Monday, July 16, 2007
Ellis is out at Winsted Holdings.
Buyer says he will 'clean it up,' merge with other companies.
The Orange County Register
Winsted Holdings, a money-losing company that generated millions through stock sales, has been sold to Appletree Capital for about $2,000.
Winsted, the subject of a Register investigation in March (CLICK HERE for the investigation), and its former president, Mark Ellis are being investigated by the Securities and Exchange Commission.
"What happened in the past is between the SEC and Ellis," said Francis Manzo, the Chicago businessman whose company bought Winsted. "I'm coming in to try to make something of this company that's a shell."
Manzo said Ellis is no longer with the company.
The Register found that from 2003 through mid-2006 Ellis raised nearly $4 million through sales of penny stock, keeping most of the cash for himself. He repeatedly reverse-split the stock, making a $1,000 stake in 2003 worth about three hundred-trillionths of a penny four years later. He lured new investors with press releases promising big deals.
Ellis did not return e-mails requesting comment for this story.
"My plan is to clean it up and create a business for the investors," Manzo said. "There's always value in publicly traded companies."
Manzo said he intends to restructure Winsted as a holding company and then merge it with other companies that want to go public.
Many smaller companies go public by merging with publicly traded shell companies that have few or no assets of their own. Such "reverse mergers" avoid the time and expense of an initial public offering.
Winsted investors cheered the sale, which was first reported on Winsted's Web site July 1 and confirmed Friday. The stock has soared from $0.0001 before the sale rumors to $0.0007 Monday.
Contact the writer: 714-796-5030 or rcampbell@ocregister.com
