WINDHAM, N.H. — Scott Brown, former senator of Massachusetts, on Monday defended his decision to accept 1.5 million shares of stock from an obscure Florida company, saying he offers guidance and serves as a sounding board in exchange for his large stake in the firm.
“It’s a startup company that I’ve been on the board for, what seven, eight months, offering any type of advice when asked,” Brown said in a brief interview after a campaign event at a local gas station highlighting his energy plans.
Brown defended the legitimacy of the company, Global Digital Solutions Inc., dismissing concerns that it has announced a series of acquisitions that have not been completed. Among them was an announcement in March that it intended to buy Remington Arms Co. LLC, one of the world’s largest gun manufacturers, for more than $1 billion. That was greeted with derision by Remington and others in the industry.
“Yeah, it’s a legitimate company,” Brown said. “It’s filed the appropriate paperwork. It’s doing what every other startup company does.”
The Globe on Sunday reported the size of the stock grant that Brown received last year for his service on an advisory board for Global Digital Solutions, a tiny, publicly traded company based in West Palm Beach that says it is in the firearms business.
The stock was initially worth $1.3 million, though it has declined by more than half since then. Company officials did not respond to interview requests Monday.
The company, created 19 years ago to sell cosmetics before switching first to telecommunications and then to firearms, has only a “virtual office,” no current products, no revenue, no patents, no trademarks, no manufacturing facilities, and no experience developing weapons, according to its most recent corporate filings.
‘Yeah, it’s a legitimate company. . . . It’s doing whatevery other startup company does.’
Financial professionals have said the stock is risky and the company’s changing business focus raises red flags for investors.
Brown, a Republican who represented Massachusetts in the US Senate for three years, is running for a US Senate seat in New Hampshire, vying in a primary for the right to challenge Senator Jeanne Shaheen, a Democrat.
The report prompted one of Brown’s opponents in the GOP primary, Bob Smith, former US senator, to call on Brown to file a financial disclosure form with the US Senate. Last month, Brown obtained permission to delay filing his form until Aug. 9, one month before the Republican primary. Smith and Shaheen have filed their paperwork.
“You should be proactive in situations like this and get the information out there,” Smith, the former chairman of the Senate Ethics Committee, said in an interview. “By the time you get that in August, and analyze it and try to figure out what’s going on, almost the election’s on top of you. You don’t have enough time to react.”
Julie McClain, New Hampshire Democratic Party communications director, criticized Brown’s stock grant, saying, “What else is he hiding?”
Brown’s campaign dismissed the criticism over his plans to postpone disclosing his recent income for a few months.
“It’s a routine extension that’s commonly requested by Democrats and Republicans alike,” said Elizabeth Guyton, Brown’s communications director.
The company’s stock fell by nearly 20 percent on Monday, to 37 cents, down from 46 cents on Friday. It traded at 88 cents when Brown’s appointment was announced on Sept. 9. That means the value of Brown’s shares dropped from $1.3 million when they were initially awarded to $555,000 on Monday.
“If the company does well, then everybody does well,” Brown said Monday. “If it doesn’t, there are many companies that are in the startup process trying to come up with good ideas, trying to create jobs — ultimately — and we’ll see where it takes” us.
After the stock closed on Monday, the company reported that shareholders authorized the firm to more than double the number of shares it can issue, which would enable it to raise cash while potentially diluting the value of existing shares.
Brown reiterated Monday that he has not sold any shares and the stock was restricted, which barred him from selling shares when he first received the award.
The company said in a filing last month the shares vest between January and September of this year.
“I haven’t received a penny,” Brown said. “It’s restricted stock and it’s actually gone down 50 percent and it could go down another 50 percent.”
Neither Brown’s campaign nor Global Digital executives would explain how Brown met the company’s leaders.
“They wanted somebody who had a military background who could offer guidance and advice and be a sounding board,” said Brown, who retired from the National Guard. “Just like others do.”
Brown has had a number of private ventures since he was defeated in the 2012 Senate election. In addition to serving on Global Digital’s advisory board, Brown has worked as a paid speaker, a commentator on Fox News, and a lawyer for a large Boston law firm.
Brown was also appointed to the board of directors of Kadant Inc., a Westford, Mass., company that makes equipment to process paper and other materials, in February 2013.
The company reported in April that Brown received nearly $46,000 in cash and restricted stock worth nearly $389,000 at the time they were awarded last fiscal year.
The amount of money Brown reaps from the stock awards depends on when and whether they vest and how much the stock rises or falls by the time Brown sells the shares.
In addition, Brown serves on the advisory board of CoachUp Inc., a Boston startup, but the company declined to say how much compensation he received.
If Brown wins the Republican primary, he will face off against Shaheen, who along with her husband, William, have amassed between $3.7 million and $7.9 million in personal assets, much of it in real estate, stakes in companies, and stocks, according to her financial disclosure form.
She and her husband have $2 million to $4.2 million in debt, mostly mortgages, according to her disclosure.
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