INVESTIGATION: Fox, Corso and 38 Studios
Friday, May 09, 2014
The relationship between Gordon Fox and Michael Corso goes back to the early days of both their professional and political careers in the late 1990's after each graduated from New England law schools and joined two powerful Rhode Island entities.
Corso joined developer Buff Chace's Cornish Associates. Chace is a member of one of Rhode Island's richest families (his cousin Kim Chace, was a leading Rhode Island investor and philanthropist and made Forbes 400 Richest List Annually before his death in 2011) and Buff Chace is best known as the developer who transformed Westminster street from vacant and under utilized desolate retail to Providence's version of Newbury Street.
As Cornish reports, "Cornish developed the Westminster Lofts, a collection of award winning, magnificently restored historic buildings comprised of just under 200 residential apartments, 40,000 square feet of retail space, and 27,000 square feet of office space. The Westminster Lofts include the Peerless Building, the Smith Building, the Burgess-O’Gorman Building, the Wilkinson Building, and the Alice Building. Cornish Associates is also responsible for the redevelopment of the Harkness Building, the Empire Building and the Biltmore Garage."
What brought their careers, fate and a central theme in the investigations now proceeding is tax credits. Most interesting is individually both Fox and Corso claim to be the author of Rhode Island's Historic Tax Credit Legislation. It was these tax credits that Buff Chace and other developers used to restore old buildings into restored apartments, that the Providence Journal fought to obtain for their downtown headquarters, and it was tax credits that were the ultimate down fall of 38 Studios.
The Historic Tax Credit Legislation was passed in 2002 and proved to be a spark to developments across the state. Corso and Fox were adjoined at the hip with the vision, the structure and a growing power structure.
Corso claims in his bio that just one of his companies - Tax Incentive Capital -- has placed over $150 million in state tax credits.
Literally, billions were invested in real estate projects that became viable and profitable for developers as a result of the hundreds of millions of taxpayer funded Historic Tax Credit Program.
While Corso made millions on historic tax credits and was paid hundreds of thousands by 38 Studios for activities related to securing the $75 million in loan guarantees, Corso had tapped the Rhode Island State coffers for millions more in movie tax credits. As GoLocal reported in 2012;
"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.
Corso hosted fundraisers. One infamous fundraising event was held at one of Chace's restored apartment buildings - funded through tax credits - and was co-hosted Corso and fellow 38 Studios insider Steve Nappa. As GoLocal reported earlier this week, it was Nappa who handled the 38 Studios taxpayer funded buildout funded $25,000 of AV work at Corso's Tazza restaurant. The work was billed to 38 Studios.
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 Caffe, the downtown café owned by Corso.
A GoLocalProv investigation in 2012 found that Fox failed to properly disclose the costs of the 2007 event and Fox's campaign was forced to amend reports after the reports disclosed the failure to report.
The Relationship - 38 Studios
There were two key elements to bringing 38 Studios to Rhode Island. First, the now infamous meeting held at Corso's office put the wheels in motion to bring former Red Sox Star Pitcher's gaming company from Massachusetts to Rhode Island.
In March of 2010, Tom Zaccagnino and Schilling met with then-Speaker Fox and former EDC director Keith Stokes in Corso’s downtown law office. Despite the meeting taking place after the legislative deadline, just a few weeks later the loan guarantee legislation was submitted by Fox's leadership team and in May the bill was pushed through the legislature. 38 Studios would receive $75 million in loan guarantees.
In the midst of Fox's difficult 2012 re-election bid, Fox denied that he was close to Corso and said the two no longer speak.
Fox and his husband Marcus LaFond rented space from Corso for the hair salon the Lafond operated until earlier this year. Records filed with the Secretary of State's Office of Business Regulation and Fox's Rhode Island Ethics Commission's Yearly Financial Statements.
Today - Fox and Corso
Today, Fox's world of influence is in massive decline. Fox's husband closed his salon on Chestnut Street. Fox was fined by the Ethics Commission in January, and in March, FBI and IRS agents made an unprecedented raid on Fox's State House Office and home. Fox resigned his Speakership and recently put his East Side home up for sale.
Corso, who lead a intricate series of companies relating to tax credits and financing, has been removed from each of the company's Websites. Corso's Sakonnet Capital Partners, Reel Capital LLC, and Tax Incentive Partners have all removed his name from the sites. Their offices are all located in the same building as Fox's husband's former salon location - 155 Chestnut Street.
Related Slideshow: INVESTIGATION: Fox, Corso and 38 Studios
The Early Years
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.
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.
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.
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.”
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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- State Report: Gemma’s Investigation, Governor Carcieri & a 38 Studios Lawsuit
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- 38 Studios Contractor Ordered to Install Equipment in Fox’s Crony’s Bar
- 38 Studios Secret Documents - See Copies
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- GoLocal’s Coverage of 38 Studios is Featured on CBS Radio - Listen
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- NEW: Schilling’s 38 Studios to Owe $395,000 Tax Bill in Providence
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- Sony Boss Blames Gov Chafee for 38 Studios Failure
- State Report: Problem Gambling, 38 Studios & Millions for Medicare
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- 38 Studios Debacle: Top Stories in RI in 2012
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- GoLocalTV: Sen. DaPonte Says Senate Did Not Know About 38 Studios
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- NEW: 38 Studios Bankruptcy Case Moving to RI
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- NEW: Speaker Fox Backtracks on 38 Studios Comments
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- Special 920 WHJJ Radio Report: 38 Studios
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- Arthur C. Schaper: 2013 So Far–38 Studios, Babysitters, and Guns
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- EXCLUSIVE: O’Neill Says Fox Lied About 38 Studios
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- LISTEN: EDC Paid $40K to Bond Agencies for 38 Studios
- NEW: 38 Studios Defaulted on $1.125 Million
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- NEW: Feds No Longer Investigating 38 Studios
- NEW: Rhode Island Gets Back $713K from 38 Studios Video Game Sales
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- Russell Moore: Don’t Pay 38 Studios Bonds
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- NEW: Full Documents - 38 Studios Defendants’ Responses to Suit
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