Questions Surround Speaker Fox’s Relationship with 38 Studios Insider
Monday, June 25, 2012
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.GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST
“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.”
As of Friday, Berman could not offer any additional comments and Fox had still not made any amendments to his campaign finance reports.
Other Expenses Listed
According to his first quarter campaign finance report from 2007, Fox spent $8,480.96 on a March fundraiser at what was then known as the Hi Hat. Fox also spent $1,466.85 on “Rep. lunches and dinners,” that month, but did not list the location.
His report also lists a $1,500 fundraising expense from March 15, 2007, but includes no details about what the expenditure was related to.
While Corso’s restaurant appears nowhere in Fox’s campaign report, two other politicians did report significant expenditures at Tazza in 2007. On October 1, then-General Treasurer Frank Caprio spent $1,256 and on October 30, then-Providence Councilman Cliff Wood spent $1,176.08 at the Westminster Street café.
Corso Becomes a Player
Over the next five years, Corso became the state’s top tax credit broker, helping to flip millions of dollars in film tax credits into cash for production companies all over the country. Corso profited by taking a small cut of each sale and has been listed as a producer or executive producer in at least 20 movies, according to IMDB.
During the same period, Fox ascended to the Speakership, becoming arguably the most powerful politician in the state. In March of 2010, Fox, former Economic Development Corporation (EDC) director Keith Stokes, Schilling and 38 Studios executive Tom Zaccagnino met in Corso’s law office to discuss bringing the company to Rhode Island.
Two months later, the General Assembly passed legislation that expanded the EDC’s Job Creation Guaranty Program from $50 million to $125 million. By July of that year, the EDC’s board had signed off on a $75 million loan guarantee for Schilling’s company. Coincidentally, 38 Studios would later use Steven Nappa’s construction company to help with the interior build out of its downtown headquarters.
But Corso is now caught up in controversy after he pledged over $14 million in film tax credits that had not actually been issued as collateral for an $8.5 million loan from BankRI to help Schilling’s struggling video game company.
38 Studios had received initial certification from the state to receive film tax credits, but the company became ineligible for the funds when it defaulted on a $1.125 million payment due to the EDC on May 1.
Company Goes Bust
Earlier this month, 38 Studios filed for bankruptcy a short time after laying off every single employee. The company owes creditors over $150 million (including $11 million to Corso) and has less than $22 million in assets.
Last week, Schilling told WEEI that he poured over $50 million of his own money into 38 Studios, but the company was unable to raise additional funds. Schilling also claims Governor Lincoln Chafee had an “agenda” and was not unhappy to see the company go under. Chafee has since disputed those comments.
Dan McGowan can be reached at [email protected].
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