They've got muck; we've got rakes. TPM Muckraker
The company, also known GDSI, got a long look in The Boston Globe this past Sunday. It wasn't a good look. Brown signed on as an advisor with the company in September, and while his role was publicly announced -- he has said he wasn't involved in the day-to-day operations -- the Globe article revealed for the first time that the company had given Brown stock worth $1.3 million.
GDSI is a unusual outfit. As reported by the Globe, it was originally formed as a beauty supply company in New Jersey, then became a wireless data firm in California, before evolving into a firearms and gun technology company in south Florida last year.
The company says it is positioning itself as (deep breath) "a leader in providing small arms manufacturing, complementary security and technology solutions and knowledge-based, cyber-related, culturally attuned social consulting in unsettled areas." But GDSI has no revenue, no patents, and no manufacturing facilities. It has issued millions of shares of stock, which trade for well under a dollar a share. (The stock's value has fallen by half since Brown got his stash.)
According to the Globe, the company had four employees, $271,776 in cash, and $19.7 million in losses as of March 31. Earlier this year, the company said it had made a $1 billion offer to acquire Freedom Group, the county's largest firearms company -- the bid was brushed off as a publicity stunt. A former lead lawyer for the Securities and Exchange Commission told the Globe the company's actions raised issues "that I think a regulator would look at." When his role with the company was announced last year, Brown praised the company for its "bold strategic vision." But when asked by a reporter on Wednesday to describe just what exactly GDSI does, Brown said softly that the company was undergoing a "transition."
"They are, like many other start up companies, they're going through a transition," Brown said. "They're trying to create jobs, ultimately they'll come up with a plan to do so."
But by late Wednesday afternoon, Brown was ready to bail on the GDSI.
“It’s clear from recent media reports that my continued role with the company would be an unnecessary and unwanted distraction,” Brown said in a statement to reporters. “I want the people of New Hampshire to know they are my top priority. Therefore, I am resigning my advisory position with the company and relinquishing all my rights to the restricted stock that has been granted me, effective immediately.”
On Friday, the Globe was back with more questions about GDSI. According to the newspaper, the head of an arms company that failed to merge last year with GDSI has sworn in court that GDSI issued a press release about a $95 million deal to sell grenade launchers that never actually never existed. Thomas Sporkin, a former SEC enforcement official, said GDSI's promotion of a $95 million deal that may not have existed raises serious questions.
“If those statements aren’t true, there’s the possibility for a securities fraud case to be brought,” Sporkin told the Globe.
GDSI did not respond to a request for comment from TPM.