Whatever happened to ... Battle Brewing

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Courtesy of EcoLog Environmental Resources Group

In court filings from last year, former Philip Services Corp. President & CEO Allen Fracassi claims Teresa Cascioli -- his former co-worker at PSC, with whom he later went into another business -- took advantage of insider information and their close friendship to deprive him of millions of dollars.

The allegations are contained 53-page statement of claim filed in the Hamilton court concerning a 2004 stock deal that gave Cascioli control of Lakeport Brewing. Fracassi is seeking $50 million from Cascioli, who was Lakeport's CEO until Labatt acquired the Hamilton brewer last March. Lakeport is famous for offering '24 for 24' or a-buck-a-beer to consumers.

The lawsuit reveals a close relationship that included the sharing of private personal and financial information, but also suggestions that Cascioli used a stamp with Fracassi's name on it to sign corporate documents without his knowledge. The allegations have not been proven in court and Cascioli denies the allegations.

Fracassi met Cascioli in 1994 when she worked for Hamilton- Wentworth region and PSC were negotiating to take over operation of the region's wastewater treatment plants. She became vice-president of investor relations at PSC until she left in 1998. After the demise of PSC, the two went into business together. After PSC, Fracassi became a principal in Newcastle Logistics Corp., a warehousing, packaging and distribution company that he continues to run on port authority land. Cascioli was the chair of Newcastle.

The dispute over Lakeport goes back to 1998, when the two formed a company called Do 4U Services Corp. Fracassi owned 75 per cent of the shares, and Cascioli owned 25 per cent. In March 1999 they formed a wholly owned subsidiary of Do 4U called AlphaCorp Holdings Ltd., which -- using $3 million in funds supplied by Fracassi -- bought Lakeport from bankruptcy protection in the summer of 1999. Cascioli became Lakeport's CEO.

In 2004 Fracassi decided to sell his controlling share of Do 4U and claims he entrusted Cascioli to do the negotiating. Fracassi alleges that he believed Cascioli was acting as his agent to negotiate the best possible price for his shares. But, his lawsuit states, at some point that year Cascioli put herself in a conflict of interest position when she decided to purchase Fracassi's shares for herself, yet didn't disclose this to Fracassi. He alleges she negotiated with investors, cautioning them not to talk to Fracassi. Ultimately she bought the 75 per cent stake in Do 4U for $9.3 million, and gained control of Lakeport. Afterward, she turned Lakeport into a publicly-traded income fund in a deal that earned her a cool $28 million. Lakeport was then bought out by Labatt in a $201- million takeover via which Cascioli's company Casc Corp. gained $28 million plus 1.5 million units of the Lakeport income fund, which had an initial value of $15 million (i. e., she pocketed another $43 million).

Fracassi claims that information was withheld from him by Cascioli that would have made him aware of the potential large increase in the value of the shares she bought from him, and that she was meeting with senior execs of other brewers about potential mergers or acquisitions in the fall of 2004 before she purchased Fracassi's shares.

Fracassi alleges that he and Cascioli met regularly and spoke by phone almost every day between 1996 until the Do 4U share sale in 2004, and 'confided in each other regarding their most private and confidential personal information and confided in each other regarding their most private and confidential business information.'

It turns out that Cascioli also managed the personal affairs of Fracassi and his wife and children, according to the lawsuit, including bank accounts, credit cards, expenses, investments and personal income tax returns. Fracassi claims that over a five-year period from 1997 to 2002 Cascioli was the only person with access to his safety deposit box, which contained private and confidential personal and business documents.

In the meantime, Cascioli has formed the Teresa Cascioli Charitable Foundation and plans to give some of her money to worthy causes.

This magazine will report on the outcome of the lawsuit when it is known.

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