Moore: Speaker Mattiello Should Resign Over 38 Studios
Monday, September 28, 2015
Last week, US House Speaker John Boehner announced that he was stepping down in October. Given the recent 38 Studios developments, the time has come for Rhode Island House Speaker Nicholas Mattiello (D-Cranston) to follow suit.
You won't hear this from the average Rhode Island boot-licking, kowtowing, power worshiping hanger-on who is afraid of the state's most powerful politician. But someone has to keep it real. Let's face it: House Speaker Nicholas Mattiello has abdicated his responsibility to protect Rhode Island taxpayers—not once, but twice.
It's only natural that he should now abdicate his office. The new revelations show us that the 38 Studios scandal was much more nefarious than we were led to believe, and Mattiello, due to his position, was in the thick of it. He no longer has the moral authority to lead the House of representatives.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTIncompetence or Culpability
We need to remember that Mattiello was House Majority Leader when this travesty passed the state legislature. That's the body's second highest ranking member! It’s been revealed this week, that former House Finance Chairman Steven Costantino orchestrated a massive act of deception when he kept the rank-and-file members of the House in the dark with respect to what the loan guarantee would be used for. Costantino knew all along that the money was going to Curt Schilling’s ill-fated video game company but kept it a secret.
But here’s the thing: Mattiello was actually in a higher leadership role than Costantino during the time the former House Finance Chairman was going around fooling all the other members—at the behest of Gordon Fox, the House Speaker (number 1 man).
That can only mean one of two things. Either Mattiello knew what was going on and is just as culpable as Costantino and Fox. Or, he didn’t. And if he didn’t, that just shows us how easily Mattiello can be played for a fool and easily duped on vital issues like a $125 million loan guaranty. That's not the guy I want leading the House of Representatives. And I believe the majority of Rhode Islanders would agree.
I’m not sure if incompetence or culpability is worse. Probably incompetence, but in any event, the situation reveals that Mattiello is not qualified to lead the House of Representatives.
Protecting Wall Street, Fox, and Costantino
In a move that's just as incompetent as the vote to create this ridiculous investment scheme that benefited Fox’s cronies, Mattiello has insisted on paying back these ill-fated bonds, which were sold under the auspices of fraud. And Mattiello hasn’t even waited until the necessary investigations were performed and completed so that Rhode Islanders know why and what they’re paying for.
The total cost of the bailout will cost RI taxpayer's somewhere around $100 million when the interest payments are factored.
Now that some facts have to emerge, thanks to the unsealing of depositions from the civil case, it's become evident that this deal was passed thanks to fraudulent statements, subterfuge, and downright fraudulent behavior. It would be nice if we knew all the facts before Rhode Island’s beleaguered taxpayers were forced to pony up the cash.
Built on Lies, Distortions, Possible Fraud
Mattiello's old associates like Fox have been shown to have lied about the timeline of the deal--telling the public that they believed they were creating a loan guarantee program, when in reality, they were all too well aware of the plan to bolster Curt Schilling's company. That plan was always doomed to fail. A document prepared by 38 Studios executives showed that the company was going to have expenses of $92 million over the three-year period that the $75 million investment was made.
As I wrote last week, the only reason companies go begging for government venture capital investments is because they can't find financing on the open, private market. And the reason they can't find financing is because they're not a good investment. This case was no different.
Had these details been made public, the outcry would have stopped the deal dead in its tracks. That's why 38 Studio's Board member Tom Zaccagnino advised that deception be used to make sure the deal became a reality, as GoLocal reported last week.
"I really don’t think we should highlight the fact we might be under-capitalized…won’t go over well with staff or board," Zaccagnino wrote to CEO Jen MacLean, CFO Rick Webster, and Fox's crony Michael Corso.
A Real Investigation
Speaker Mattiello has added some serious insult to injury by cowering before the ratings agencies. He claims that he's concerned about the state's credit rating. But that's never been too much of a concern for legislative leaders in the past. Rhode Island has one of the highest debt per capita ratios in the country, and it we were really concerned with credit, they would have made sure that that's not the case.
(Not to mention that the 38 studio's debt is not an actual debt of the Rhode Island taxpayers.)
Here's the real reason Mattiello and his lieutenants want to bail out the 38 studios bondholders: they're worried about an actual investigation. If the insurance company was left holding the bag (the bonds were insured), then insurance companies would conduct an investigation that would have revealed even more information than the state's civil suit.
An Instrument to Enrich Themselves (At Our Expense)
Another thing that's crystal clear from the release of the previously sealed 38 studio's deposition documents stemming from the state's lawsuit against the company, it's that it highlights how so many of Rhode Island's elected officials view the state government.
They see state government as a mechanism to make themselves and their friends rich at the expense of the people who aren't connected to the government. All the talk about helping the masses is downright laughable. And they're not afraid to lie or try and cover things up either.
The situation is enough to make you cry harder and more often than John Boehner.
Russell Moore has worked on both sides of the desk in Rhode Island media, both for newspapers and on political campaigns. Send him email at [email protected]. Follow him on twitter @russmoore713
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.
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