Hartford Business Journal

6 Hartford Business Journal • April 6, 2015 www.HartfordBusiness.com Top STory Bristol investors sue Back9 A husband and wife have filed suit against Hartford's Back9Network, alleg- ing that the company was dishonest and unethical in selling them securities. William and Janet Ghio, of Bristol, made four investments in Back9 be- tween late 2012 and late 2014. They allege that the company's officers and representatives did not disclose until after the fourth investment that Back9 was paying DirecTV "millions of dollars" to carry its golf lifestyle program- ming. Company officers also allegedly told the couple in December that re- ports of layoffs in the news were untruthful and that the company was not about to go out of business — which it did in February. That knowledge would have been material to the couple's investment decisions, the suit says. The suit claims Back9 President Carlos Silva, Chief Operating Officer J. Reid Gorman, then CEO James Bosworth and Executive Vice President of Investor Relations Paul Pendergast were involved in the solicitation of the Ghios. The Ghios hold 62,500 shares of series B preferred stock. Their Decem- ber investment totaled $360,000. The value of their previous investments are not included in the complaint, which was served on March 17, and ap- peared on the state superior court's website. The suit asks for the cancellation of the investment, damages, interest, legal fees and other relief. Back9 released the following statement on the suit: "Despite obstacles such as an unsubstantiated investor lawsuit, the current management team of Back9Network will continue devoting 100 percent of its efforts, without pay, to pursuing the best deal possible for all of its valued investors. It is regrettable that Mr. & Mrs. Ghio have taken this action against Back9Network and certain current and past employees of the Company. Just like every accredited investor in Back9Network, The Ghio's were informed both verbally and in writing of the inherent risk of their investment, and they signed investment agreements to that effect regardless of such warnings. The Ghio's frequently attended Company events since their initial investment in 2012 and closely watched the business grow over the years. As recently as late 2014, the Ghio's requested that a family member be given an internship at the Company based upon their investment history, which was agreed to." BioScience CT bioscience fund awards $955K to UConn, Yale researchers The Connecticut Bioscience Innovation Fund has awarded grants to two re- searchers studying a test for multiple sclerosis and a treatment for cancer, of- ficials announced. UConn Health Center's Dr. Robert Clark will receive nearly $455,000 to further develop a blood-based test to diagnose multiple sclerosis. There is no single test on the market that can make a definite diagnosis, according to Connecticut Innovations, which manages the state-backed fund. Meanwhile, Yale University's Wu Dianqing has been awarded $500,000 to continue development of a target, antibody treatment for colorectal cancer — the third most common type of cancer in the developed world. The CBIF has now awarded nearly $5 million since launching in early 2014. conSTrucTion & engineering AI hires ex-ConnDOT chief Byrnes Former state transportation commissioner James F. Byrnes Jr. has joined the Middletown engineering-services firm whose owner wants to erect a headquar- ters-apartment building in downtown Hartford. Byrnes is senior director for business development and corporate strategy at AI Engineers Inc. AI founder Abul Islam proposes a high-rise office-apartment build- ing on the former Broadcast House site on the northern edge of Constitution Plaza. Byrnes, 68, has spent more than 40 years in engineering/transportation, rising from a Connecticut Department of Transportation engineer to deputy commis- sioner then, from 2002 to his retirement in April 2004, as the agency's head. TranSporTaTion Transportation panel to seek revenue sources Gov. Dannel P. Malloy said he has appointed a nine-member panel to recommend ways for the state to finance his 30-year, $100 billion transportation plan for the state. The Transportation Finance Panel will begin its work this month and is expected to issue recommendations by late summer. Members includes: • Oz Griebel: President and CEO of the MetroHartford Alliance. • Bert Hunter: Chief investment officer of the Connecticut Green Bank, which provides incentives and financing for energy efficiency projects. • Joan Carty: President and CEO of the Stamford-based Housing Develop- ment Fund, which provides homeowner and developer loans and services. • Emil Frankel: Former commissioner of the state's Department of Transpor- tation (1991-1995) and former assistant secretary for transportation policy at the U.S. Department of Transportation (2002-2005). • Paul Timpanelli: President and CEO of the Bridgeport Regional Business Council • Stanley Mickus: Marketing and public affairs for New London's Cross Sound Ferry Services • Cameron Staples (chair): President and CEO of the New England Associa- tion of Schools and Colleges and former state representative. • Beth Osborne: Senior policy advisor for national advocacy organization Transportation for America and former acting assistant secretary for trans- portation policy at the U.S. Department of Transportation. • William Bonvillian: Director of the Massachusetts Institute of Technology's Washington, D.C. office. HealTH care & inSurance UnitedHealth to acquire benefits manager for $12.7B UnitedHealth Group, which has major insurance operations in downtown Hartford, said it has agreed to acquire pharmacy benefits manager Catamaran Corp. for approximately $12.7 billion. Catamaran would merge with UnitedHealth's pharmacy care services busi- ness, OptumRx, the companies said. The combined companies would "create a dynamic competitor in the PBM market by combining the strengths of Catamaran's industry-leading technology platform with the data and analytics capabilities of Optum," UnitedHealth said. UnitedHealth has offered $61.50 per share in cash, and says the deal would add 30 cents per share in 2016 net income. Incorporated in Canada and headquartered in Illinois, Catamaran offers phar- macy benefit management and healthcare IT to managed care organizations, employer groups, unions, plan administrators, government entities and others. It expects to fill more than 400 million prescriptions this year for 35 million custom- ers. Meanwhile, Optum claims approximately 600 million annual prescriptions. governmenT & poliTicS Malloy unveils $13M in rescissions For the third time since November, Gov. Dannel P. Malloy has announced rescissions to the current fiscal year's budget. The state entities hit hardest by the $13 million in cuts announced last week are The Office of Early Childhood ($5.8 million), UConn and UConn Health ($3 million) and the Board of Regents for Higher Education ($1.5 million). The cuts closely follow steep increases in budget-deficit projects this month from both the Office of Policy Management and the Office of Fiscal Analy- sis. Comptroller Kevin recently projected the deficit somewhere in the middle of OPM and OFA, at $172.8 million. Lembo warned that the projection is just shy of 1 percent of total appropria- tions, which means it's nearly at the threshold requiring deficit mitigation. He recommended that Malloy and the legislature start a deficit-mitigation plan immediately. OPM Secretary Benjamin Barnes released a statement indicating that such plan- ning would come during budget negotiations at the end of the legislative session. Barnes noted that Lembo's calculations don›t account for last week's rescissions. The state also made $31.5 million and $5.5 million in cuts in January and November, respectively. The OFA determined that the January round of rescissions only cut the defi- cit by $20.2 million because of projected lapses in state agency accounts. Malloy promotes DMHAS deputy Gov. Dannel P. Malloy has nominated Miriam E. Delphin-Rittmon as commis- sioner of the Department of Mental Health and Addiction Services. Delphin-Rittmon is deputy commissioner and has been serving as acting commis- sioner since Patricia Rehmer departed last month to take a job with Hartford Healthcare. Delphin-Rittmon completed a two-year White House appointment last year as se- nior advisor to the administrator of the U.S. Department of Health and Human Services. She has also worked as an assistant professor at Yale School of Medicine's psychiatry department, where she completed her postdoctoral fellowship after earning a doctorate in psychology from Purdue University. By THe numBerS 3,596,677 Connecticut's population in July 2014, down by 2,664, or 0.1 percent, from July 2013. $25M The amount Travelers is spending to fix up its Main Street plaza and garage in Hartford. 10.6 The percentage of Connecticut's population that is divorced. $900,000 The budget shortfall Middlesex Community College faces, which could force the school to close its Meriden satellite campus. $0 The amount of taxes Connecticut residents will now pay for over- the-counter medications, thanks to a new law now in effect. Top 5 moST read on HartfordBusiness.com ■ Attorney General shakes up environment division ■ Bristol investors sue Back9 ■ Colchester retailer gets $1.5M state loan for expansion ■ Hartford's Gothic Park lands buyer ■ Malloy unveils $13M in rescissions STay connecTed For breaking and daily Greater Hartford business news go to www.HartfordBusiness.com. HBJ on Twitter: @HartfordBiz HBJ on Facebook: www.facebook.com/HartfordBiz HBJ on LinkedIn: www.linkedin.com/company/ the-Hartford-Business-Journal Daily e-newsletters: HBJ Today, CT Morning Blend www.HartfordBusiness.com/subscribe Weekly e-newsletters: CT Green Guide Weekly www.HartfordBusiness.com/subscribe Week in review The currently defunct Back9Network is facing more legal issues. P H O T O | H B J F i l e

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