TicketNetwork announced Wednesday that the company was pulling out of a high-profile economic development program following a tumultuous three days that began when CEO Donald Vaccaro was arrested early Monday.
"TicketNetwork is regrettably withdrawing from the state's First Five program,'' TicketNetwork counsel Andra Mazur said in a statement. "Due to the personal incident involving our CEO ... we feel that it is necessary to respectfully withdraw from the First Five program in an earnest attempt at preserving our future relationship with the state."
The First Five program is one of Gov. Dannel P. Malloy's marquee initiatives, designed to reward companies that create jobs in Connecticut. The state agreed to offer the South Windsor-based firm $6.3 million in low-interest loans in exchange for meeting certain employment benchmarks. Three other companies have also been approved for the program.
But after Vaccaro's arrest at an Oscars-watching party at Real Art Ways in Hartford early Monday, Malloy signaled his displeasure. He called Vaccaro's behavior "boorish" and suggested that the CEO showed a profound lack of judgment.
No one in Malloy's administration would come out and say it, but there were strong indications that TicketNetwork was made aware that it had a choice: Pull out of the program now, on its own — or face a lengthy review by top Malloy aides with a public result that probably wouldn't turn out well, and could end with the company's ouster.
The commissioner of the Department of Economic and Community Development, Catherine Smith, was first to comment, and she was guarded: She said the state did not sever the relationship; she said it was the company's choice. However, she said it was an "appropriate" decision.
Later, however, Malloy's senior adviser, Roy Occhiogrosso, went further in describing the administration's posture. "The governor made it clear that he was unhappy, and that he wanted a full review of what had happened, conducted by three of his top aides. And the company properly inferred from that, that they needed to take some action on their own."
Smith told reporters at the Legislative Office Building in Hartford that publicly traded companies were already subject to rigorous reporting requirements and government oversight, but that "after this occasion, if we do another deal with a privately held company, I think, yeah, you'll probably see us do a little bit more due diligence around both the CEO and potentially other members of the staff.''
The TicketNetwork deal with the state was announced in July. At the time, the company, which runs an online marketplace for sports, concert and theater tickets, was being courted by officials in Virginia and North Carolina, but opted to remain in Connecticut, partly because of Malloy's aggressive approach to economic development.
Smith noted, however, that the deal had yet to be finalized and that no money had changed hands. She said she hopes that TicketNetwork will remain in the state, even without the carrot of a state-backed loan. "I certainly hope they'll continue to grow here,'' she said. "These are great jobs. These are call center jobs, these are tech jobs. They're building websites, they're doing all kinds of important and good things. I really do hope they'll continue to be successful and continue to grow.''
Robert Barnes, the security officer who was the target of Vaccaro's racial slur, said he hopes the incident won't hurt TicketNetwork employees.
"Mr. Vaccaro's actions the night of Feb. 26th were unexusable and he should have to face appropriate consequences. I have considered the comments and threats that were made to me by Mr. Vaccaro and have contacted an attorney; we are deciding how to proceed,'' Barnes, head of security at Real Art Ways, said in an email. "I do however, want to say that I view Mr. Vaccaro's actions that night as personal in nature, he acted on his own and not as a representative of TicketNetwork. I hope that TicketNetwork takes the necessary steps to restore its relationship with its employees and with the state of Connecticut."
TicketNetwork's Mazur said that the company continues to believe that the First Five program is a "commendable government initiative that will help Connecticut's economy grow" and that the company was honored to have been chosen.
"TicketNetwork has over 400 dedicated employees and remains fully committed to maintaining a positive work environment for them,'' the statement said.
Vaccaro is taking an indefinite leave of absence. On Tuesday, he announced that he was seeking counseling and treatment for alcohol abuse.
According to Hartford police, Vaccaro kissed a woman and grabbed her breasts at the party Sunday night. When a bouncer escorted Vaccaro to the door, Vaccaro said, "You never should have touched me," followed by a racial slur, the bouncer told police.
Police were called at 12:10 a.m. Monday. Vaccaro was charged with second-degree intimidation based on bigotry or bias, a felony; and four misdemeanors — second-degree threatening, second-degree breach of peace, first-degree breach of peace and interfering with a police officer.
On Tuesday, Malloy directed Smith, along with Consumer Protection Commissioner William Rubenstein and his top legal adviser, Andrew McDonald, to examine the state's relationship with TicketNetwork.
Public records show that the incident at the Oscars party was not the first in which Vaccaro has been accused of inappropriate remarks and behavior toward a woman in public.
A woman who formerly worked for TicketNetwork filed a lawsuit against the company in December 2010, claiming that Vaccaro approached her at a company-sponsored Halloween part on Oct. 12, 2009, "and made sexual advancements … including unwanted touching of the plaintiff's body in a sexual manner."
She also claimed in the lawsuit, filed at Superior Court in Hartford, that on Oct. 31 of 2009, Vaccaro again encountered her in a "social setting," when she was with her boyfriend. Vaccaro told her that "you have amazing [breasts]," according to the lawsuit.
Then, at a holiday party on Dec. 9, 2009, Vaccaro made the same remark, with the addition of a vulgar adjective, the woman claimed in the suit. The woman complained about it that night to one of the company's "legal representatives," the lawsuit said, adding that she was fired two days later. The company said that "she was terminated for not making the required fifty … sales calls a day," the lawsuit said. But that was just a "pretext," she claimed.
Vaccaro, through his lawyer, denied the claims. The woman sought monetary damages for "physical and emotional injuries," including anxiety, fear, distress, anger, depression and "emotional pain and suffering."
The case was working its way toward a trial last summer when the plaintiff abruptly withdrew the action. The withdrawal was formally filed with the court on July 22 of last year.
That was one day after Vaccaro's First Five economic development deal with the Malloy administration was announced by the governor at a press conference.
Malloy, a former prosecutor, was asked whether Vaccaro deserved the presumption of innocence.
"I think even if there is a matter of legal innocence, that is that a crime was not committed, the boorishness of the behavior by someone ... in that kind of a position ... it's disturbing ... it's disturbing."
The other three companies that have agreed to take part in the First Five program are Cigna Corp., ESPN and NBC Sports Group.
Health insurer Cigna Corp. took Malloy up on the offer and moved its corporate headquarters from Philadelphia to Bloomfield, returning the company to the state for which it was formerly named, Connecticut General.
In March, ESPN said it would add 75 new jobs by the end of 2011 and repeated a plan announced in July 2010 to bring 125 jobs from New York to Bristol, mostly related to ESPN The Magazine. In August, the sports network said it would hire an additional 200.
NBC Sports Group said in October that it will bring more than 450 jobs to Stamford as it converts a former Clairol hair-dye plant into sports network studios with office space. The state will give the network group a $20 million loan at a 1 percent interest rate, all of it forgivable if NBC Sports adds the promised jobs in five years, retains the 200 or so employees it already has in Stamford and spends at least $100 million.
Only the Cigna agreement has been finalized.
During the 2011 legislative session, the General Assembly authorized five slots for this year's First Five program and five for next year, for a total of 10. At the special legislative session last fall, five additional slots were allocated, which will carry over into the 2013 fiscal year.
"I remain very optimistic that we will ... have some very good news about companies either expanding here or coming in from out of state," Smith said.