Thus far, the Canopy Financial story has been about how some company execs allegedly cooked the books to secure more than $60 million in new venture capital investment. But we’ve now learned that the scheming may have been far broader, and affected many more people than just Canopy’s investors and (mostly laid-off) employees.
In a letter sent Wednesday to its customers, Canopy said that it has reason to believe that former executives were skimming from the Health Savings Accounts that Canopy’s technology is designed to help administer. In other words, they were stealing from ordinary folks employed by companies like Fifth Third Bank and Sovereign Bank (Canopy also claimed many clients outside the financial services space, but we’ve been unable to confirm their validity).
Canopy’s letter did not say how much money might have been taken, but we hear that it was well in excess of just a few hundred thousand dollars.
Health Savings Accounts get poole! d into banks as escrow, and it appears that the former execs somehow tapped into those accounts. Perhaps that’s what FBI Special Agent Brent Potter was referring to in his affidavit, as part of a criminal complaint against former Canopy president Jeremy Blackburn:
In July 2008, Individual B opened an account at Ridgestone Bank, ostensibly for the purpose of holding Health Savings Account participant funds for a Canopy client. In 2009, Ridgestone Bank questioned the declining balances in the account, and asked Individual B to provide an audited financial statement for Canopy.
The criminal complaint did not explicitly name Individual B, but he would appear to be Canopy’s former chief technology officer, Tony Banas.
One final question worth asking is: Where the hell was the board of directors? It’s one thing for some execs to create a second set of books for prospective investors, but quite another to be skimming from accounts that the board should have been keeping tabs on (at least via an audit committee).
Were Canopy’s directors complicit, or just asleep on the job? So far, all we know is that these folks — including Glenn Solomon of Granite Global Ventures and John Powers of Stanford Investment Management Co. — are good at keeping silent.
Hellman & Friedman and JMI Equity have completed their acquisition of Datatel Inc., a Fairfax, Va.-based provider of enterprise information management solutions for higher education institutions. No financial terms were disclosed, although peHUB preveiously reported a sale price of approximately $570 million. Sellers includeThoma Bravo, Trident Capital, HarbourVest Partners and JP Morgan Asset Management — which sponsored a management buyout of Datatel in early 2005.
The Nielsen Company, a New York-based media company whose shareholders include Blackstone Group and KKR, has agreed to sell Billboard magazine and seven sister titles to e5 Global Media LLC, a joint venture of Pluribus Capital Management and Guggenheim Partners. Nielsen also announced plans to shutter Kirkus Reviews and Edito! r & Publisher.
Fina Technologies Inc., a Cambridge, Mass.-based developer of quantitative trading algorithms and business solutions for massively data-intensive applications, has raised $4.5 million in Series A funding. Reed Elsevier Ventures led the round, and was joined by Excel Venture Management.
Circassia Ltd., a UK-based drug company focused on allergies, has raised £15 million in third-round funding. Imperial Innovations led the round, and was joined by return backers Invesco Perpetual and Lansdowne Partners.
PharmMD, a Brentwood, Tenn.-based provider of medication therapy management, has raised $8.8 million in private equity funding from The Riverside Company and FCA Ventures. Harpeth Capital advised PharmMD on the deal.
Genius.com, a San Mateo, Calif.-based provider of real-time 1-to-1 marketing solutions for sales and marketing professionals, has secured $6.5 million of a $7.23 million Series D round, according to a regulatory filing.! The companyhas nowraisedjust over $40 millionfrom Accel Partners, Mohr Davidow Ventures, Emergence Capital and Walden International. www.genius.com
Cloud Engines, maker of the Pogoplug network-attached storage adpater, has secured $3 million of a $4 million VC round, according to a regulatory filing. Existing shareholder Foundry Group participated. www.pogoplug.com
AXA has puts the auction of its 15.6% stake in Chinese life insurer Taikang Life on hold, due to concerns that some potential buyers may be restricted by China’s new draft rules on insurance company investing. Bidders have included Temasek, Blackstone Group and KKR. AXA has been expected the sale to generate approximately $1 billion.
The Carlyle Group has acquired a 40% stake in Turkish healthcare services company Medical Park Saðlýk Hizmetleri AS. No pricing terms of the all-equity deal were disclosed.
Dollar General, a KKR portfolio company that went public last month, reported a $75.6 million profit for its fiscal Q3 (ending Oc! t. 30), compared to a $7.3 million loss in Q3 2008.
EQT Partners and GIC Special Investments have agreed to buy Springer Science and Business Media, the German academic publisher owned by Candover and Cinven.
Navigation Capital Partners has acquired prepaid and debit solutionsprovider Prepaid Solutions USA from West Suburban Bank. No financial terms were disclosed. SunTrust Robinson Humphrey advised Navigation on the deal.
China Nuokang Bio-Pharmaceutical Inc., a Chinese drug company focused on hematological and cardiovascular products, raised $45 million via an IPO on the Nasdaq. The company sold 5 million American depository shares at $9 per share (below its $10-$12 offering range), and closed its first day of trading down 3.7% at $8.67 per share. Jefferies & Co. served as lead underwriter on the IPO. China Nuokang shareholders include Anglo China Bio-technology Investment Holdings (70.48% pre-IPO stake),Sequoia Capital China (16.58%) and HBM Biomed (4.69%).
KAR Auction Services Inc., a Carmel, Ind.-based provider of vehicle auction services in North America, raised approximately $300 million via its IPO. The company priced around 25 million com! mon shares at $12 per share, compared to its plans to sell23 million shares at between $15 and $17 per share. KAR plans to trade on the NYSE under ticker symbol KAR, with Goldman Sachs and Credit Suisse serving as co-lead underwriters. Shareholders include Kelso & Co. (42% pre-IPO stake), Parthenon Capital, Goldman Sachs and ValueAct Capital. www.karholdings.com
Trony Solar Holdings Co., a Chinese thin-film solar company, indefinitely postponed its IPO due to market conditions. The company had planned to offer 19.5 million American depository shares at between $9 and $11 per share. Backers include Intel Capital and JPMorgan Special Situations.
Microsoft has agreed to acquire Sentillion Inc., an Andover, Mass.-based developer of software for the healthcare industry. No financial terms were disclosed. Sentillion had raised around $29 million in VC funding, from firms like Intersouth Partners, Dresdner Kleinwort Capital, Polaris Venture Partners, Merrill Lynch Capital Partners, Universal Health Services, St. Paul Venture Capital, Newbury Ventures and First Consulting Group.
NCR Corp. (NYSE: NCR) has acquired DVDPlay, a Campbell, Calif.-based operator of DVD-rental kiosks. No financial terms were disclosed. DVDPlay had raised around $30 million in VC funding, from firms like El Dorado Ventures, Emergence Capital Partners, Palo Alto Venture Partners andVanguard Ventures.
The Soitec Group has agreed to acquire an 80% stake in Concentrix Solar GmbH, a Germany-based provider of concentrated photovoltaic solar systems, at a total enterprise value of €55 million. Concentrix was formed in 2005 as a spinout from the Fraunhofer ISE, and received an undisclosed amount of VC funding from Good Energies.
Firms & Funds
Berkeley Energy hasraised €50.7 millionfor its Reneable Energy Asia Fund, which will back renewable energy projects in India and other developing countries in Asia. Backers include CDC Group PLC, which committed €10 million.
BTG Pactual is planning to launch a private equity fund focused on Brazilian infrastructure opportunities.
Harris Williams & Co., an investment bank focused on the middle markets,is opening a London office, which would lead the firm’s European advisory practice. It will be led by Thierry Monjauze, who previously was co-head of European technology investmen! t banking for Deutsche Bank.
Syntaxis Capital has held a €140 million first close on its second Central European mezzanine fund. The total target is €250 million, compated to the €120 million raised fo Syntaxis’ first Central European mezz fund.
Corey Baylor has joined BMO Capital Partners as a New York-based managing director in the firm’s financial sponsors group. He had spent the past 13 years with Merrill Lynch, most recently as a managing director in Merrill’s financial sponsors group.