day, the stock
price plunged 51 percent. It continued to drop as details of the alleged
financial chicanery began to emerge, reaching $2.50 a share by the time
investors’ complaints were consolidated into one civil lawsuit in June 2000.
In 2001, Lason filed for bankruptcy. The Lason executives were
hit with assorted fraud charges in 2003, and all three pleaded guilty.
hit with assorted fraud charges in 2003, and all three pleaded guilty.
Rauwerdink received a nearly four-year prison sentence and was
ordered by a federal judge to pay $285 million in restitution. Monroe and
Messinger received shorter sentences and were ordered to pay $20 million apiece
in restitution.
ordered by a federal judge to pay $285 million in restitution. Monroe and
Messinger received shorter sentences and were ordered to pay $20 million apiece
in restitution.
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At its height, Lason listed 10,000 workers in 29 states and
abroad, but by 2004 it reported just 2,700 employees. In 2007 it was sold to
HOV Services in India.
abroad, but by 2004 it reported just 2,700 employees. In 2007 it was sold to
HOV Services in India.
Reprographics 101 