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This health care startup closed. Millions in taxpayer money is gone. Now what?

Pictured is Rep. James Grant during a debate in 2015. [SCOTT KEELER   |   TIMES, 2015]
Pictured is Rep. James Grant during a debate in 2015. [SCOTT KEELER | TIMES, 2015]
Published Jul. 5, 2018

TAMPA — It's been two weeks since health care IT company CareSync Inc. shuttered, leaving the patients who used its services in the lurch and nearly 300 employees scrambling for new jobs. The closure came with little warning, just days after a buyer tentatively agreed to purchase the Tampa company.

Among the questions left in its wake — What will happen to the sensitive health data the company stored? Why did the buyer back out of the sale? And a nagging seven-year-old question that has once again bubbled up:

What happened to $7.25 million in public funds from Hardee County that was poured into the company's development?

Some of those CareSync employees left jobless plan to attend a Hardee County commissioner meeting this morning looking for answers.

"We weren't just friends. We were family," said Shelly Wright, a former CareSync employee who will attend the meeting.

EARLIER COVERAGE: Health care IT company CareSync shuts down, laying off 292

CareSync and troubled funds

CareSync is the most recent incarnation of a company started by Tampa Bay entrepreneur Travis Bond and state Rep. James "Jamie" Grant, a Tampa-native politician running for reelection.

The company offered a platform to help patients with chronic conditions better manage their medical and insurance records, doctor appointments and medications. It was built out of a combination of three companies. Two of them — LifeDash Inc., a social platform, and Continuum Labs, which handled the software development portion — were started and run by Bond.

The third building block was LifeSync Technologies, where state business records list both Grant and Bond as managing members. It set out to help patients in the same way CareSync wound up doing.

Over three years, evolving versions of the company — at all times run by either Bond or Grant — received $7.25 million in public funds from Hardee County. But its questions about the grant's distribution triggered a state district attorney report, an ethics commission investigation and a private audit.

In an interview with the Times this week, Grant blamed the company's demise on a "hostile takeover," CareSync's board of directors removed Bond as CEO in April and Grant as senior solutions architect in early June.

As for the money? Grant, who has collected at least $270,000 from CareSync and its predecessor companies since 2012, says the company lived up to its original agreement and doesn't owe any reimbursement of public funds.

Bond, as well, defended the company's performance.

"From the beginning, CareSync has continually invested directly into Hardee County," he said in an email. CareSync, he said, has invested more than $15 million into the county since 2016, $13.5 million of which was payroll.

The Hardee County Industrial Development Authority, however, has never been able to account for how millions were spent. Two installments of the grant were given to LifeSync and later Continuum in violation of reporting standards required under the agreement.

An independent auditor found in 2014 that the Hardee County IDA didn't require a time line or measurable outcomes from LifeSync to hold the company accountable for the money.

As recently as 2017, the Hardee County IDA said it was not acting on the results of any investigation because of a pending lawsuit over the custody of public records related to the case.

But now, Bill Lambert, current head of the IDA, is ready to move on. He said he considers the terms of the agreement between CareSync and Hardee County met and isn't looking for repayment.

"We felt like we'd gotten a reasonable return on our investment," he said, citing CareSync's job creation.

Seven members of CareSync's board did not respond for comment.

MORE: Go here for more Business News

The grant

The issue began in September 2011 when Grant and Bond approached the Hardee County IDA to secure money for LifeSync, which at that time did not exist.

The Hardee County IDA is tasked with promoting economic development in the county, and can provide incentives and grants to companies looking to set up shop in the area. Much of its funding comes from a multi-million-dollar agreement with The Mosaic Company, a phosphate mining business that pays Hardee County for the right to mine on 11,000 acres.

The funds were intended to help build a software application product called BlueWater, which Grant said would produce $26 million in sales by 2014 and 400,000 subscribers. Among other obligations, the company was supposed to open its customer service arm in Hardee County and employ local residents, as well as document how the funds were being used.

There was another major stipulation: If LifeSync was sold or did not adequately perform, the purchasing company would need to pay the Hardee County IDA at least a portion of the grant.

LifeSync was given $2.6 million initially. Grant sold BlueWater and the remainder of the grant to Continuum Labs about a year later for 1.25 million shares. Continuum got another $4.6 million from the Hardee County IDA between October 2012 and January 2014.

In 2014, Continuum Labs was formally renamed CareSync.

Investigations

By early 2013, an initial $2.6 million had been spent. But where it went, exactly, was unclear.

Two investigations were launched after a number of complaints by citizens and a local city commissioner were raised. One investigation by the State Attorney's Office in Bartow was closed in October 2013. It found no evidence of criminal misconduct.

Another investigation by state auditors in 2013 found several issues. According to investigators, the Hardee County IDA broke the law by giving LifeSync money even though the company didn't formally exist. The documentation of funds that was supposed to be generated by both LifeSync and the Hardee County IDA was never produced, meaning the money wasn't being tracked. And at the time of the investigation, the product also hadn't been delivered.

To date, the only auditing of the finances of the deal came from independent accountant CliftonLarsonAllen, an outside auditor hired by the Hardee County IDA. It reviewed Continuum's budget records spanning October 2011 to June 2014, though just seven months worth of records were provided by Continuum and the Hardee County IDA.

It found several problems with the deal. For one, neither Grant nor LifeSync was vetted for financial stability before the money was transferred. There was also no time line for benchmarks to be hit, nor was there a time line for relocating the company's customer service center to Hardee County.

Family ties

The report also revealed that the Hardee County IDA benefitted from the tech startup in other ways.

Three Continuum employees who were paid from the grant are related to Hardee County public officials. They were among 10 Continuum employees and three LifeDash employees who received more than $60,000 apiece in annual salaries.

According to Grant, "the only dollar that ever went out was to people that applied for jobs and based on merit, got those jobs."

Both the Hardee County IDA and Continuum still have not signed the preliminary audit to finalize it, citing a pending lawsuit. When the Times reached out last week to Michael Carter, the CliftonLarsonAllen CPA who conducted the financial report, it was the first he had heard of CareSync's closing.

Still undetermined is who, if anyone, owes the Hardee County IDA repayment. Under terms of the initial agreement, Continuum, which later became CareSync, would be on the hook for repaying the money.

But Grant said his understanding was that as long as LifeSync (and later CareSync) got up and running, brought jobs to the area and put all of the money directly into the project, there would be no repayment.

"We significantly performed on the grant," he said. "For anyone to suggest anything else is a lie."

Contact these reporters at mcarollo@tampabay.com or hdenham@tampabay.com.

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