Sen. Fasano Questions Soundness of State’s Investment in Seven Stars Cloud

July 12, 2018

Senate Republican President Pro Tempore Len Fasano (R-North Haven) is raising questions about Governor Dannel P. Malloy’s administration’s $10 million investment in Seven Stars Cloud (SSC), a company that is proposing to establish headquarters at UConn’s former West Hartford campus. Earlier this month, the governor unveiled a plan to offer the company a taxpayer funded forgivable loan of $10 million under the administration’s First Five Plus program. Sen. Fasano wrote to the Department of Economic and Community Development (DECD) Commissioner Catherine Smith with multiple concerns about the company’s stability.

“Initially, I was cautiously optimistic hearing about Seven Stars Cloud (SSC) decision to establish its North American headquarters in the Greater Hartford area,” Sen. Fasano wrote. “However, upon further investigation and analysis by staff and concerned taxpayers, I’m perplexed regarding DECD’s decision and therefore I am writing to seek more information regarding the decision to offer a $10 million loan to a company that does not earn any money and is less stable than originally reported.”

In the letter, Senator Fasano raised multiple concerns and questions about the company’s profitability, sustainability, business practices, stock market performance, cash flow and audits.

“I am very concerned about the soundness of this deal, especially against the backdrop of DECD’s spotty record. The fact of the matter is Seven Stars Cloud does not make money, lacks capacity to invest seriously in innovation, has multiple unfavorable ratios and is burning through whatever cash it and its shareholders have at a rapid pace.  It’s on borrowed time, something their auditors have emphasized and noted,” wrote Fasano.

Click here to read Sen. Fasano’s letter to DECD Commissioner Smith.