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Analysis: Bizarre Friday Afternoon 38 Studios Press Conference Will Infuriate RIers UPDATED

Saturday, July 30, 2016

 

A Friday, July afternoon media dump by Col. Steven O’Donnell and Democratic Attorney General Peter Kilmartin unveiled the 38 Studios four-year investigation achieved nothing — no charges. It will be a hard pill to swallow for many Rhode Islanders, that the 38 Studios deal that was layered by insiders and resulted in the loss over more than $75 million, ended with no justice and no penalties.

Both O’Donnell and Kilmartin were defensive in their presentations and in answering questions. 

The explanation by O’Donnell will be less than satisfying for so many Rhode Islanders and will raise significant questions about the endless perception about the insider game in Rhode Island politics. Attorney General Kilmartin — then a member of the House of Representatives when the funding legislation was approved for 38 Studios — will also be questioned by many, as Kilmartin had been a member of Gordon Fox’s leadership team. 

Fox is now in Federal prison on unrelated charges. Fox’s ally, lawyer and lobbyist Michael Corso made millions from the 38 Studios deal and even had the music system in his then bar Tazza upgraded and billed to 38 Studios according to a GoLocalProv investigation.

Ken Block, former GOP candidate for Governor immediately tweeted, “The fact that @AGKilmartin did not recuse from #38Studios investigation taints the entire process. Remember, he was member of leadership.”

Kilmartin was a member of Gordon Fox's leadership team

The Friday late afternoon press conference was immediately attacked by journalists for the last minute and no minutes notification. Friday afternoon press conferences are used by public relations people to minimize the impact of bad or embarrassing news.

“We all share the frustration of 38 Studios,” said Kilmartin in his announcement that there would be no criminal charges. Kilmartin said in his role as Attorney General, he could not be “emotional.”

“To the cynics, no explanation will be sufficient. But at the end of the day, the bottom line is there is not enough evidence to bring charges against anyone.  Bad politics, bad public policy, bad business decisions do not always rise to the level of criminal conduct,” said Kilmartin. He then went on to tell a story about what his mother would say to him.

“Not enough evidence or probable cause to bring any charges against anyone,” said Kilmartin.

Accountability v. Cynicism

For many Rhode Islanders, the outcome of the four-year investigation is unimaginable. The evaporation of $75 million in taxpayer dollars in less than two years seems incomprehensible. But, what may be more infuriating is the language used by O’Donnell and Kilmartin that anyone who disagrees with the outcome is a cynic.

The cynicism will only be enhanced by the hour of the press conference, the approach of O’Donnell and Kilmartin in their presentation, and the outcome.

The grand jury first started October of 2012 and according to O'Donnell and Kilmartin more than 100 interviews were conducted - they repeated it countless times.

In May of 2016 Kilmartin said during a wide-ranging interview with GoLocalProv that the end of the 38 Studios investigation is in sight. 

"I believe the state police are close to a wrap up," said Kilmartin, though he said he couldn't provide a specific time frame. "And we will see how that investigation ends up."

Political Fallout

Within minutes of the announcement of the decision, Governor Raimondo’s office announced that she would have no public events for three days — and thus no opportunity for the media to interview publicly.

The political fallout could be significant.

For Kilmartin, who repeatedly refused to recuse himself, despite being a legislator at the time of the financing scheme’s passage, it functionally ends his career.  He is term limited out of his office and will leave the Attorney General’s office in 2018. Rumors of him considering a run for Congress or the Governor’s office will end today.

 

Related Slideshow: INVESTIGATION: Fox, Corso and 38 Studios

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The Early Years

Early 2000s

Fox was emerging as a powerful leader in the House via his role on the Finance Committee and later as Finance Committee Chair. Corso served on the management team at developer's Buff Chace's Cornish Associates.

The two worked together to write and pass the Historic Tax Credit Legislation.

Bio attached from the early 2000's - Cornish Assoicates Website.

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Insiders

Insiders Had Hands All Over Schilling’s 38 Studios Deal

The owner of the construction company that was awarded a contract to work on the interior of 38 Studios’ downtown headquarters has close ties to House leadership and other prominent local politicians, GoLocalProv has learned.

Steven Nappa, who owns Nappa Construction Management, has contributed over $16,000 over the last decade to top politicians including House Speaker Gordon Fox, Congressman and former Providence Mayor David Cicilline, Providence Mayor Angel Taveras, former House Speaker William Murphy and former House Finance chairman Steven Costantino. In June 2011, Nappa also contributed $1,000 to the Fund for Democratic Priorities, a political action committee maintained by House leadership.

Nappa is also connected with Michael Corso, a Providence lawyer who has made a fortune helping to sell state tax credits and was involved in the earliest meetings between Schilling and Rhode Island officials. The two hosted a private fundraiser at the Peerless Lofts for then-Majority Leader Fox in 2007. Nappa also helped build the movie screen located in the open space next to Tazza, the downtown café owned by Corso.

Corso himself has contributed $11,625 to Fox, Cicilline, Taveras, Murphy and other local politicians in recent years.

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Movie Tax Credits

Corso and Movie Tax Credits

The Providence lawyer who pledged more than $14 million in Rhode Island motion picture tax credits that had not actually been issued as collateral in order to obtain an $8.5 million loan for Curt Schilling’s 38 Studios is now playing a behind-the-scenes role in a Michael Corrente movie that is slated to receive $625,000 in state tax credits, GoLocalProv has learned.

Michael Corso, a top tax credit broker whose loan agreement with BankRI is among several 38 Studios-related matters currently being investigated by state and federal authorities, is one of seven producers for “Backmask,” a horror film currently being shot in Exeter, according to IMDB. Corso’s business partner, Anthony Gudas, is listed as the executive producer and former State Rep. John Loughlin has a small role in the film.

 

On Monday, the Rhode Island Film and TV Office confirmed the film has received an “Initial Certification Letter” for the tax credits. Corso did not respond to a request for comment.

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Tazza Fundraiser

Questions Surround Speaker Fox’s Relationship with 38 Studios Insider

Several weeks after initial inquiries from GoLocalProv, House Speaker Gordon Fox still isn’t answering questions about a 2007 fundraiser held for him by the lawyer who would play a pivotal role in bringing Curt Schilling’s 38 Studios to Rhode Island three years later.

In March 2007, Michael Corso, Steven Nappa and Robert Britto of Nappa Building Corp. and former State Representative Ray Rickman were listed as the hosts of a private fundraiser held in the Peerless Lofts for the then-Majority Leader. The event, which helped Fox rake in approximately $10,000, was catered by Tazza, the downtown café owned by Corso.

But while Fox’s campaign finance reports from the time include details about several other fundraising events held during the first quarter of 2007, there is no information listed about expenses incurred for the Corso-hosted event, which may constitute a campaign finance violation.

“Speaker Fox has been extremely busy entering the final two weeks of the session, but he will soon be checking the campaign records from five years ago,” Fox spokesman Larry Berman told GoLocalProv on June 4. “If corrections are necessary to the report, he will make them.”

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Fox and Corso

38 Studios Insiders Have Been Connected Since May 2009

The lawyer at the center of the deal that brought Curt Schilling’s 38 Studios to Rhode Island had a business relationship with a top executive at the video game company a year before a piece of legislation that expanded the EDC’s Job Creation Guaranty Program was pushed rapidly through the General Assembly.

On May 29, 2009, Michael Corso, a top tax credit broker whose relationship with House Speaker Gordon Fox helped steer 38 Studios to the Ocean State, struck a deal to purchase credits handed out for the multi-million dollar Stone House hotel project in Little Compton from the Round Pond Management Corporation, whose President was Tom Zaccagnino.

 

By June of that year, Zaccagnino, who was also the co-managing director at the Wellesley Advisors Corporation in Maynard, MA, had become Vice Chairman and Lead Director of 38 Studios. A month later, Haymarket Capital, an LLC with the same address as the Wellesley Advisors Corporation, was involved with the seven-figure bridge loan a group of Rhode Island investors provided to 38 Studios.

In March of 2010, Zaccagnino and Schilling met with Speaker Fox and former EDC director Keith Stokes in Corso’s downtown law office. By May, the General Assembly had expanded the EDC’s loan guarantee fund from $50 million to $125 million, the exact amount the EDC awarded to 38 Studios later that summer.

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Crony's Bar

38 Studios Contractor Ordered to Install Equipment in Fox’s Crony’s Bar

 
A former subcontractor for 38 Studios is alleging that his firm was ordered to work on former Speaker of the House Gordon Fox's business colleague Michael Corso's bar as part of their contract - and has produced what he says is documentation to prove it.
 
Project manager Michael Rossi with SyNet, Inc. has revealed a budget for work which he says shows at $25,000 line item for work to be done at Corso's Tazza Cafe in 2011 -- under a job order for the failed 38 Studios.
Warwick-based SyNet bills itself as "the premier design-build low voltage contractor of structured cabling, access control, surveillance and audio visual systems in the Northeast."
 
Representative Mike Chippendale, Senior Deputy Minority Leader and Secretary of House Oversight who is leading the investigation into 38 Studios along with Rep. Karen MacBeth, told GoLocal, "[Rossi] has hit a number of things on the head, things he wouldn't have been able to have known otherwise. He was able to validate some things, and the State Police has said they have determined the [budget] document has credibility."
"We're moving in the right direction," said Chipendale, who along with Macbeth have both been the target of mail threats in the past month. "We've kicked the hornets' nest."
 
Rossi said when he was working at SyNet, he was aware the 38 Studios work could be a possibility. "When my boss called me to say we got the project, that I was going to oversee the [network infrastructure] work, I thought, "Wow...38 Studios. This is big."
 
"As soon as I started working, they told me to order cable right away," continued Rossi. "I didn't have a permit. Arguments went back and forth. I walk out, I say I don't have a budget, I'm not doing it. I get berated by my boss to get back on the job. Next day, I get the budget, I'm back on the site -- and there are walls up already, with no permits pulled."
 
A portion of the SyNet 38 Studios budget document with a line item for work on Corso's Tazza bar and restaurant.
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Galasso

Rhode Island Cartoonist Takes Aim on Fox and Corso

In the midst of Gordon Fox's 2012 re-election effort, he distanced himself from his longtime friend, Mike Corso.

Rhode Island's iconic catoonist took aim at Fox's claim and artfully tied Corso and Fox together.

 
 

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