Hartford Business Journal

14 Hartford Business Journal • November 6, 2017 • www.HartfordBusiness.com By Greg Bordonaro and Matt Pilon gbordonaro@HartfordBusiness.com, mpilon@ HartfordBusiness.com L ast February, state officials hailed the impending move of a New York City-based medical technology investment firm to a distressed Hartford corridor, where the company planned to house three startups in a newly built office building and create 195 jobs in exchange for $3.6 million in taxpayer money. The funds to CliniFlow Technologies LLC, whose $45 million Hartford project was being pushed forward on a "fast-moving timeline" and envisioned as a key piece of a medical-technology innovation hub between Hartford Hospital and Trinity College, were approved unanimously Feb. 1 by the state Bond Commission, including by its chair- man, Gov. Dannel P. Malloy. That approval came on the heels of a separate $400,000 in- centive deal granted to CliniFlow in January by the state Department of Economic and Community Development (DECD). But before those deals were either ap- proved or granted, David Wagner, CliniFlow's chairman and CEO, and other companies he's associated with were named in several civil lawsuits in various states. One suit, filed in New York federal court in May 2016, accused Wagner and associated companies of "outright fraud" and running a "Ponzi-like" scheme that used money from new employ- ee-investors to pay back-wages of existing workers, federal court records show. Wagner — a Trinity College alum who until recently sat on the private school's board of trustees — and his various com- panies have been named in several other civil lawsuits, accused of accepting loans or investments and misusing funds or breaking contractual agreements. He has denied the allegations in court. All lawsuits Wagner has been named in are civil cases, not criminal. Wagner, a Rhode Island resident, and his companies have settled at least one suit brought by a former employee, and another resulted in a $181,480 judgement, court records show. Meanwhile, two suits are ongoing in New York and a judge overseeing both cases has restricted the assets of an array of Wagner companies, including two that were slated to relocate to Hartford: 3si Systems LLC and Vox MediData, according to court records. Now, Wagner's and ClinFlow's Hartford project, which has received little press to date, appears uncertain. In August, the state pulled the plug on its $3.6 million in bond funds, which were never distributed to the company, after CliniFlow failed to meet certain project milestones. Taxpayers, however, are still on the hook for the $400,000 aid package provided to CliniFlow from DECD's Small Business Ex- press program. The incentive package, which includes a $300,000 loan and $100,000 grant, requires CliniFlow to create eight full-time jobs in the city by Jan. 2018, according to the company's Small Business Express Loan application, ob- tained by the Hartford Business Journal through a Freedom of Information request. If it fails to adhere to the terms, CliniFlow would be in violation of its agreement and could face penalties, including a loan clawback. As part of its original pitch, CliniFlow planned to relocate three of its health technology companies — 3si Systems, SpearFysh and Vox MediData — to a newly built, 70,000-square-foot office building on properties owned by Hartford Hospital, said DECD Deputy Commissioner Bart Kollen. In an emailed statement to HBJ, Wagner said CliniFlow still plans to bring "high-tech jobs to Hartford," but its business plan has changed somewhat over the past six months. "CliniFlow now plans to utilize private capital rather than public funding," the email said. "Also, CliniFlow now plans to focus company spending on technology development and customer support rather than funding the development of large new buildings." He and his attorney didn't elaborate further or respond to HBJ's follow-up questions by press time. But the status of CliniFlow's operations remain unclear. The company's website (www. cliniflowtech.com) doesn't work and in August CliniFlow stopped making rent payments on 4,152 square feet of Hartford office space it leased at 425 Franklin Ave., according to a lawsuit filed in state Superior Court in September by the building's landlord, The Greca Plaza LLC. Some of the Small Business Express funds were to be used for leasehold improvements and rent, Kollen said. Meantime, Hartford HealthCare, which confirmed it had "exploratory discussions" with Wagner and CliniFlow, said in a written statement that it ended its relationship with both earlier this year. A proposal to build a 70,000-square-foot office building and parking garage where boarded-up buildings currently sit at the corner of Washington and Jefferson streets in Hartford has fallen through. PHOTO | SAM RODRIGUEZ, ALL AMERICAN AERIAL LLC David Wagner, Chairman & CEO, CliniFlow The curious case of CliniFlow Technologies A state-backed med-tech investor who planned to breathe new life into a distressed Hartford corridor faces fraud allegations SPECIAL REPORT

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