Terren Peizer

Terren S. Peizer, chronicled by the LA Times as a financial prodigy,[1] and often called the "Zelig of Wall Street"[2] is currently the Chairman of his personal Los Angeles-based investment vehicle, Crede Capital Group (CCG). Since its inception in June 2009, CCG has provided companies with capital commitments and funding in excess of $1 billion. In the third quarter of 2011, after investing $15 million into a portfolio company, Crede Capital then orchestrated a Joint Venture (JV) with The People's Republic of China's Communist Youth League (China Youth Goyor Technology(Beijing) Co., LTD.). China Youth League ("CYL") is a youth movement of The People's Republic of China that plays a vital role in the development of China.

Communist Youth League of China (CYL) has over 83 million young members between the ages of 14 and 28, the majority of which are typically well-educated and influential. The joint venture will provide a location based search, advertising, and commerce platform to China's 230 million smartphone users. The platform will include additional functionality, such as local news, video messaging, gaming, e-books, and online novels, social networking services, and e-wallet solutions.^[1] Most recently, Peizer's Crede entity completed a $40 million investment in Xcite Energy Ltd. (XEL: LSE) at GBP.95. Within a week of Xcite's public announcement of Peizer's investment,the company's equity traded as high as GBP 1.88, providing an immediate windfall to Xcite's Shareholders, and those investors who piggy-backed on Peizer's investment. Peizer's Crede and affiliates have agreed to invest an additional $90 million in Xcite Energy Ltd. in the coming year.^[2]

Peizer also is the founder, control shareholder, chairman and CEO of Catasys, Inc. Through its OnTrak behavioral health treatment program, Catasys, Inc. provides an innovative, proprietary and integrated program that combines medical interventions, psychosocial therapy and care coaching into a comprehensive, long-term treatment solution. Catasys has contracts in place with Health Plan of Nevada, Coventry Health Care, Inc. (Kansas, Oklahoma, Louisiana), Fallon Community Health Plan of Massachusetts, and Ford Motor Company (catasyshealth.com). According to SEC filings, the company has a pipeline in excess of 14 million managed care lives (sec.gov). These populations consist of Commercial, Medicare, Medicaid, and dual eligible plans.

One of Mr. Peizer's notable recent investments is 22nd Century Group (NYSE MKT: XXII). On October 3rd, 2014 Crede CG III, Ltd (Crede) invested $10,000,000.00 into XXII via purchase of 3,871,767 shares of resticted stock. 22nd Century Group is a is a plant biotechnology company whose proprietary technology through genetic engineering and plant breeding allows (i) the level of nicotine (and other nicotinic alkaloids) in the tobacco plant to be decreased or increased and (ii) the levels of cannabinoids to be decreased or increased in addition to the cannabinoid profile being tailored. 22nd Century owns or is the exclusive licensee of 129 issued patents in 78 countries plus an additional 51 pending patent applications, and 22nd Century has co-exclusive rights to another 16 patent applications. ^[3] Crede has been instrumenteal in Asian strategic initiatives for XXII; with Chinese market being one of the most lucrative cigarette markets in the world, any market penetration by 22nd Century Tobacco would result in a substantial return for Crede. ^[4]

Raised in Beachwood, Ohio, a suburb of Cleveland, Peizer has assisted companies by assembling management teams, boards of directors and scientific advisory boards, formulating business and financial strategies, and investor relations; all towards the purpose of creating shareholder value. Peizer has a background in venture capital, investing, Mergers and Acquisitions, corporate finance, and previously held senior executive positions with the top investment banking firms Goldman Sachs, First Boston and Drexel Burnham Lambert. Peizer received his B.S.E. in finance from The Wharton Business School of the University of Pennsylvania.

Mr. Peizer has been called "One of Wall Street's top players"^[5] and has frequently noted the importance of his Midwestern family values in various interviews. Peizer has exhibited a humble and modest lifestyle consistent with his Midwestern upbringing.^[6]

Investment career

Terren Peizer is a graduate of the Wharton Business School at the University of Pennsylvania. In 1980 and at just the young age of 20 years old, Mr. Peizer was recruited by former Treasury Secretary Robert Rubin of Goldman Sachs. He was believed to be the youngest "Associate" during that era. In 1983, he was recruited by First Boston and quickly established himself as the most profitable High-Yield Bond Trader. He was often referred to as the "Michael Milken of the East Coast"^[7] because in his workaholic manner, he provided Drexel Burnham Lambert clients with an alternative to the Milken-controlled, High-Yield Bond market. During his association with First Boston Mr. Peizer capitalized a little known reverse merged company, Danaher, Inc. Today, Danaher, Inc. is one of America's largest industrial companies. Mr. Peizer's most notable work while at First Boston, came when he and his clients led the restructuring and financing of Ted Turner's insolvent Turner Broadcasting Corporation. Peizer capitalized Turner Broadcasting Corp's CNN and WTBS Super Station with $185 million; thereby, saving the Turner Broadcasting Corporation from bankruptcy.

In the spring of 1985, in an effort to remove the competition from the marketplace, Michael Milken partnered with the young Mr. Peizer, and made him senior vice president of Drexel Burnham Lambert. Michael Milken immediately anointed Mr. Peizer as his "protégé and left-hand man."^[8] Because Peizer and Michael Milken shared clients, desk and phone,^[9] it was not long before Peizer assumed responsibilities for all of Milken's direct client relationships. This made young Peizer the most productive executive on the famous X-shaped high-yield bond desk. His reputation as Milken's top sharp-elbowed traders^[10] would provide the foundation to his investment career.

In the midst of Drexel's liquidation that occurred in 1990, Mr. Peizer was laid off with 5,300 other Drexel employees. Mr. Peizer agreed to testify against Milken in exchange for immunity, helping send his former boss to prison.^[6][10]

Peizer utilized his risk-taking entrepreneurialship and purchased the Omaha Racers, a minor league basketball team. Under his ownership, the Racers won the CBA Championship. At this point, Peizer opportunistically sold the team and sought other financial ventures.

Mr. Peizer then started his investment company, Beachwood Financial and Wendover Financial Corporation, named after his hometown and home street, stating "never forget where you came from."^[5][11] He later teamed up with Neil Cole to capitalize the company "Candies"^[12] which is the predecessor to today's multi-billion dollar Iconix Brand Group. During Peizer's early investment career, his function for many of these smaller and developmental-stage companies was once described as "lender of almost last resort."^[5] Mr. Peizer's investment savvy empowered him to obtain favorable deals with these companies still in their early developmental stages.

From 1999 through 2002, Mr. Peizer was Chairman of the Board of Cray, Inc., a NASDAQ Global Market company and the Super Computer industry's leading designer and builder.^[13] He still remains its largest beneficial stockholder.

In August 2006, Mr. Peizer founded and served as chairman of the board of Xcorporeal, Inc., and a developer of Wearable Artificial Kidneys. For a substantial multi-million dollar upfront payment and ongoing licensing royalties, he licensed most of the company's intellectual property to the dialysis industry's dominant services provider Fresenius Medical Care.^[14] Many of these companies, including Xcorporeal, Hythiam and Cray became public companies during Mr. Peizer's tenure.

Mr. Peizer's investment philosophy was taking shape in these early years, which, according to him, was to "Invest in situations where you tip the playing field in your favor and Invest in companies with low market caps but with the ability to change the way its industry does things."^[5] Peizer applied his financial acumen and structuring expertise to minimize his investment at risk, but allow for exponential returns. This philosophy has served Peizer well and has led to his founding of Cray, Xcorporeal and Hythiam. Mr. Peizer has often stated his hopes that the two medical companies will change the addiction treatment and kidney dialysis industries, respectively.

Major deals and financial transactions

Although there have been no recent attempts to estimate Peizer's wealth, the Los Angeles Times confirmed his net worth at $50 million back in 1994. While discussing the unusual step of Peizer investing his own personal net worth in some investment deals, the paper stated that he "avoids the usual accoutrements of wealth, such as big houses and expensive cars". In an article written in the 1990s, a reporter also noted that "Peizer still lives in the condo he bought nine years ago, when he came West to sit at Milken's left hand."^[6]

However, despite his modest surroundings, Peizer has been involved in some of the top U.S. financial transactions. For instance, while at Drexel, Peizer was involved in financing some of the largest multi-billion dollar corporate takeovers of the 1980s, including Ted Turner's purchase of MGM/UA Entertainment Co., and the buyout of Beatrice foods, Storer Cable, and RJR Nabisco. Peizer and his clients also led the financings of America's most innovative and pioneering companies. This is best exemplified by the capitalizing of McCaw Cellular, the nation's first national cell phone carrier, which later became AT&T Cellular. Peizer and his clients also led financings for such known Industrialists as: Ron Perlman, John Malone, Carl Icahn, Ted Turner, Nelson Peltz and Rupert Murdoch. Peizer and his clients also financed many of the early buyouts of LBO pioneers KKR, Blackstone Group and The Carlyle Group.

On the heels of the Turner/MGM/UA deal, Peizer became a magnet for entertainment deals and financings. One such deal, chronicled in the book Hit and Run^[9] married Peter Guber and Jon Peters', Guber Peter's & Co. with Burt Surgarman's Barris Industries. Motivated by Barris' $100 Million cash hoard, Peizer merged the two companies, which was then parlayed into Sony Pictures.^[9]

In 1999, Peizer surprised the financial markets when he successfully outbid Billionaire Alec Gores Technology Group in a takeover bid for Cray Research (now Cray, Inc.) by the much smaller Peizer-controlled, Tera Computer Co. Tera issued cash, stock and notes to purchase the once-struggling supercomputer company from Silicon Graphics. Over the years, Cray has developed many of the supercomputers used by the U.S. Defense and Intelligence communities, pharmaceutical, aerospace, oil drilling and weather and seismic industries. Within two years of Peizer's acquisition, Cray's market capitalization grew from $25 million to $1.3 Billion. While building these companies, Peizer became integral and developed such an investor following, that his departure would have a profound effect on these companies. When he stepped down from one such company, the stock took a downward turn when a press release in 1999 "announced his "resignation", claiming that his "objectives have been achieved." The stock dropped 16% on the day of the announcement. The stock has drifted further south to $13.50, off 47% from its 52-week high, from Peizer's resignation."^[10]

Drexel Burnham Lambert

Peizer is occasionally also known for his role, then only 28 years old, in cooperating "along with other Drexel employees and clients" as a witness in the government's case against Michael Milken and Drexel Burnham Lambert, Inc. in the federal crackdown on insider trading in the mid to late 1980s; which eventually led to guilty pleas from financier Michael Milken and Drexel. The case was prosecuted by Rudolph Giuliani while he was the U.S. attorney in New York. Peizer himself was never involved in any Securities and Exchange Commission infractions, nor a subject or a target for any criminal prosecution; Peizer was merely a witness, amongst other Drexel employees and clients. In court transcripts, Judge Kimba Wood applauded Peizer for his sincerity, honesty, and integrity.^[15]

Hythiam and Prometa

Peizer founded the Prometa Treatment Program in 2003 and launched Hythiam, Inc. in 2004. Peizer capitalized the company with in excess of $170 Million. The Prometa program, which cost consumers $15,000 for a three-part infusion, uses a combination of three FDA approved medications, none of which had ever been used to treat substance dependence. Peizer was successful in getting Hythiam listed on the NASDAQ Global Market Exchange, using a technique Peizer has utilized many times before, and has become Wall Street's leader in, the Reverse Merger or Reverse Public Offering (RPO).^[16] In July 2010, Hythiam and Peizer gained its first heath plan customer (Health Plan of Nevada, Inc.),^[17] joining Ford Motor Company and the United Auto Workers in its adoption of Hythiam's Catasys Integrated Substance Dependence Solution. Peizer still envisions Hythiam's treatment methodology being deployed throughout the nation.

Hythiam's success has not come without criticism. Hythiam gained some notice for its 2006 ad campaign licensing deceased comedian Chris Farley's image with the slogan, "It wasn't all his fault" (alluding to his death from a drug overdose).^[18] This advertisement campaign garnered national attention, as Peizer became a fixture on the American news circuit, regularly appearing on national news syndicates such as Fox News, CNN, Good Morning America, The Today Show, and CNBC's Squawk Box and Mad Money. Despite questions about its tastefulness, and criticism from addiction treatment providers for advertising direct to consumers, Peizer defended the campaign as "creating awareness" about addiction as a medical disease, not a social and psychological personality disorder.

Other critics focused on the company's emphasis on sales over research that would establish the validity of Prometa, especially since the FDA restricts marketing of drugs to the purpose for which they have been approved. Peizer justified the company's approach in a 60 Minutes episode^[19] as providing information about the treatment protocol to physicians, since Hythiam does not market the medications directly to consumers. The physicians in the practice of medicine then prescribe the medications to the patients in need.The FDA allows physicians to prescribe all FDA approved medications off label in the practice of medicine. Addiction experts marveled that Peizer was exploiting a nuance and "loophole" that no one ever dared before him.

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