Frisco Shop Wins Auction From Prison-Bound Founders

Golden Gate Capital won a recent auction for Neways International, a dietary supplement supplier, just days before the couple that founded the company were sent to prison for tax evasion.

Golden Gate Capital won a recent auction for Neways International, a dietary supplement supplier, just days before the couple that founded the company were sent to prison for tax evasion.

The San Francisco-based shop won the auction because it was able to close the deal the fastest and because of its experience in the space with Herbalife, a maker of weight control products, said Jamie Lewin, a founding partner of McColl Partners, which ran the auction for the sellers. Golden Gate, investing from a $1.8 billion fund, had financing in place from Jefferies & Co. and did not need to do any due diligence after the three month auction process, Lewin said.

Federal prosecutors said the founders, Thomas and Leslie Mowers, avoided about $1 million in taxes by cashing an estimated $3.2 million in overseas commission checks without reporting the money to the Internal Revenue Service, according to news reports. Thomas Mower was sentenced to two years and nine months in federal prison and fined more than $75,000. Leslie Mower was sentenced to two years and three months in federal prison and ordered to pay a $60,000 fine. The couple divorced in July 2000 but each owned 50% of the company.

Asked if the company sold because the Mowers were going to jail, Lewin said, “I’m sure it’s something they considered when they decided to sell, but it’s not something we probed them on. It’s a sad story.” Representatives from Golden Gate could not be reached for comment.

Terms of the deal were not disclosed. Golden Gate makes equity investments from $20 million to $200 million in transactions ranging from $25 million to more than $1 billion. The company generated about $700 million in annual revenues, Lewin said.