EDITORIAL: Does Kilmartin Think Everyone in Rhode Island is Dull-Witted?
Tuesday, August 02, 2016
On Monday afternoon, after Speaker Nick Mattiello called for the 38 Studios records to be opened to the public, the response from Attorney General Peter Kilmartin was classic.
Former Don Carcieri press secretary — the same Carcieri who pushed for the funding of 38 Studios — Amy Kempe, who is now Kilmartin’s press secretary, issued a biting response to the Speaker’s request.
“As was stated in last week's joint 38 Studios report, this remains an open, albeit currently inactive investigation. Release of documents could jeopardize the integrity of the investigation should new information come to light that would warrant it to be reactivated. The law and Court rules prohibit the Attorney General and the Rhode Island State Police from releasing grand jury proceedings," said Kempe. "This request appears to be a political reaction, not a legal reaction."
Just who was the former Carcieri flack issuing the statement on behalf of?
Understanding the AG’s Legal Process
So let's get this straight. There are no charges after four years of investigation and it is inactive.
But, if we open up the documents, that could somehow jeopardize the integrity of the investigation, which is...closed. And so far has yielded....nothing.
Well, that make sense. About as much sense as voting to give 38 Studios $75 million, or spending four years of time investigating and issuing no charges.
Kilmartin and 38 Studios
Let’s go through the facts:
1) Kilmartin was the number three guy in the leadership team of Speaker Bill Murphy and Majority Leader Gordon Fox, which is when he was the Democratic Whip. Before that he was President Pro Temp. He was part of the leadership team for years -- before he ran for Attorney General.
2) Kilmartin voted for the 38 Studios funding scheme -- the legislation that clearly was designed to give 38 Studios $75 million (which, during the "press conference" last Friday, was revealed that those legislators who knew the $75M was earmarked for 38 Studios -- a critical point in the process -- were made known at some point during the investigation.)
But again, that can't possibly be made public to taxpayers. It's protected, of course, by the cover of grand jury proceedings.
3) Kilmartin never raised any questions about Fox and Murphy’s involvement in the funding scheme.
If Friday's late afternoon 38 Studios press conference by Kilmartin and State Police Colonel Steven O’Donnell was not bad enough, Monday’s missive from Kilmartin/Carcieri’s press secretary was a kick in our chins, a spit in our face… for all Rhode Islanders.
Related Slideshow: Seven 38 Studios Facts You Would Not Believe
Here are the seven facts that you would not (want to) beleive about the 38 Studios deal.
Meetings Started a Year Before When We Were Told
The first story was that Governor Carcieri went to a fundraiser for a WWII Veteran’s event at Curt Schilling’s home and that served as the spark to a meeting between Keith Stokes and the 38 Studios officials to try and lure the company from Massachusetts to Rhode Island.
Then, it was disclosed that meeting Speaker Fox had had meetings earlier in the spring through his relationship with his close friend Mike Corso.
In the documents released Thursday, Bill Murphy attested to how he sat in on a meeting with Corso, Fox and Curt Schilling while he was still Speaker.
But now, emails starting in July of 2009 between Corso and 38 Studios’ Tom Zaccagnino show the wheels were put in motion even earlier than we thought.
If Not for RI, 38 Studios Would Have Closed Within 1 Month
If RIEDC had turned down the deal in July 2010, documents released showed that 38 Studios would likely have missed making payroll the next month.
In a July 7 email from Rick Wester to Tom Zaccagnino, he wrote, “The latest would be the August 15th payroll at this point. I’m having doubts we can get through the 30th."
The RIEDC board approved the $75 million in bonds on July 26.
The Original 38 Studios Deal Was Small and Inexpensive
An internal email at 38 Studios dated February 18, 2010 outlines a Rhode Island staffing plan starting at 10 employees in 2010 and increasing to 40 in the future.
However, RIEDC mandated a high staffing level and thus a high burn rate.
For 38 Studios to receive its last payment the RIEDC agreement required staffing to elevate to 450 headcount.
38 Studios Knew RI Money Was Not Enough to Fund the Company
An email exchange between top 38 Studio leadership and Mike Corso, confidant to Speaker Gordon Fox, in preparation to meeting with the RIEDC Board led by Governor Don Carcieri showed that 38 Studios wanted to keep certain financial realities under wraps.
Tom Zaccagnino wrote to CEO Jen MacLEan, CFO Rick Webster, and Corso, “I really don’t think we should highlight the fact we might be undercapitalized…won’t go over well with staff or board."
Two and a half weeks earlier EDC Board gave preliminary approval and on July 26, the RIEDC Board gives final approval to the $75 million.
Style Over Substance
In October of 2010, RIEDC was preparing a public relations strategy because “the Gubernatorial candidates have politicized the 38 Studios deal.”
The Strategy document outlined the key messages, and the need to “accelerate development of an in-depth Providence Journal story, including offer of access to Board members. The Providence Journal team will be Andy Smith, Paul Grimaldi and Business Editor John Kostrzewa — we will push for Neil Dowling’s inclusion.”
At the same time as EDC was rolling out its PR strategy to sell to the public value of the 38 Studios deal, 38 Studios internal documents showed that the company was tittering on financial collapse. In fact, a demand for payment from Speaker Fox’s confidant for a $500,000 payment could not be met because it would cripple payroll.
An October 27 internal memo from CEO Jen MacLean to Schilling, Zaccagnino, CFO Rick Wester, and COO Bill Thomas said, “After running payroll, we have less than $500K in our Maynard accounts. We simply can’t pay Mike before the bonds close, no matter how much he might wish otherwise.”
The Deal Was Done Before Anyone Could Imagine
How deep were top EDC staff in on the deal to fund 38 Studios?
In an April 12 (2010) memo from RIEDC’s Michael Saul to Mike Corso and RIEDC’s attorney Rob Stolzman, he proposes “Determine whether any local institutions (RISD endowment, RI Foundation, Hasbro, Brown endowment, State Pension fund, etc) would commit to purchase a share of bond issue.” This is just one of ten “to do’s.”
EDC’s top staff were strategizing on how to sell the bonds, months before the bill ever hit the House floor for consideration.
This April 12 strategy session was supposedly just a little over a month after Governor Don Carcieri and Curt Schilling met and two months before the loan guarantee program is signed into law.
Did Rhode Island Pay for Improvements at Corso's Bar
In one email in May 2011, Mike Corso alerted top 38 Studio officials of over $600,000 in change orders to the build out of the Empire Street 38 Studios’ offices.
The change orders Corso pushed for increased the cost of contractor Nappa Constructions’ project cost from $10.9 million to $11.6 million. As GoLocal reported in 2014:
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."
"I'm changing everything on job -- these were all no bids. Nappa construction picked Rossi Electric. I realize the job can't be done the way it's designed," said Rossi. "The money was getting kicked back in the form of goods and services to Corso and Fox. I said I'm not doing this. I knew I was getting set up for jail with this. I went out on sick leave, I was done."
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