ALBANY—According to the financial disclosure form she filed for a Congressional run, Assemblywoman Dede Scozzafava holds at least a $1 million of preferred stock in a troubled holding company controlled by her brother that owes thousands of dollars in back taxes.
During a phone interview, Scozzafava tried to put as much distance between herself and the company, Seaway Valley Capital Corporation, as possible, describing herself as a "passive investor." She told me she is not involved in its operations, is not and has never been employed by it and acquired the stake when stock she held in another company was taken over.
But she remains an officer of an affiliated business, according to corporate records filed with the Securities and Exchange Commission, the disclosure form and her official Web sites.
Just before Scozzafava was designated as the Republican candidate to replace John McHugh in Congress, some conservatives not pleased with her designation attacked the candidacy by noting that several Seaway Valley Capital Corporation's subsidiaries owe $192,000 in back taxes. The company's latest quarterly filing with the S.E.C. indicates it has negative equity—it owes more money than it holds in assets—and is operating at a loss. Its chairman, CEO and chief financial officer is Thomas Scozzafava, the candidate's brother. He earned $140,000 from the company in 2008.
When the tax story first broke, Scozzafava defended herself to me and other journalists by noting that the company was her brother's. She told Politico then,"I'm not an officer, not a director, not an employee. I have nothing to do with the company."
"I have nothing to do with Seaway Valley Capital Corp.," Scozzafava repeated to me yesterday.
Business filings suggest a closer relationship.
Scozzafava's disclosure form indicates she currently serves as the chief operating officer of a private partnership, Seaway Capital Partners. This partnership was formed in 2002 to raise investment money for a company called WiseBuys, which occupied several storefronts in the North Country vacated by Ames. This is when Scozzafava made her initial investment "to create jobs in the North Country." She said she served as an officer of WiseBuys until resigning in March of 2007.
Several months later, SEC records show, Seaway Valley Capital Corp. absorbed WiseBuys, Hackett's Hardware and the investment fund set up by Seaway Capital Partners. Scozzafava's equity stake in WiseBuys, was transferred to the public corporation. While she insists she has no other ties to this public company, in a letter to shareholders in 2007, Mr. Scozzafava wrote that Seaway Capital Partners is a "predecessor" to Seaway Valley Capital Corporation. Scozzafava told me Seaway Capital Partners remains "intact," but offered no details on its current activity.
Scozzafava also told me and Marc Heller at the Watertown Daily Times yesterday that her holding in Seaway Valley Capital Corp. is a "debt obligation" rather than an equity stake.
But Seaway Valley Capital Corp.'s last annual filing with the SEC says that Scozzafava's preferred stock gives her a three percent voting right in the company. She acknowledged this, but says she hasn't voted. While this preferred stock offering can be exchanged for common stock, which trades for fractions of a cent, it can also be cashed out for just over $1.75 million.
Given the corporation's negative equity, I asked Scozzafava if she was concerned about the investment.
"My original investment was to try to create jobs in the North County. I haven't taken a penny from it," Scozzafava said. "Do I worry about getting my investment back? Yes, some days I worry about it. But we also created an awful lot of jobs and we filled a void."
Neither of Scozzafava's designated opponents—Conservative Doug Hoffman or Democrat Bill Owens—has filed their financial disclosure forms.