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Illumina: RICO Investment Trust
Summarizing this GRAIL nonsense
I'm going to share the punchline to GRAIL since it appears its starting to spread behind-the-scenes and it’s honestly a grind to actually explain the specifics and how the disclosures all connect.
Based on my interpretation, the disclosures point to:
GRAIL's stake being structured inside a fraudulent REIT.
Specifically this one. The loan reconciles to Helix Holdings I, LLC capital raise, and “Patton Creek” is Helix. Fast forward to today, a big takeaway is everyone involved - many being companies unrelated to GRAIL - has probably been secretly dealing with an asset-liability mismatch crisis we don’t know about.
By the way, the recent merger between GNL and RTL (where much of GRAIL ends up) is a big deal when you know this REIT scheme exist.
Disclaimer: This newsletter is not investment advice. Views or opinions represented in this newsletter are personal and belong solely to the owner and do not represent those of companies that the owner may or may not be associated with in a professional capacity, unless explicitly stated. As previously disclosed, I submitted an SEC whistleblower tip regarding the Illumina situation.
Summarizing this Nonsense
This REIT structure makes it possible to hide and/or not disclose who has a stake in GRAIL. It also makes it possible to collude and do all sorts of things without anyone knowing. Being able to commit RICO violations is a feature, not a bug of this structure. And yes, I think there is a rational explanation to why this scheme would be allowed to exist to convince so many established and trusted people, institutions, funds, etc. to get involved and not be concerned about the consequences of what they’re doing. This thing has been around for a long time from what I gather.
Summarizing the Nonsense (Based on my Interpretation of Disclosures):
The key mechanic to make this “work” is there's a way to acquire a GRAIL stake that masquerades/converts into a different stock as a placeholder.
This means there are several companies out there that have a GRAIL stake that currently looks like their company's stock. It's really clever if you set aside the awful things it enables and encourages.
This is done by acquiring the stake through employee stock purchase plans (or some equivalent) which uses a stock plan "connected" to one of the entities inside this REIT and uses the company's "main" equity incentive plan to convert it into company shares.
Case in point, Steve MacMillan has a GRAIL stake that currently masquerades as Hologic stock acquired through their Deferred Plan. He's arguably the key architect of all of this and he gets to waltz into Illumina’s Board and act like he’s independent when he has a massive vested interest in GRAIL.
Care to guess what the disclosures indicate Mr. MacMillan’s 1m+ unsettled shares is deferring is connected to?
This is also how Illumina insiders can acquire a stake via the Verinata Stock Plan, and how Verinata's venture investors can get a GRAIL stake without disclosure via contingent consideration payments, etc.
And when you go through the connections/affiliations of Illumina's Board, you get the point I'm making...and I haven't got into the new CEO and the role Agilent plays in all of this.
Accessing these "connected" stock plans often comes down to the name of the entity. This is why you see certain "names" like Artemis (i.e. Verinata's predecessor name) all over the place that appear to have a GRAIL stake. It's also why you see a lot of reference to ARC in names, and why entities/companies flip-flop these "names" through time (I'm looking at you DigiChart)
Putting stakes inside a REIT also means you can take out loans tied to the "value" of the property the stake is attached to and essentially guarantee returns, etc.
The trade-off is you need to pay interest on it and the the loans have maturity dates that either need to be refinanced or paid down. Put another way, you can telegraph M&A and other transactions to these maturity dates.
It also means when there’s an asset-liability mismatch from, say, SVB blowing up, it’s everyone’s problem who are involved. These REITs connect companies across in different industries in ways the public doesn’t fully comprehend or appreciate.
This “maturity date” also provides a much different context the Illumina’s attempted PacBio deal and the GRAIL deal.
Transactions are also what releases the stake "attached" to a property/real asset, which means the recent merger between GNL and RTL (where much of GRAIL ends up) is a big deal. It's also why Illumina's decisions to get rid of their i3 campus is a big deal.
Basically, there's a reason you're seeing a flurry of announced M&A, equity offerings/registrations, getting rid of buildings, etc. that coincides with the announcement/close of this merger.
Also, GNL and this ARC REIT have Icahn ties which should tell you a lot of the stuff you see tied to activist can often be tied back to these REITs which means this campaign was either in-fighting between parties tied to these REITs or a charade to get certain transactions done or justify departures with some cover. I'm not happy about this, obviously.
I just threw a lot at you, and all of this is my interpretation of the disclosures I reviewed. I don’t expect anyone unaware of this REIT scheme to really get or absorb what I just said, but the story playing out here is literally the real life plot to South Park’s March 2009 Margaritaville episode with Utah and Colorado being key parts to this story to boot. It’s so dumb.
The intended audience of this write-up are the folks involved and/or aware this scheme exists.
The Box is Open
I’ll share the details over time so everyone fully understands what’s going on, but the box is already open regardless. It’s all coming out, and many of the stories aren’t mine to tell.
You're more than welcome to believe everything I’ve said is the perspective of some crazy person, but I hope, at this point, everyone recognizes this isn't the sort of thing I would just make up, and is something I'd discover in the disclosures.
This isn’t to toot my own horn, but reality is I'm probably the only person with the right combination of experience, expertise, and strange love for "good" governance to actually grind my way through the disclosures to connect-the-dots and compound learnings to discover this without knowing this scheme actually existed. I’m probably also the only person dumb enough to not accept a massive check (based on what I’ve seen in the past) to shut up, and risk losing everything out of principle.
For those involved that can actually confirm what I'm saying is true, y'all suck and being attached at the hip to some of you forever feels like a punishment, honestly.
All of you know I'm actually showing some restraint about what this all actually is despite the crazy stuff I've already shared. I'm also guessing a lot of folks are aware of this scheme without knowing the full extent of what this whole "thing" is, what they actually signed up for, and who they’re in bed with. Now they generally know.
Everyone involved also knows it’s impossible to get everyone to put a lid back on this now that it’s open. Everyone can’t get a pardon, and this is going to inform what folks do. It’s a real life prisoner’s dilemma.
One More Thing
There are other public company frauds out there that the disclosures link back to GRAIL and real companies that have fraudulent entities tied to it.
So while I'm not wired with the financial motivation to get after those names and reap a financial windfall, I know others are. Much of this can sound crazy, but the disclosures are the disclosures, and you can actually put on rational, reasoned trade while ignoring the crazy narrative.
Have a good weekend.