National Beverage Responds To Misconduct Claims In Glaucus Report


In response to accusations of misconduct that emerged last week, National Beverage Corp., owners of LaCroix Sparkling Water, have begun mounting their defense over claims that Chairman and CEO Nick Caporella used false invoices to manipulate financial statements and drew from a secret fund to artificially inflate profits.

A 51-page report by Glaucus Research Group, an “activist” short seller firm, refers to a 2012 lawsuit filed by David Mursten, a former advisor to Caporella, in which he alleges that his former boss engaged in several schemes devised to cover up company losses. Glaucus alleges to have obtained unredacted versions of court documents that they say reveal Caporella told Mursten that his son, Joseph, could produce false invoices for distributors when needed. He also allegedly claimed that a “little jewel box” could supply funds as needed to inflate profits. The judge ruled in Caporella’s favor in 2014.

The Glaucus report sparked an 8.2 percent drop in NBC’s stock on September 28, according to an article in The Wall Street Journal. Caporella owns more than 50 percent of company shares.

National Beverage, owners of brands such as Shasta, Faygo and Everfresh, has enjoyed robust growth recently thanks to the strong performance of LaCroix Sparkling Water, which earned an estimated $226 million last year, according to data service Euromonitor International.

California-based Glaucus retains a short position in National Beverage of undisclosed size, meaning it stands to benefit from a decline in the company’s share value. A disclaimer in the report reads: “We are short sellers. We are biased.” It also adds: “Just because we are biased does not mean that we are wrong.” The firm has previously released reports critical of other food and beverage companies which it was shorting, including Teavana in 2012 and Hain Celestial in 2013.

Law firm Harwood Feffer LLP announced last Thursday in a press release it had begun “investigating potential claims against the board of directors of National Beverage Corp., concerning whether the board has breached its fiduciary duties to shareholders.” Several other firms have subsequently announced their own investigations on behalf of shareholders.

National Beverage responded by labeling Glaucus’s conclusions as a “false report.”

“I would again caution fellow shareholders about reacting to the many false statements made yesterday and I assure all parties that the financial prospects of the Company are just as fundamentally strong today as the day before this self-serving attack by short sellers,” said Caporella in a press release last week. The release calls the Glaucus’s report “an egregious attempt made to manipulate the Company’s common stock value…through information that was adjudicated and found to be without merit both at the trial and on appeal.”

National Beverage has responded to the allegations by launching its own website, The site, which states its affiliation with Florida-based law firm Waldman Trigoboff Hildebrandt Marx & Calnan, contains links to several documents cited as “material information of interest.”

A statement linked on the site titled “Information of interest on Glaucus Research” states, without direct attribution, that Glaucus has a history of “false and inaccurate claims against companies with the intent of manipulating the stock price through fear” and previous accusations has been proven false by independent sources.

The Glaucus report comes just as National Beverage is emerging from another litigation: In January, the company, via its Shasta Beverages Co. subsidiary, filed suit against rival soda brand Spindrift and two former sales team leaders, Chad Palma and Beth Meyers. The suit alleged Palma and Meyers’ hiring represented “an obvious attempt to raid the top Shasta marketing and sales employees in order to obtain Shasta’s confidential, proprietary, and trade secret information.” National Beverage dropped the case in August.