The maker of La Croix soft drinks is crashing after a short seller accuses it of cooking the books

National Beverage Corp., the maker of popular sparkling water drink La Croix, is tanking after a short seller released a report on the company.

Glaucus Research, a short selling researcher, claimed that National Beverage's CEO had admitted to a lawyer that he was manipulating the stock price by creating false invoices for the firm. Glaucus said that it has a recently un-redacted testimony from an attorney formerly under National Beverage's employ, David Mursten, that shows CEO Nick Caporella admitted to cooking the books.

"Yet in a recently un-redacted complaint, Mursten alleged that Caporella admitted to him that FIZZ always hit earnings targets because if the Company was short, Caporella would reach into his 'little jewel box' to manipulate earnings," said the report from Glaucus.

"Mursten also alleged that Caporella admitted to him that Caporella's son and FIZZ President (Joseph) once fabricated invoices to distributors in order to fraudulently inflate the Company's reported financial performance."

Glaucus also made a number of other claims, including:

• Low cost growth while increasing revenues by shows financial reporting manipulation. "How does a small, regional beverage manufacturer which sells discounted brands report such low operating expenses relative to its peers?" said Glaucus. "In our opinion, the answer is simple: either FIZZ has revolutionized the beverage business or it is falsifying its reported financial performance"
• Alleged off-book stock gifts to employees. "Depositions under oath also indicate that Caporella gave a 'gift' of 150,000 shares of FIZZ's stock to an employee of CMA in 2011," said the report. "Yet FIZZ's public filings never reflect such a change in shareholding, indicating that the compensation was kept off the Company's books and records."
• The use of "suspicious" third-party entities. "Other key FIZZ and CMA executives are also executives listed in the filings of separate entities controlled by Caporella that are not listed as FIZZ subsidiaries in its 10-K," said the report. "Some share the same address as the Company. Two additional recent lawsuits allege that the Company transacts with undisclosed related parties."

Following the release of the report, shares of National Beverage are down more than 11% to $41.35.