Sun Capital's Scooter Store situationFebruary 22, 2013: 2:47 PM ET
Scooter Store has a big problem, but it's not really a private 'equity' problem.
FORTUNE -- Yesterday the FBI raided the Texas headquarters of The Scooter Store, a maker of motorized scooters for the elderly and disabled.
This was just the latest twist in the company's long-running trouble with the government, over alleged Medicare over-billing. For example, The Scooter Store agreed to pay $4 million -- and forego $13 million in claims -- to settle a civil case brought by the U.S. Justice Department in 2007. Then, just last month, it was ordered to reimburse Medicare $19.5 million for over-payments between 2009 and 2011 (even though an independent outside auditor found that it had over-billed by more than $80 million – something Scooter Store disputes).
I bring all of this up in this space because several news reports refer to Scooter Store as a portfolio company of private equity firm Sun Capital Partners. This is based on a February 2011 investment – terms of which were not disclosed.
A source familiar with the situation, however, tells me that Sun is actually a senior secured lender to Scooter Store -- rather than an equity owner. Most of the equity is still held by company founder Doug Harrison, who stepped down as Scooter Store CEO in March 2011 "to pursue other interests."
Obviously Sun can't be thrilled by the latest turn of events, but at least it's on the more preferable side of the Scooter Store cap table.
Neither Sun Capital nor Scooter Store returned a request for comment on its involvement.
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