Courthouse Hearing Unveils Carpionato Was Target of Federal Investigation Related to Hundreds of Thousands of Dollars in Quarters

Courthouse Hearing Unveils Carpionato Was Target of Federal Investigation Related to Hundreds of Thousands of Dollars in Quarters

A charged hearing in Providence Superior Court on Thursday between the competing interests of the massive holdings of the Carpionato Group was sparked by the payment of $580,000 in fees, including legal work, in response to a U.S. Department of Justice investigation into some of the Carpionato companies.  That investigation has never been made public before.

Specifically, the federal investigation was a probe into the use of funds by Sheryl Carpionato, according to testimony before Superior Court Judge Brian Stern and legal documents secured by GoLocal.

As background, Fred Carpionato's widow, Sheryl Carpionato, and a longtime corporate executive, Kelly Coates, have been legally battling over control of the Caprionato Group, specifically a series of trusts created by Fred Carpionato, who died in 2018.

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According to one document, “Mr. Coates, in his capacity as President and CEO, paid outstanding legal invoices incurred in connection with defending this action, conducting an internal investigation into Sheryl Carpionato’s misconduct with respect to her collection of quarters from coin-operated washing machines owned by Washers Inc., a Carpionato company, and her counting and deposit of those quarters, after learning that the U.S. Attorney for the District of Rhode Island (“USAO”) had commenced a criminal grand jury investigation into such conduct, and responding to subpoenas issued by the USAO directing the production of records and other information for purposes of its criminal investigation into Sheryl Carpionato’s conduct.”

 

“Siphon Quarters for Her Personal Use”

That document filed by attorney John Tarantino on behalf of Kelly Coates stated, “That misconduct began after Sheryl Carpionato became a co-Trustee. During the COVID-19 pandemic, she took exclusive control over the collection of quarters from Washers’ coin operated laundry machines located at, among other places, ten federally subsidized housing properties owned by the Trust. In 2020, Sheryl Carpionato directed that the quarters be delivered to her home in Cranston, where she assumed responsibility for counting and depositing them into Washers’ bank accounts."

Washers was a Rhode Island corporation founded in 1984 by Fred Carpionato to capture revenue from apartments and government housing washers and dryers.

Further, the filing asserts, "However, unbeknownst to Counterclaim Plaintiffs, for more than five years, Sheryl Carpionato exploited her role as Trustee to siphon quarters for her personal use, concealing her ongoing theft through secret record-keeping, deliberately structuring bank transactions to evade federal reporting requirements, and leaving Washers’ bank accounts chronically underfunded and unable to meet its financial obligations. Sheryl Carpionato maintained that control until approximately May 2025, when the USAO issued the grand jury subpoenas to Washers, the Company, and three Company-affiliated businesses in connection with a criminal investigation into her handling of Washers’ funds.”

As GoLocal unveiled in April, Sheryl Carpionato and Coates are embroiled in a fight for control of a business empire valued in the hundreds of millions of dollars. Thursday’s hearing was just the latest battle in the ongoing legal fight.

 

Quarters and Federal Investigation

According to an affidavit by Coates submitted to the court in opposition to a Temporary Restraining Order by Sheryl Carpionato’s attorneys to restrict Coates ability to unilaterally expend corporate funds, Coates claims that it was critical to pay the lawyers that represent the company during the U.S. Department of Justice investigation.

 

According to that affidavit:

On information and belief, over the course of five years, Sheryl Carpionato brought $9,000 in quarters to the banks-just under the $10,000 reporting threshold-on 67 separate occasions.

 

On information and belief, Sheryl Carpionato misappropriated for her own personal use quarters totaling hundreds of thousands of dollars.

 

Throughout this scheme, Sheryl Carpionato concealed her conduct by failing to report to the Company the number of quarters she collected, how much she kept, or what she did with the cash she received. She also authorized false Washer's tax returns that failed to account for the funds she had misappropriated.
 

All of this was without my knowledge or that of Mr. Marocco. Sheryl Carpionato concealed her conduct by never reporting to the Company how many quarters she collected, how much she kept, or what she did with the cash she received. She instead kept her own handwritten logs of the coin collections, which she withheld from the Company. Even after finally obtaining access to the logs in late 2025, the Company still cannot completely reconstruct or verify the accuracy of Washers' financial accounts.

 

After the grand jury subpoenas issued in May and June 2025, Mr. Marocco and I sought Trustee approval to immediately replace the coin-operated machines with new, cashless machines - a step that would eliminate future opportunities for similar misconduct. For months, Sheryl Carpionato exploited her veto power to block this replacement.
 

In addition, after years of delaying and refusing to approve raises for the Company's employees and while delaying raises for the accounting department on the grounds ground that the Company allegedly could not afford it, Sheryl Carpionato abruptly reversed course and supported raises for two employees, one of whom had collected Washers quarters on her behalf and had just been interviewed as part of the internal investigation.
 

On the day after the Company informed the USAO that it would be providing its privilege log, the USAO advised that it closed its investigation into this matter, without seeking indictments and without explanation.

 

The Legal Battle

At Thursday's hearing, Sheryl Carpionato's attorney, Paul Kessimian, argued for the TRO to control what he claimed was improper spending by Coates. He said, "The reason we are here on a TRO is that the behavior continues, unrestrained."

"No notice and no disclosure," said Kessimian, referring to the lack of alleged disclosure by Coates about paying the legal bills.

Kessimian added that the payment of the legal bills was made under the "Cloak of darkness — they knew they were doing wrong."

"Until the court renders a decision, and not the court of Coates," Kessimian added.

Coates's attorney, Tarantino, charged that Sheryl Carpionato bullied employees, causing one employee to go out on mental health leave. Further, Tarantino said that she had sent out a company-wide memo telling staff that Coates could no longer approve any expenditure unilaterally. 

"We can’t operate the hotel. We can’t pay any bills. We can’t pay anything," said Tarantino.

Judge Stern urged the two parties to meet and develop a process to approve business spending. The lawyers are expected to appear before the court next week.