Fasano Response to DECD’s Statement Defending State Investment in Seven Stars Cloud

HARTFORD – Senate Republican President Pro Tempore Len Fasano (R-North Haven) released the following in response to DECD Commissioner Catherine Smith’s statement regarding concerns about the state’s $10 million investment in Seven Stars Cloud.

“I look forward to receiving the thorough assessment Commissioner Smith claims was performed and hope that it will provide more answers than she was able to provide in her press statement today. The fact that this company is still operating at a loss, even with their 500% jump in revenue for the first quarter which was a result of them playing the stock market in crude oil trading, underscores the need for a deeper investigation by the state of Connecticut. Seven Stars Cloud’s net income loss over that same period of time was a shocking $4.2 million. The administration trying to spin this company’s growth in crude oil trading as a positive raises even more concerns and questions about their vetting of SSC. I would think Connecticut would want to partner with a company that is showing growth in a field at least somewhat related to the business they are supposed to be bringing to our state, not growth because of their involvement in oil trading – growth which still is not even enough to support a positive cash flow. In addition, letters of credit backing planning and zoning projects have universally been rejected because of the inability to rely upon these letters as adequate security for developments. For the state to now rely upon a letter of credit as a means of backing a loan seems at best a paper promise, or at worst grasping at straws to bolster this deal. Taxpayers deserve answers.”

BACKGROUND

The following is a statement from SSC’s Q1 2018 OPERATING RESULTS Press Release Issued on May 15, 2018:

“Revenue for Q1 2018 was $185.9 million as compared to $33.2 million for the same period in 2017, an increase of approximately $152.8 million, or 461%. The increase was primarily due to our expanding business in crude oil trading which began in October 2017.”