(Updated 11:40 a.m.) One day after its chief executive officer took a leave of absence following his arrest, the online ticket exchange company announced it was withdrawing from the state’s ‘First Five’ program.
“Due to the personal incident involving our CEO Don Vaccaro, we feel that it is necessary to respectfully withdraw from the FirstFive program in an earnest attempt at preserving our future relationship with the state,” TicketNetwork Counsel Andra Mazur said in a statement Wednesday.
Gov. Dannel P. Malloy told reporters Tuesday that three members of his administration were examining the state’s plan to loan the company money.
The state offered TicketNetwork a $4.5 million, 10-year state loan to create between 200 and 600 jobs over 10 years. The deal, which had yet to be finalized even though it was announced in July, also came with a five-year, $1.8 million loan from the Connecticut Development Authority for information technology, furniture, and fixtures.
Catherine Smith, commissioner of the Department of Economic and Community Development, said Wednesday that TicketNetwork was the type of company the state would like to see expand in the state.
Smith, who fielded questions from business owners at a forum sponsored by the Connecticut Business and Industry Association, spent some of her time defending Malloy’s ‘First Five’ program which seeks to give financial assistance to 15 companies that promise to create 200 jobs.
“We have already a pretty thorough vetting process,“ Smith said. “A lot of the companies are already publicly traded companies so there’s already a lot of due diligence out there in the market.”
But TicketNetwork, the second to be accepted for the loan program, was a privately held company.
She said the more privately held companies like TicketNetwork make it a little more difficult for the state to obtain information about the company and its officers.
But the sexual harassment lawsuit a former marketing assistant filed against the company was public information. The case was settled outside of court one day after the July 21 press conference where the ‘First Five’ funding was announced.
At the announcement of the loan Smith said that she was unaware of the sexual harassment complaint against the company.
Would that type of complaint prevent a loan of this type in the future?
“I think it would all be circumstantial,” Smith said. “We’d need to look at the entire situation. We’re not going to try and predict the outcome of any legal matter, so it makes it more complex.”
Smith said the vetting process heavily focuses on the company, and not its top executive officers.
But after this incident Smith said they will be doing a little bit more due diligence “around both the CEO and other members of the administration as well.”
Did the Malloy administration ask TicketNetwork to withdraw its application?
“No,” Smith said.
She said it wasn’t her team dealing with the company after Vaccaro’s arrest it was the governor’s office. But she said the lesson she learned from the incident is that her team is going to do “a little bit more due diligence around the leadership of the company, if it’s privately held.”
Despite the recent circumstances, Smith said she hopes the company decides to stay in the state and grow. When the state began discussions with the company it had offers to relocate for tax incentives from other states.
“We believe the First Five program remains a commendable government initiative that will help Connecticut’s economy grow. We were honored to have been chosen,” Mazur said.
On Tuesday Vaccaro announced he was taking an indefinite leave of absence from the company following his arrest at an Oscar party. Vaccaro will be in court to deal with the charges on March 7. While on leave from the company Vaccaro will be seeking treatment for alcohol abuse.
Mazur said long-time company executives Doug Kruse and Jeff Scheman assumed responsibility for running TicketNetwork as Co-CEOs.
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TicketNetwork was the second company to be chosen as part of Malloy’s First Five program.