It was January 2012. The PGA golf association was hosting its merchandise show in Orlando, Florida – and the Back9Network was there.
It was a chance for the fledgling network to give the industry a sneak peek at its original programming – shows like Extreme Golf, Hole Lotta Love, and Beer Cart Girl. Back9 threw a launch party attended by golf glitterati.
“I believe that golf is the most democratic sport in the whole world,” then-CEO James Bosworth told a crowd of Back9 fans wearing Back9 hats. “For a very, very, very long time, golf has been about a bunch of stuffed shirts trying to keep people out. The Back9Network is about inclusion.”
Why Adam Cloud?
It’s hard to say. Efforts to arrange an interview with Cloud were unsuccessful. But there are least three things that connected Cloud to the golf network, which is now off the air and facing at least one investor lawsuit.
First, his brother Chris Cloud, who was also at the party in Orlando, had for four months been Back9’s paid state lobbyist. Second, Back9 confirms it had just rented downtown Hartford office space from Cloud’s father, Sanford Cloud, Jr., the month before.
The email raises a question of ethics: should a city treasurer use his public email to encourage investment in a company doing business with first-degree relatives?
Cloud began the email with city business. He was following up on a meeting he had with Robert Smith from Vista Equity Partners, an investment company offering services to the city's pension fund.
“It was an extreme pleasure to meet and speak with you about the great work that you are doing at Vista,” Cloud wrote. “You gave us a lot to think about and presented your strategy flawlessly.” Cloud said he was sending Smith information about state incentives to move businesses to Connecticut. And he name-dropped.
“As I stated in our meeting, I have a strong relationship with our Governor with whom I mentioned our meeting,” Cloud wrote.
But then he switched gears. If the first half of the email was about city business, the second half was about selling Smith on a golf network.
“Back 9 plans to become the premium lifestyle and entertainment network for golf fans globally,” Cloud wrote, telling Smith that the city was also considering investing in Back9 through an “economically targeted investment bucket.”
“The margins are in the 60% range, well short of Vista's but compelling nonetheless,” Cloud wrote.. “I share it with you only because I get the sense that you are a man that likes to be on the ground floor of great ideas!”
Then Cloud signed off, without having disclosed his family’s ties to the Back9Network.
“Again, it was a great pleasure to meet you and I look forward to a profitable and long term relationship,” he wrote, before wishing Smith “happy holidays” and ending the email with his name and title: Adam M. Cloud, Treasurer, City of Hartford.
The email didn’t amount to much for Back9. According to Cloud’s private attorney, John Droney, while the city subsequently invested about $20 million of its pension fund with Smith’s firm, Vista Equity Partners never invested in Back9. That’s a fact confirmed by current Back9 leadership and by Droney. Droney also said that the city didn’t invest in Back9.
“Treasurer Cloud will not apologize for promoting a business that sought to locate, operate and create jobs within the City of Hartford,” Droney said in an email.
But Cloud’s email raises questions about whether he engaged in “self-dealing” -- the use of one’s official position for the benefit of one’s family instead of for the public good -- or whether his actions constituted a conflict of interest.
Adam Cloud’s email raises ethical questions, said Karen Hobert Flynn, a national senior vice president at Common Cause, the public interest advocacy group that promotes accountability and transparency in government. She said she is calling for an ethics investigation to learn more.
“Common Cause believes that if a city contractor is encouraged to invest in a business where the city treasurer’s brother and father could potentially benefit financially, we think that’s a conflict of interest,” Hobert Flynn said. “And that kind of activity should be prohibited.”
But while Hobert Flynn believes that kind of activity should be prohibited, Hartford’s ethics code does not appear to forbid it. In contrast, the state ethics code would prohibit this kind of activity, she said.
“Although Adam Cloud doesn’t explicitly encourage investment, the fact that he’s sending it from the city treasurer’s email and encouraging [Smith] to take a look at it does raise questions about whether there were any other follow-up communications around that,” Hobert Flynn said.
The email was one of many turned over to the federal Securities and Exchange Commission in response to a subpoena it served the city earlier this summer.
In addition to Cloud’s campaign finance disclosures, investigators also asked for his correspondence. WNPR has also asked for and received that correspondence.
Meanwhile, Back9 has failed to meet some investor expectations. Despite a $5 million investment from the state Department of Economic and Community Development, the company ran out of money, fired all but its executive leadership, and went off the air. Investors have sued. So has at least one former employee.
Sanford Cloud, the treasurer’s father, eventually joined Back9’s board in 2013. The elder Cloud’s love of the game of golf led CEO James Bosworth to make him the focal point of a Back9 promotional video.
But their relationship eventually soured. While on the company’s board, Sanford Cloud helped push Bosworth out in 2014 -- at least that is Bosworth’s allegation in court filings.
Earlier, Back9 hired Camilliere, Cloud and Kennedy, a state lobbying firm in which the city treasurer’s brother is a partner. According to state records, Chris Cloud’s firm had been working for Back9 for about four months, beginning at the end of August 2011. State records also show Back9 paid the firm a total of $158,000 between 2011 and 2014.
A few months after the 2012 party in Orlando, the state began to invest in Back9. Connecticut would eventually pour $5 million into the company.
“We’re already home to some of the top companies in the industry and we have an infrastructure of economic development tools that will keep attracting more film production and media companies, content creators, technology providers, investors and entrepreneurs to the state,” Governor Dannel Malloy said in the press release announcing the deal. “Back9Network is a great addition to our [capital] city, one that is poised to grow in a 21st Century industry.”
In December of 2011, when Treasurer Cloud sent the email, was also the same month that Back9 said it started leasing downtown Hartford office space from a company owned by Cloud’s family.
The exact date on which the lease began is unclear. In an email, the company’s current leadership said that Back9 leased space from the Cloud family at 30 Lewis Street in Hartford from December 2011 to November 2014.
Adam Cloud’s private attorney John Droney disputes that timeline. In an email to WNPR, he said Back9 had not yet leased the office space when Cloud sent the email.
“Back9 was not a tenant of the Treasurer’s family’s business at the time of the email to Vista,” Droney wrote. “Back9 was, for a short time, a tenant in a building owned by the Treasurer’s family. This leasehold arrangement was not a factor in the 2011 email mention of Back9 to Mr. Robert Smith.”
Droney also said that Cloud didn’t recall contacting any other investors about Back9, and he said the “60 percent margin” figure refers to the potential for profit.
Droney denied a request to interview Cloud directly. He declined to answer other questions, such as how Cloud came to be familiar enough with Back9 that he would both encourage others to invest in it and declare “margins are in the 60% range.”
Efforts to reach Smith of Vista Equity Partners were unsuccessful.
Cloud’s Back9 email again focuses attention on his use of his public office for non-public concerns.
Treasurer Cloud became a focal point of a federal investigation involving troubled insurance broker Earl O’Garro and his firm, Hybrid Insurance. Officials were initially concerned that Cloud had a conflict of interest with Hybrid, a firm which also did business with his family. Like Back9, Hybrid hired Cloud’s brother to be his lobbyist, and it rented space at 30 Lewis Street.
O’Garro was eventually charged by federal prosecutors with defrauding the city, the state, and others – and making off with public money. Adam Cloud played a role in getting O’Garro that money. And while O’Garro’s case is scheduled for trial later this year, Cloud has not been charged. Attorney Droney has called Cloud a “victim” and has called O’Garro a “sociopath.”
Finally, earlier this year, the SEC subpoenaed Cloud’s campaign finance filings, among other things. It’s not clear what the SEC is looking for. But this email is among the evidence sent to federal investigators.
This is all happening in the context of Cloud’s reelection campaign. Earlier this month, he won the city’s Democratic primary for treasurer. The general election is in November.