Insiders Had Hands All Over Schilling’s 38 Studios Deal

Thursday, May 31, 2012


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.

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Nappa is the latest name to surface in connection with 38 Studios, the Curt Schilling-owned video game company that received a $75 million loan guarantee from the state in 2010 and was forced to lay off all of its employees last Friday.

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.

On Wednesday, neither Nappa nor the Economic Development Corporation (EDC) responded to inquiries about the amount the construction company made from the 38 Studios deal, but a Providence Journal story from last March cited a carpenter’s union official who said between 15 and 30 employees were working on the project.

Par for the Course

While House and Senate leadership have remained quiet regarding the Schilling’s company in recent weeks, concern over which connected individuals or companies benefited from the 38 Studios deal has only increased.

In addition to Corso and Nappa’s connections to 38 Studios, several top local law firms made hundreds of thousands of dollars off the deal, including Adler Pollock & Sheehan ($124,790), Taft & McSally ($36,990), First Southwest Company ($120,620), Moses & Afonso ($190,000) and Pannone Lopes Devereaux & West ($12,250).

For Common Cause executive director John Marion, it comes as no surprise that insiders may have profited from the deal.

“It appears that the politically connected have benefitted from the 38 Studios debacle,” Marion said. “This is par for the course in Rhode Island politics, however. Powerful construction businesses, law firms, and others have long been beneficiaries of government's largesse and have at the same time been financially supportive of powerful politicians in the state.”

Deal Only Possible Because of General Assembly

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Schilling’s loan guarantee was only possible thanks to last-minute legislation that allowed the EDC to expand its Job Creation Guaranty Program from $50 million to $125 million, the exact amount that ended up being awarded to 38 Studios. At the time, lawmakers expressed concern over the lack of information they had regarding the fund, but the bill overwhelmingly passed anyway.

The bill was first included as part of a supplemental budget that passed in the House but never made it out of the Senate. At the time, six Representatives (Rod Driver, Larry Ehrhardt, Robert Jacquard, Charlene Lima, Brian Newberry and Bob Watson) voted against the article in the budget.

“If you don't want it to be a favor factory, kill the article," Watson, who was serving as House Minority Leader, said at the time. “This is like an attractive nuisance for all sorts of skullduggery."

When the issue came up again in May of that year, Watson was the only Rep. to vote against the bill.

Forensic Audit Underway

This week, Schilling, whose company was unable to make payroll in the days before it opted to lay off every employee, blamed Governor Chafee for scaring off potential investors with comments he made about company. Schilling was said to be seeking tax credits to help keep the company afloat, but Chafee was unwilling to offer any more incentives to save the company.

Chafee announced Wednesday that the state has hired Deloitte to conduct a forensic audit of the company.

And while Chafee has said he still hopes to company can find a way to pull through, he has also acknowledged that he isn’t optimistic.

“This is a business that punishes those who don’t know what they’re doing,” Chafee has repeatedly said.

Dan McGowan can be reached at [email protected]


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