Dede Scozzafava was mayor of her hometown of Gouverneur and has enjoyed broad support while serving in the state Assembly since 1999. Her public stature is often cited by investors as a factor in their decisions to buy stock in her brother's company. And now that their investments are nearly worthless, they want answers. "I can't defend any of that," Scozzafava says, "because I'm not involved in any decision making in the public company." Dede Scozzafava is vice-president and chief operating officer of Seaway Capital Partners, the firm that started Wise Buys in 2003. In 2007, Seaway Capital sold its share in Wise Buys to Seaway Valley in exchange for preferred shares of stock. Scozzafava told David Sommerstein she has always been just a "passive investor" in the new company.
(Thanks to the Watertown Daily Times for this transcript of this interview)
DEDE: It is by definition a passive investment and I have been consistent in that versus my role in Wisebuys where I've been fully transparent that I had an active role in that company. I actually had a title in that company.
NCPR: A couple weeks before we even knew there was going to be a Congressional race, you exchanged your preferred shares in Seaway Valley for common debenture - essentially a bond - alone earning 12 percent interest. Why did you do that and why then at that time?
DEDE: Well I think, yeah I can't really answer as to the why-when but I can explain that the reason that was done we felt that we needed a type of investment vehicle that could perhaps attract new capital. Whether - and it was fully reported - some of it went into Seaway Valley Capital Corporation...um...some of it might go into at some point other businesses here in the North Country as well but we needed a way to have something... some type of investment that was a little more marketable. Um...it wasn't about, you know, a higher interest rate, it wasn't about getting preference over... it was just about having a new vehicle that perhaps we could attract some new capital.
NCPR: However it does protect your investment a little bit more. You do sort of move higher up in the bankruptcy food chain...[Dede: over whom?]...over other preferred stock holders.
DEDE: I'm not aware of the other preferreds. But the truth of the matter is at that point in time, it didn't matter if you held a debenture or a preferred share or a common shares I mean if a company was going under or liquidating no one was going to get anything. Outstanding liabilities were way ahead of any sort of investor actually having the potential of recouping anything.
NCPR: But here you are in a position to contact the CEO of the company who happens to be your brother, Tom, and engage in a negotiation to exchange these preferred shares for a interest-bearing bond whereas other people, certainly the common shareholders don't have that connection; they don't have that...I mean, doesn't that put you in a sort of preferred situation?
DEDE: I'm not...I don't believe it does put me in a preferred situation. I think the common share holders...I don't know...first of all I don't know who they are, I don't know what type of contact...I know that it's a fully reporting company and there are limitations to what can and cannot be said or communication can occur. But I know he's followed everything he needs to follow as far as fully reporting. And, David, I can't be responsible if people...for...purchase of shares or when they chose to sell shares or when...I mean, those are the capital market and there's individual decisions that are made. And, you know, sometimes you're hearing from people who lost money I'm not sure if you hear from people that make money but those are...those are my brother's questions that really have to be answered, they're not mine.
NCPR: Why don't you say, you know, technically I'm a passive investor, but obviously I have a lot invested - financially, personally - in this company, in Seaway Valley, you know, I'm continuing to loan them money but beyond that I have a sort of economic and philosophical interest in Seaway Valley succeeding because we want to do good things for the North Country economy.
DEDE: But I think that kind of speaks for itself, David. But I can't...I have to talk in terms of what is and what's factual. By definition I'm a passive investor. I very much care about creating jobs here in the North Country. I very much care that these businesses find a way to continue to retain the employees they have. Of course I care about that. But, by caring, does that mean that I somehow can vote more shares than I legally can? No. I at the end of the day do not have the decision-making capability at Seaway Valley Capital Corporation. I do not have that decision-making ability. Do I still want to try to find opportunities to create jobs in the North Country? Yes, I do.
NCPR: What do you think voters should make of this investment that you have and this connection that you have with Seaway Valley?
DEDE: Sure. Listen, I invested my entire life savings in trying to create jobs here in the North Country and believing in people in the North Country and I am not at all ashamed of the investment I made. It's been a very difficult time over the last couple years. There's been a lot of misinformation, a lot of people run around and speculate without truly having all the facts...um...but to this day, I do not regret investing just about everything I had in the North Country economy to try to create jobs. We had jobs - full-time jobs - for 200 people. We pumped a lot of money in this economy. And I'm hopeful - hopeful- that it's going to be able to continue in some form or fashion.