Tom Suozzi, Clarapath, and the Biotech Boom He Didn’t Disclose

Further, after his electoral resuscitation, one of the House district’s most powerful stakeholders, the Northwell Health system, became one of Clarapath’s biggest boosters: piloting Clarapath’s technology at its facilities, investing millions into the company, and even leading a recent round of fundraising. As a consequence, Clarapath’s valuation has exploded — and so, experts said, has Suozzi’s potential payout when he decides to finally sell his shares.

Even in his years out of office, Suozzi remained Democratic royalty. His father was a state appellate judge and the ex-mayor of Glen Cove, a job that Suozzi himself occupied from 1994 through 2001, before he sat in the powerful county executive chair for the eight years prior to his ouster.

Suozzi had a long relationship with Cold Spring Harbor Laboratory. He gave his second-ever State of the County address at the facility in 2003, and his administration provided substantial financial assistance to the lab during his tenure as county executive.

In 2011, under the guidance of US Senator Chuck Schumer, venture capitalist Mark Fasciano helped establish an investment fund focused on launching companies out of Long Island’s longstanding research institutions. Fasciano was a member of the Long Island Regional Economic Development Council and had served on the transition team for then–incoming governor Andrew Cuomo.

State corporation records show that only days before Suozzi sank $28,000 into Clarapath, Fasciano registered an entity called MF Clarapath LLC. Around this same time, according to his LinkedIn, he became Clarapath’s first CEO.

Fasciano did not respond to repeated requests for comment. Neither did Clarapath’s current CEO, Eric Feinstein, nor the company’s media team.

At the time Suozzi and Fasciano climbed aboard, Clarapath was a nascent company formed three months prior in Delaware. It didn’t apply for a patent on its proprietary product, which seeks to automate biopsy procedures, until five years later, in June 2016. It didn’t register to do business in New York until seven months after that.

By that point, Suozzi was in Washington.

In his first financial disclosures as a candidate and newly minted congressman, Suozzi placed the value of his investment in Clarapath in the $15,000 to $50,000 range.

But in ensuing years, he declared the value as “undetermined” or “none” — even though he sank an additional $250,000 into the company in early 2021.

He assessed the company as worthless at the time of his exit from the House in 2023 for an ill-fated gubernatorial run, and then as “unknown” again when he returned after the fleeting, madcap tenure of George Santos.

In the meantime, Clarapath had formed a partnership with Northwell Health — the most powerful force in Long Island’s political economy.

Northwell then led the round that brought Clarapath’s total fundraising to $75 million this past summer. Today it controls three of Clarapath’s nine board seats (not including the one held by Feinstein), giving it the largest presence of any institution. The two are entwined enough that, on his new company’s website, former CEO Fasciano asserts that “Clarapath is now part of Northwell Health.”

Northwell wields massive influence in Long Island affairs: With more than 80,000 employees and nearly $17 billion in annual operating revenue, the healthcare empire is the largest private employer not just in the region but in the entire state.

“This is not your average hospital,” said Bill Hammond, senior fellow for health policy at the Empire Center for Public Policy think tank. “This is a goliath of the healthcare world. It would be very hard for an official on Long Island not to have a relationship with them.”

Hammond noted that Northwell’s expansion over the past generation — adding 23 hospitals and 850 additional facilities — owes much to its political savvy: CEO Michael Dowling served as a top official in late Governor Mario Cuomo’s administration and as a confidante to former Governor Andrew Cuomo, sitting on the scion’s Medicaid Redesign teams and other executive panels.

Northwell has also hired an array of former politicians, including John Flanagan, the former Republican Senate Majority Leader; ex-Nassau County legislators Kevan Abrahams and Josh Lafazan; one-time Nassau County Comptroller Jack Schnirman; and retired Suffolk County Executive Steve Bellone.

Besides recruiting so many people with political connections, Hammond said, Northwell further amplifies its influence through the Greater New York Hospital Association trade group and its allies in organized labor.

“You know the phrase, ‘the military-industrial complex’? There is a hospital-industrial complex, and it’s intimately intertwined with our political system,” Hammond said. “Between the hospitals and the big healthcare labor unions, it’s almost like a fourth branch of government at this point.”

Northwell told New York Focus it was “not aware of any communications with Representative Suozzi in connection with its decision to invest in Clarapath.”

It did not answer questions about when it became aware of his stake in the startup, or what protocols it has in place to deal with how its actions might impact the private finances of public officials.

John Kaehny, executive director of the good government group Reinvent Albany, characterized the Suozzi/Clarapath arrangement as “sleazy” but legal. Northwell Ventures and similar profit-seeking subsidiaries nested within tax-exempt hospitals are also lawful — but he called them “absurd.”

“If you allow gigantic nonprofit institutions that are completely reliant on public funds and private insurance to have for-profit arms, that’s an invitation for self-dealing,” he argued.

“That can be very complicated when you have elected officials, and all kinds of public officials, that have dealings with the nonprofit end of the hospital — maybe even getting them money — and then have separate dealings with the for-profit end for their own personal enrichment.”

Kaehny pointed out that New York spends the most per capita on Medicaid of any state in the nation, which he attributed to its hospital-oriented model of care. Northwell, like other hospitals, also receives assistance from the state Dormitory Authority and other state grants.

And as he left Congress for his ill-starred bid for governor, Suozzi obtained a $2 million federal earmark for a Northwell-run geriatric center. It was among the largest he obtained during his first stint in the House — matched by $2 million he secured for Cold Spring Harbor Laboratory for its “Next Generation Artificial Intelligence Center for Advanced Cancer Diagnostics.” (There is no evidence any of these funds supported Clarapath.)

“Congressman Suozzi has always fought like hell for countless municipalities and not-for-profits in his district,” Kim Devlin, Suozzi’s campaign advisor, told New York Focus in an emailed statement.

Meanwhile, the value of Suozzi’s stake may only swell as he sits in Congress over the years ahead.

Clarapath’s valuation has exploded during Suozzi’s time in federal office: In 2021, financial services firm LXL Capital estimated the company’s worth to be between $96 million and $144 million. After the fresh $36 million fundraising round this past July, LXL pegged Clarapath in the $216 million to $324 million range.

Nicole Bradberry, managing partner of the startup consultancy Sunflower Health Advisors, told New York Focus that an early shareholder can get bought out in a fundraising round, or if a larger firm acquires the entire company.

Even if future fundraising rounds diminish the percentage of a firm an angel investor controls, the company’s overall valuation grows — and so does the early stakeholder’s eventual payday.

And the biggest possible cash-out comes if the startup becomes a publicly traded company.

“Obviously the reason you go in so early is because that’s where the big payoff is,” said Bradberry. “The earlier you’re in, the bigger the payoff.”

The congressman’s team maintained that Suozzi has complied with all rules, but added that he would soon update his filings to reflect the money he has put into Clarapath to date.

“As a private citizen, in 2014 Tom invested in a healthcare startup working to make biopsies more accurate and faster,” campaign advisor Kim Devlin wrote in a statement. “While the company is private and still a start-up and the value undeterminable, he amended his recent financial disclosure report to make an estimate of the value of the investment.”

Suozzi’s resulting amended disclosure shows an estimated value of $250,000 to $500,000 for his stake in Clarapath, with a note adding that the actual value is “undetermined.”