Hartford Business Journal

16 Hartford Business Journal • November 6, 2017 • www.HartfordBusiness.com 2018 2018 2018 2018 2018 2018 NOW OPEN! NOW OPEN! NOW OPEN! 2018 2018 2018 2018 2018 2018 NOW OPEN! NOW OPEN! NOW OPEN! Nominations Nominations Nominations Nominations Nominations Nominations Nominations Nominations Nominations Nominations Nominations Nominations Nominations Nominations Nominations For more information including criteria, and to nominate, go to HartfordBusiness.com/OurEvents was excited about the vision of having a lot of new employees moving to the city," Kollen said. Mayor Luke Bronin's office declined to comment for this story. The hope, Kollen said, was that Clini- Flow's project would breathe new life into Hartford's historic south-central district, which Hartford Hospital has been trying to redevelop for years, and be part of a fledgling medical-technology cluster. Hartford Hospital, between 2010 and 2012, purchased all four buildings — part of an area known as President's Corner — where CliniFlow planned its new location, city re- cords show. And there was at least one other planned development there before CliniFlow. In 2010, Hartford Hospital and the Con- necticut Children's Medical Center proposed to construct a new 11-story, $35 million medi- cal office tower on Washington Street, but the project never came to fruition. Today the four dilapidated buildings re- main vacant with boarded windows and "no trespassing" signs. Legal woes The various lawsuits that name Wagner are complex and involve close to a dozen different companies to which he is allegedly tied. One company commonly named in the lawsuits is New York-based Downing Part- ners LLC, an investment firm whose website lists Wagner as the chairman and managing partner. Downing is listed as the parent to some subsidiary companies named in the lawsuits, court records show. Several suits accuse Wagner, his compa- nies and other business associates of fraud and running a "Ponzi-like" scheme — allega- tions Wagner has denied in court. In one suit filed in New York federal court this past May, Ohio-based Wesley Holdings said it loaned 3si Systems, which was slated to relocate to Hartford, nearly $1.3 million to develop the company's medical technology business. Instead, the suit alleges Wagner "withdrew most of the loan funds and used them to enrich himself and to repay prior 3si Systems investors who had sued … or were threatening to sue." The suit said Wagner recruited employee- investors for 3si Systems based on repre- sentations they would be paid certain salary, commission, bonus and health benefits in ex- change for selling products developed by 3si. Wagner also represented during the recruit- ment process that 3si's products were fully developed and ready to sell, the suit said. The suit alleges, however, that 3si didn't have commercialized products to sell and that Wagner used investments from new employee-investors to pay old employee- investors who were owed back wages. The suit said Wagner was also paying himself management fees, while 3si had "no legitimate income or positive cash flow." The suit also accuses Wagner of transfer- ring 3si's assets to CliniFlow as part of a complex shell game that violated Wesley's loan agreement. The lawsuit also makes reference to Wagner's overtures in Hart- ford, stating: "Wagner is currently using 3si Systems' assets to solicit new investors and pursue millions of dollars in bond debt from the State of Connecticut." Other individuals who filed lawsuits said they were prior employee-investors of a Wagner-controlled or -operated company. They alleged they had to invest ($250,000 in at least four cases) as a condition of securing employment, but that they stopped receiv- ing their salaries "almost immediately" upon starting work at the company. When they complained about not receiv- ing salary or expense reimbursements, their managers told them to go recruit new inves- tors, one suit alleges. In an emailed statement, Wagner wrote that "CliniFlow is confident that it will emerge from this civil litigation with a positive outcome, and that it will be able to return its full time and attention to com- mercializing innovative medical technolo- gies that improve outcomes for patients and lower costs for healthcare institutions." State Aid to CliniFlow Technologies CliniFlow Technologies was involved in two deals with the state of Connecticut. In Jan. 2017 it received $400,000 in Small Business Express program funds, which were supposed to help the company move one of its startups, 3si Systems LLC, to Hartford. In exchange for the money, CliniFlow must add eight full-time jobs in Hartford by Jan. 2018. In the second deal, the state Bond Commission approved $3.6 million from the state's Manufacturing Assistance Act program to aid CliniFlow's $45 million Hartford investment, which included construction of a new office building, parking garage and the creation of 195 jobs. Those funds, however, were not granted to the company after it failed to meet certain project milestones. A street-level view of the Jefferson Street corridor CliniFlow planned to redevelop. The first two buildings in the foreground, owned by Hartford Hospital, were part of the project. HBJ PHOTO | SHARON BORDONARO

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