Hartford - The founder and president of a company chosen as an early beneficiary of Gov. Dannel P. Malloy's "First Five" economic development program is facing criminal charges for alleged misbehavior at an Academy Awards party.

Donald Vaccaro, 49, whose TicketNetwork Inc. of South Windsor is among the top Internet businesses for reselling sports and events tickets, was arrested shortly after midnight Monday at an Oscar night fundraising event in Hartford.

According to an account in The Hartford Courant, an intoxicated Vaccaro touched and kissed random women at the party and then grabbed the breasts of one woman with both of his hands.

When a bouncer tried to pry his hands off the woman and escort him outside, Vaccaro became belligerent and threatened the bouncer, calling him a "black mother-[expletive]" and other insults.

Hartford police charged the TicketNetwork CEO with second-degree hate crime, second-degree threatening, breach of peace, first-degree criminal trespass and interfering with police.

Within hours, Vaccaro's mugshot was leading news across the state and his reputation lay in tatters with Connecticut's political class. Politicians are now treating his campaign donations like tainted money.

A spokesman for U.S. Rep Joe Courtney, D-2nd District, said the congressman is donating the $2,400 in 2010 campaign contributions he received from Vaccaro to the New London Homeless Hospitality Center and the Hockanum Valley Community Council.

House Speaker Christopher Donovan, D-Meriden, who hopes to succeed U.S. Rep. Chris Murphy in the 5th Congressional District, donated the $1,000 his campaign received to a women and families center.

Last year Gov. Dannel P. Malloy praised Vaccaro as a "serial entrepreneur" with important ideas for Connecticut's economic future. But on Monday he scolded him.

"If these allegations prove true, they are reprehensible," the governor said in a statement. "Mr. Vaccaro should be ashamed of himself."

It was less clear how the fallout from Vaccaro's arrest will affect TicketNetwork; Malloy spokesman Andrew Doba confirmed that the state has yet to finalize the contract for its First Five deal with the ticketing firm.

The deal proposes a 10-year, $4.5 million loan to the company at 2 percent interest. If TicketNetwork creates 200 new jobs in addition to the 292 jobs it supported last summer, $2.5 million of the loan would be "forgiven." The state would also give a $1.45 million grant to the company for employee training and an alternative energy system.

TicketNetwork is a fast-growing player in the business of secondary-market ticket sales, the Internet version of scalping. The firm's software products power an online marketplace that matches up ticket buyers and sellers and charges various fees.

An investigation by The Day last fall uncovered a component of Vaccaro's operations that disproved his claim that TicketNetwork employees weren't taking physical possession of tickets. The investigation found that vendors had been sending volumes of tickets to a network of black mailboxes and properties that Vaccaro owned or controlled.

Vaccaro issued a statement Monday afternoon through a public relations firm:

"This was a very unfortunate incident. I am deeply concerned about what has been reported and I am taking the allegations very seriously," the statement read. "People who know me are well aware that my approaches to life and work are highly inclusive and the comments reported do not reflect my values."

The Oscar night incident is not the first accusation against Vaccaro involving women. In late 2010, a former employee filed a sexual harassment discrimination suit against TicketNetwork. In court documents, the employee described how Vaccaro "grinded himself" against her and other female employees during a company Halloween party and made boorish comments about her anatomy.

She claimed that he later made an unwanted advance, stating, "I spent many a night with women from our company... and they never left unsatisfied."

When she told a company legal representative about the CEO's behavior, the response was, "Yeah, he does that all the time. We have to remind him all the time that he can't do that," the lawsuit claimed.

In July, one day after Malloy announced that TicketNetwork was one of the First Five companies, the woman withdrew her lawsuit in Hartford Superior Court. Her attorney did not return phone messages on Monday.

The latest claims against Vaccaro may have dimmed his company's chances of obtaining favorable legislation from the General Assembly this year.

Last week the Commerce Committee agreed to raise a bill that would likely protect TicketNetwork's business model by banning the use of ticketing systems that don't allow people to transfer their tickets to others. These "paperless" systems require that a buyer bring to the venue photo ID and the credit card used to buy the tickets.

"This certainly puts that bill in a bad light," said State Sen. Gary LeBeau, D-East Hartford, the committee's co-chairman who raised the bill on behalf of TicketNetwork.

A similar bill last year died in the general law committee after TicketNetwork filed a defamation lawsuit against David Fay, president of The Horace Bushnell Memorial Hall, for comments made during a public hearing. Fay had accused the firm of "price-gouging" ticket buyers. That lawsuit is still pending.

LeBeau said Monday that he supports TicketNetwork's bill because the company is the intended beneficiary.

"Despite the fact that Mr. Vaccaro has been alleged to be involved in some dubious and harmful activities, the business - separate from him -- has created 200 new jobs in the last six months," said LeBeau, whose district includes TicketNetwork.

The state Department of Consumer Protection released a report last week about ticket selling practices in Connecticut. The department recommended against the proposed bill, as only a handful of "paperless" concerts have happened in Connecticut so far.

"Our recommendation is to allow the marketplace to work in the first instances before resorting to legislation," the report concluded.

Vaccaro, a Glastonbury resident, is scheduled to appear in Hartford Superior Court March 7.