Why did Connecticut lose money investing in Heather Bond Somers' company?
It seems that Heather Bond Somers of Groton, one of three Republicans vying for lieutenant governor, has reason to brag about co-founding a successful medical device company in Connecticut in 1997.
In fact, she and her partners sold it in 2012 for what appears to have been a significant profit. She is still a paid consultant for the company, which is based in Willimantic and employs close to 50 people.
Somers' campaign refuses to say how much the company, in which the state's Community Development Authority, invested $1 million in 2000, was sold for.
But the state was paid back less than half of its original $1 million equity investment, $475,000. Why so little, when the company did well?
I spent a day this week trying to find out why the state took such a big haircut on its investment, money that is supposed to be part of a revolving venture capital fund, using profits from one startup to help another.
Neither Connecticut Innovations, the quasi-state agency that has been merged with CDA, nor Somers' campaign could explain where the money went.
Jon Conradi, Somers' campaign manager, blew a lot of smoke my way when I asked how a $1 million investment in a successful company melted down to $475,000, but he never answered the question.
Conradi did say that the sale of the company generated from $600,000 to $1 million in state sales tax, so, indeed, the company must have sold for a lot of money.
Conradi called Somers' take from the sale a "modest amount'"and said it was "what someone would get off a 401K" but he wouldn't say how much it was. After all, modest to some could be a fortune to others. And, really, a 401(k) could be anything, huge or tiny.
I would bet Somers did not lose more than half the money she invested in the company.
In trying to explain why the state lost more than half its investment, Conradi said there were actually two separate companies, and that the state's $1 million was divided equally between the two.
One did well, the other didn't, he said.
OK, I asked, even if the state lost its entire $500,000 invested in one, why didn't it make money on the $500,000 invested in the other?
Conradi said he would get back to me on that, but didn't. In fact, he stopped answering email, an odd media blackout for someone managing the campaign of a candidate for lieutenant governor.
The question about what happened to the state's investment in Somers' company also went largely unanswered by Connecticut Innovations.
No doubt the payout of $475,000 was legal and followed the terms of the original investment agreement, whatever that may have dictated in regards to recouping equity.
I asked for a copy of the investment agreement, but Lauren Carmody, director of public relations for Connecticut Innovations, said Monday it will have to be reviewed by lawyers before it can be released.
I had not heard back by late Tuesday.
Carmody also didn't have any specific answers about why the state's $1 million investment in a successful startup shrank by so much.
"This deal resulted in a settlement that was lower than CDA's investment in the company, which unfortunately happens with some high-risk deals," she said.
Carmody said she could not say how much Somers' company sold for, adding that the number would actually not show in the agency's records.
The lack of transparency from Connecticut Innovations is concerning.
The lack of transparency from a candidate for high office in the state is unacceptable. Republicans should take heart in the fact they will have two other choices for lieutenant governor in next week's primary.
After all, how could Republicans successfully launch their expected attack on Gov. Dannel Malloy and his lavish use of "corporate welfare" if the party's candidate for lieutenant governor won't explain how she came to profit personally from a big dose of corporate welfare.
This is the opinion of David Collins
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