Thumbing through tidbits in the local fish wrapper the other day, we were amused to read this tale of Brahmin angst. It seems Mr. Howell and Lovey can’t bear the imposition of a mobile home near their exclusive Davis Islands retreat.
We particularly enjoyed this bit of populism from a city council member: “… people paying as much as $30,000 in property taxes should not have to live next to a construction trailer for several months.”
That’s rich but that’s not the story, not the really interesting story. We’re referring to the story the fish wrapper seems to have completely missed, the one in which an investor website casts doubt on the solvency of the publicly-traded parent of a local construction company, and raises pointed questions about the veracity of management, one of whom happens to be the guy with the trailer on Davis Islands.
You’ve really got to read the the fish wrapper to appreciate this. The would-be villain of that yarn is Brian Marshall, who is identified as the owner of “Fireline Construction.” We’re guessing that it’s actually Fireline Restoration, a subsidiary of Home Solutions of America, Inc. A Brian Marshall is listed as President on the company’s website and job seekers are directed to call the 813 area code.
Mr. Marshall owns property on Davis Islands where he plans to build a humble 12,000-square foot French chateau. The trailer is there for the project manager. Marshall is said to have shown disdain for city codes since he bought the property last January. He sent a demolition crew to the property without a demolition permit. The city stepped in. Now he’s got that trailer on site, even though his construction plans have been disapproved - twice. If he doesn’t submit a revised plan by Sept. 21, he could be subject to a fine.
This would be of strictly parochial interest, of course, unless you happen to have invested in shares of Home Solutions of America. If so, we hope you got out in June and/or sold short in July. HSOA shares have declined in value by almost 63 percent since June 1.
Citron Research, a website that describes itself as “the new face of Stocklemon,” smells something fishy about HSOA and Fireline. The site’s writers said exactly why in July then again in August. If they’re right, the fish wrappers might want to try another angle.
Here’s a taste of what Citron had to say about HSOA: “Home Solutions is a company that puts out press releases about everything … without concerning itself much with the truth.” - “… we now believe that the company is on the brink of bankruptcy.” - “Citron Research continues to believe HSOA is a house of cards propped up on cashless earnings and mounting receivables.”
Here’s more from Citron Research:
“… Home Solutions of America (NASDAQ:HSOA) rocked the world with rapid-fire news that it had entered into two $100 million dollar construction contracts - the largest in its history - one in Tampa and one in New York.The bloom quickly came off the rose as HSOA scrambled to “correct” the New York story - on June 11, it had to re-write history - excising counterparty “SD Consulting” out of the picture because of the revelation that its principal was David Goldwasser, a recently released felon convicted of financial fraud. HSOA inserted “Blue Diamond Group” as the counterparty in the story.
Last week, Citron Research suggested that the Tampa project was likely a related party transaction, arranged with a Jeff Craft, an employee of Fireline Restoration, a subsidiary of HSOA. Meanwhile, the status of the New York project, contracted from Blue Diamond, has remained unclear, especially as to its ability to finance or fund a “$100 million dollar contract”.
In the interest of bringing further clarity to this, Citron Research reports that state business filings raise significant questions as to whether Blue Diamond itself is a related party to Fireline, and thus to HSOA.
At www.sunbiz.org/search.html look up “Blue Diamond Ventures LLC”. On June 6, just days after the New York contract announcement, and before the June 11 “correction” naming Blue Diamond as the counterparty, Richard Holowchak filed as a Florida Limited Liability entity. The listed manager is Tom Davis of Tampa Fl.
The problem is, Tom Davis is the Vice President of Fireline Restoration. http://www.firelinerestoration.com/meet_the_team.htm.”
Citron Research posted this about Brian Marshall and Fireline:
It is now close to a month and a half after Home Solutions announced the $100 million contract in Tampa and we have finally made some progress in finding out what we believe to be the mystery project. After 6 weeks of searching up and down all over Hillsborough County for what might be this 600,000 square foot project, Citron believes we have finally found it. It seems to fit much of the criteria of what has been described to the public.
It is the belief of Citron Research that the Hillsborough project is attempting to be built (as they don’t have permits) on a 9 acre parcel of land in Gibsonton, Florida. The developer is currently in negotiation with the county in an attempt to get the land rezoned. We believe that the land is being developed by the local real estate development firm of Craftmar Construction and Development.
Yet, there is one problem. As Brian Marshall is telling the investing community, “We are pleased to have been selected for another major construction management project”, he fails to mention…that he owns Craftmar Construction along with Fireline employee Jeff Craft.
Furthermore, in what appears to be a last minute attempt to rewrite history, Jeff Craft has recently been taken off the Fireline website in the past month. It has been so recent, that Google still has the cached version of him on the site.
Here is Jeff with Fireline- http://www.firelinerestoration.com/team.htm
And here is the current Fireline Team page, Jeff Craft is not listed with Fireline:http://www.firelinerestoration.com/meet_the_team.htm
Here’s a little more from Citron Research:
“Specifically, some of the numbers in the (HSOA)10-Q are startling.
To generate $51 million in topline revenue in the face of eroding interiors and restoration business, on the conference call, CEO Fradella attributed the lion’s share to income from Fireline, although he was unable to name a single significantly sized project contributing to that revenue.
Fireline would have had to generate $35 million for the quarter. Fireline’s total revenue in the six months prior to the merger (as per 8k) was $18 million , so we are expected to believe that merging into HSOA resulted in a 400% growth spurt.
And its not just any business - its 50% gross margin business. In a world where the world’s top construction companies - top-flight firms such as Shaw Group - post margins of 10%, HSOA blithely racks up 50% margins quarter after quarter. And that is from a subsidiary growing 400% during a construction recession and no disasters to name of.”
Here’s how Citron Research concludes its August 30th post about HSOA: “Who gets em’ first…the SEC, the Bank, or the Vendors?
Cautious investing to all ….. and tick, tick, tick.”
This is interesting stuff. If Citron has its facts straight, construction trailers and city code violations might soon be the least of Mr. Marshall’s concerns.