Canrock Ventures, the early- stage technology company that President Kimberly Cline brought to LIU Post around Thanksgiving 2013, is currently under investigation by the U.S. Treasury’s Inspector General for allegedly having misused federal dollars.
“I can confirm that Canrock Ventures is the subject of the review by the Inspector General,” a Treasury spokesperson told The Pioneer. “The audit concerns specific transactions of federal funds and the I.G. is trying to determine whether Canrock violated conflict-of-interest rules.”
In 2012, New York State, through a then newly-founded investment pool called the Innovate NY Fund, chose Canrock as one
of seven tech startups that would be allocated a total of $35 million dollars, of which Canrock was given $5.7 million. The companies were relatively free to choose how they would use their respective share of money; however, there were some rules to follow.
A March 22 Newsday article titled “LI Venture Firm to Be Reviewed By Feds,” reports that Canrock invested almost $2 million of taxpayer dollars into five computer software companies, where Canrock is either the largest shareholder or owns a significant stake. Additionally, four of these startups were co- founded by Mark Fasciano, the company’s managing director. Mr. Fasciano is also the chairman of the board of directors on three of them.
In an interview with Newsday, the 45-year-old Fasciano denied that there were conflicts of interest in how Canrock used Innovate NY money, and that New York officials knew about his dual roles as a board chairman of three of the companies and a Canrock partner.
According to the Newsday article, the review of Canrock Ventures began after Newsday asked the Treasury Department questions about one of the company’s investments that was funded using federal money. This occurred in early November 2013, around the same time that LIU president Dr. Cline was in the process of having Canrock Ventures move on campus in an open floor-plan office on the lower floor of the B. Davis Schwartz Memorial Library.
“The university does not comment on investigations of other parties or the potential ramifications of the outcomes of the investigations,” Sarah DeCamp, associate director of Public Relations, wrote in an email on behalf of the president’s office.
DeCamp explained that the initiative began after President Cline met with Canrock’s leaders when out in the community to meet neighbors and learn more about regional businesses. They started a discussion about the great possibilities linking students to an active tech-incubator, and, together, made it happen. The Pioneer reported in its January 29 article “New Student Business Opportunity: Canrock,” that the school signed a 10-year lease with the company.
DeCamp also explained the many possibilities of housing a startup tech company on campus. “We are able to provide students with an array of opportunities to learn about start-ups including mentorship programs, guest speaker lectures, interactive workshops, and
seminars with innovators and entrepreneurs,” she wrote in the email. “Additionally, LIU has been working with Canrock to provide students with an entrepreneurial tech internship program.”
Five students currently intern with the tech incubator, with others joining in the summer, according to DeCamp. If they will be affected remains unknown until the Inspector General finalizes he audit. The Pioneer reached out to Mr. Fasciano, who declined to comment on the investigation, and also to Ryan Attard, human resource specialist at Canrock Ventures and director of the ThoughtBox lecture series, who declined to comment on the investigation or anything related to the company.
However, DeCamp, on behalf of president Cline, assured in the email that the investigation does not affect the university.
But some university students are concerned over possible implications. “For students who work there now, it has the potential to hurt their business and progress dramatically, in case they are found guilty of this,” said Jacob Maitland, a senior Business major.
Maitland personally met with Mark Fasciano last year, after being introduced by a business associate. “I could imagine working
for Canrock because I have a good impression of Mr. Fasciano and
they provide some essential resources and expertise which many new businesses need to survive, let alone prosper,” he said. “But at the same time, their future image and reputation is at risk.”
He also believes that President Cline could lose some credibility in case the Inspector General finds that Canrock misused federal money. “The president may be viewed as irresponsible…by creating a situation in which this could happen,” he said.
“But at the same time, I like how she’s shaken up the campus and tried to implement new ventures and opportunities for students. There is never reward without risk, and she has the best interests of the students at heart.”