Boondoggle Alert: Insurance Commissioner Nominee Benefited From State Fund He Endorsed.

Thomas Leonardi, Governor Dannel P. Malloy’s nominee to head the state’s Insurance Department, participated in a state-authorized insurance investment fund that cost taxpayers $408,000 for each job it created.  The 1994 Insurance Reinvestment Act, according to to a December 2009 report by the legislature’s bipartisan Program Review and Investigations Committee, provided $52 million in tax credits to create a paltry 128 jobs between 1994 and 2008.

Leonardi’s Farmington-based Northington Partners was one of 5 fund managers authorized to accept investments that would qualify for tax credits under criteria aimed at creating insurance or insurance related jobs in Connecticut. The tax credits, Leonardi told the legislature in 1994, would create 3,000 jobs over ten years at a cost of $62 million, a 1999 report from the Office of Legislative Research reveals. That would have been $20,666 a job, about 5% of what the cost became.

Leonardi was spectacularly wrong in predicting the benefits the fund would provide the state’s economy.  A primary booster of the fund legislation, Leonardi may have reaped a bountiful harvest for himself from taxpayers through his fund’s relationship with insurance giant Zurich.  It invested $190 million in a Northington fund, which reinvested the funds in Zurich in order to collect the tax credit.  Significant management fees likely accrued to Leonardi’s fund.

Legislators will want to know more about Leonardi’s stake in a taxpayer boondoggle but an investment bonanza when he testifies at his confirmation hearing.