INVESTIGATION: Fox, Corso and 38 Studios
Friday, May 09, 2014
Fox and Corso, Corso and Fox - two of Rhode Island's most influential power players of the past 15 years have been, and are now, inextricably linked.
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.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTAs 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."
Fox was elected to the House of Representative in 1992 and was appointed a member of the all-powerful House Finance Committee as a freshman in trade for his support for new Speaker - John Harwood. Both Corso and Fox went to RI public universities - Fox graduated from Rhode Island College and Corso from URI. And each to mid-level law schools. The similar paths would lead to more than a decade of friendship and a cross-pollinizing relationship.
Tax Credits
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.
Film Tax Credits
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.
The Relationship - Fundraising
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.
The Relationship - Landlord
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.
In December of 2013 - Corso's Tazza Caffe closed.
Related Slideshow: INVESTIGATION: Fox, Corso and 38 Studios
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