One-on-One: Kilmartin Says 38 Studios Probe Nearing Completion
Monday, May 09, 2016
Rhode Island Attorney General Peter Kilmartin said during a wide-ranging interview with GoLocalProv that the end of the 38 Studios investigation is in sight.
"I believe the state police are close to a wrap up," said Kilmartin, though he said he couldn't provide a specific time frame. "And we will see how that investigation ends up."
The closing of the Rhode Island State Police investigation into 38 Studios, and the revelations and potential prosecutions that might arise from it, would thrust the highly controversial issue back into the spotlight once again. It could also finally bring some closure to an investigation that's spanned about four years running.
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The issue, which originated when associates of former House Speaker Gordon Fox, who is now serving time in federal prison for misusing his campaign funds and taking a bribe while on the Providence Licensing Board, met with a 38 Studios Board member and warmed to the idea of the state providing a method for the company to obtain some much-needed capital.
That year in 2010, the General Assembly created a loan guaranty program through what was then called the Rhode Island Economic Development Corporation (EDC). Shortly thereafter, a $75 million loan guarantee was issued for the company. By 2011, the company was bankrupt.
"The first thing I think about when I think of Peter Kilmartin is the 38 studios issue," said Brandon Bell, the state's Republican Party Chairman.
Bell argues that the fact that Kilmartin voted for the loan guaranty when he served in the Rhode Island House of Representatives that paved the way for 38 studios coupled with the fact that he was close with House leadership at the time are reasons that he should have supported the hiring of an independent prosecutor for the case.
"If we had an independent prosecutor, I think that would have gone a long way," said Bell.
Independent Prosecutor?
Kilmartin points out that he resigned his position as House Majority Whip several weeks prior to the floor debate on the budget, in which the program that paved the way for the ill-fated deal was passed.
"If I had any knowledge about where those funds were going to be going beyond what was said on the floor of the House, I would have considered bringing in an independent prosecutor. But that just wasn't the case," said Kilmartin.
Kilmartin said that an independent prosecutor isn't needed since all of the investigating around the case is being done by the state police. That's the protocol in the vast majority of cases, Kilmartin pointed out.
The Attorney General spoke at length about his accomplishments in office, but said he could not comment about ongoing investigations or even, in some cases, whether his office was involved.
In particular, Kilmartin refused to comment about the resignation of former state representative and House Finance Chairman Ray Gallison. He wouldn't even acknowledge whether his office was assisting in an investigation. The reason he cannot broach the subject, he said, is because commenting could jeopardize the investigation, he said. A good defense lawyer, he argued, would jump all over such a mishap.
"And we've got a lot of good defense lawyers in Rhode Island," said Kilmartin.
Neuman Controversy
Asked about the recent controversy regarding Governor Gina Raimondo's Chief of Staff Stephen Neuman, who GoLocal reported was working with DraftKings lobbyists and managing legislation that could impact the company while his wife was applying for a job with the company, Kilmartin said the issue is in the purview of the Rhode Island Ethics Commission to investigate, not his office, if there is reason to believe there was wrongdoing.
But Kilmartin was readily able to point to some high profile prosecutions that his office either handled or facilitated, involving people with whom he had professional relationships previously. Those examples include former North Providence Police Chief John Whiting, who was convicted of stealing $714 from a woman's purse, and former House Speaker Gordon Fox. (In Fox's case, the statute of limitations had expired on the federal level, but Kilmartin agreed to prosecute him on the local level if he refused to agree to a federal plea bargain that took the crime into account.)
Stressing Collaboration
"I believe the US Attorney's Office and my office are, I would venture to say, as close as any two in the country," said Kilmartin. Peter Neronha, the US Attorney for Rhode Island, has himself spoken highly about the collaboration between the two offices in the past.
The two offices regularly assign staff members to work within one another's offices to that end. Kilmartin said the approach has been especially effective in prosecuting gun charges.
A Low Profile Politician
Kilmartin lives in Pawtucket's Darlington section. He doesn't grant many press interviews. Kilmartin said he's not interested in claiming the credit for things that happen under his watch. But as a retired police officer, what he's most concerned with is justice, he said.
He pointed out that the RI AG's office and the federal offices of Social Security Administration (SSA), Office of Inspector General, established a Cooperative Disability Investigations (CDI) Unit to investigate and prevent fraud in SSA’s disability programs. The program reviews claims for red flags and prevents payments that would have been paid otherwise. That's saved RI roughly $1.7 million since February of 2015, because in many cases, Kilmartin said, the state pays benefits that have been approved by the federal government.
In 2013, Kilmartin assigned a prosecutor to look into unemployment fraud cases at the RI Department of Labor and Training. From 2013 through 2015, that's resulted in $490,612 in court ordered restitution for unemployment insurance fraud. From 2014 through 2015, courts have ordered $53,740 in restitution to be paid in workers' compensation fraud cases.
Settlements
Kilmartin said that the reason he hasn't been more aggressive in pursuing civil actions against industries such as the finance industry or the pharmaceutical industry is because a Rhode Island Supreme Court case, RI v. Piedmont, ruled that the Attorney General's Office doesn't have civil jurisdiction to pursue a case that another RI state agency or federal government agency has jurisdiction over.
"That's really limited our ability to initiate suits, particularly in the area of deceptive trade," said Kilmartin.
To circumvent the problem, the RI Attorney General's Office has signed on to multi-state lawsuits in order to achieve similar ends.
Multi-State Approach
The most recent example of that, he said, was last week's announcement of a state and federal $784.6 million dollar settlement reached with Wyeth, a wholly owned subsidiary of Pfizer, Inc. The settlement resolves allegations that Wyeth knowingly underpaid rebates owed under the Medicaid Drug Rebate Program from 2001 until 2006. Of that settlement, Rhode Island will see $5.46 million, which will go to the state's Medicaid Program.
Another multi-state settlement Kilmartin was involved with was the Google suit over allegations that the company sold drugs to Americans without a prescription. The $60 million given to the state has been used for various state building and infrastructure upgrades. A new Attorney General's Building to handle all of the consumer related issues, such as finger printing or BCI checks, will be built in Cranston using the funding, which will make the office more 'customer friendly', Kilmartin said.
He said he's relentlessly sought to make the RI Attorney General's Office more technologically advanced, overseeing computer upgrades, which he believes will make the office more efficient both for the present and for the future.
Future Aspirations
But Kilmartin said he really hasn't given an over-abundance of thought to his own future--especially politically. In that sense, he's different from some of his predecessors such as Patrick Lynch or Sheldon Whitehouse, both of which eyed the Governor's office, but were weighed down by some high profile cases (the Station Fire for Lynch) or tragedy (the Jennifer Rivera murder for Whitehouse), said University of Rhode Island Political Science Professor Maureen Moakley.
"If things go right, the Attorney General's Office can be a great platform for higher office," said Moakley, pointing to New York Governor Andrew Cuomo as one of many examples. "But things can often go wrong and become a liability."
Yet unlike his predecessors, Kilmartin said that he's not eyeing another run for a higher public office. But he's not ruling it out either.
"I have never been the sort of person who thought 'I am going to run for this office with the intention of running for another office later'," he said.
"And I hope that gives people the confidence that every decision we make here at the Attorney General's office is made in what's the best interest of this office as opposed to politics. Out of all the statewide general offices, I believe this office needs to be the least political," he said.
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