Judge Granted TRO to Kilmartin Blocking 38 Studios Docs, Daughter Works for AG

Monday, July 03, 2017


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AG Peter Kilmartin

Late Friday afternoon, Rhode Island Attorney General Peter Kilmartin rushed to Superior Court seeking a temporary restraining order to block the release of the controversial 38 Studios documents. 

The TRO was granted after the General Assembly voted last week to release them, just before court closed for the weekend. The judge hearing the motion and issuing the order was Robert Krause. His daughter Allison Krause is a 2013 graduate of Roger Williams University -- and is a staff attorney for the Attorney General’s office.

Krause's daughter does not directly work on the 38 Studios case, according to multiple sources.

The entire backdrop of the 38 Studios $75 million in funding and the investigation has been under a constant cloud of conflicts and alleged cover-ups.  

- Governor Raimondo has publicly stated that Attorney General Kilmartin should have recused himself from leading the failed criminal investigation, as he voted for the 38 Studios funding scheme and served in the leadership of the House of Representatives just weeks before the legislation was shepherded through the legislature.

- One of the key players in 38 Studios was lawyer and lobbyist Mike Corso, then-Speaker of the House Gordon Fox’s close crony. Fox and Corso were close personal friends and Fox’s husband’s business was located in one of Corso’s buildings.

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Krause signed off on TRO

Close Connections

Fox, Kilmartin and once-Speaker of the House and now lobbyist Bill Murphy served in the leadership together — just eleven weeks before the bill moved through the legislature, but after the first meetings took place in the effort to incentivize 38 Studios to move to RI.

That first meeting, according to Murphy’s deposition in the civil trial, took place in the fall of 2009 -- a meeting in which Murphy says he walked in on a meeting between Fox, Corso, and 38 Studios’ Tom Zaccagnino. SEE DEPOSITION BELOW

Corso hosted fundraisers, including the infamous fundraising event which was held at one of developer Buff Chace's restored apartment buildings - funded through tax credits - and was co-hosted by Corso and fellow 38 Studios insider Steve Nappa. As GoLocal reported earlier, it was Nappa who handled the 38 Studios taxpayer funded buildout of $25,000 of AV work at Corso's Tazza restaurant. The work was billed to 38 Studios. Corso’s restaurant was located in another one of Chace’s buildings. READ DOCUMENTS HERE

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.

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State Police and FBI Raid on Speaker Fox's State House Office

More Meetings, Deals

In March of 2010, Tom Zaccagnino and Curt 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 2007, Hasbro signed a major partnership agreement with Electronic Arts (EA) — an agreement that would help transform the Rhode Island toy company from a product-based manufacturing company to an interactive and entertainment focused multi-billion business. The deal has been worth hundreds of millions for the two companies. The CEO of Hasbro at the time was Al Verrecchia.

EA is the same company that had a major partnership and investment in 38 Studios. In a document released by Judge Michael Silverstein, a May 2010 memo was included that outlined the multi-million deal between EA and 38 Studios for the funding of $50 million and royalty structure that could exceed $100 million.  

The EA agreement was material to the state of Rhode Island’s financing. Of course, the state’s financing of $75 million to 38 Studios was a de facto a stabilizing force to EA’s investment in 38 Studios. Verrecchia served on the state board authorizing the $75 million deal and he voted to approve the package.

For Verrecchia, at the time of the 38 Studios vote he was the Chairman of a major public company who had a material and strategic relationship with EA. He was serving on a public board voting for $75 million in funding for a company that had a $50 million investment from the same company with which Hasbro was partnering. 

Recent Assembly Action

The General Assembly on Thursday passed legislation concurrently to force the release of all 38 Studios documents. "To the extent that any legislation is presented and signed by the Governor, as contemplated in the motion for a temporary restraining order in the above-captioned matter the relief request is granted," signed by Krause.

The order was filed at 4:13 PM -- almost exactly one-year after Kilmartin and former RI State Police Colonel Steve O'Donnell had their press conference announcing that there would be no criminal charges in the 38 Studio bankruptcy.

According to judicialrecusal.com, “Just as a judge may be subject to disqualification in a situation where she has an interest in the subject matter of the case or in a party, she may be subject to disqualification if her spouse or other close relative has such an interest.”

The site states, “Rather, it must be demonstrated that the judge’s relationship is sufficiently close to warrant an inference that her impartiality is likely to be compromised. Then it must be shown her relative’s interest is substantial enough to justify the belief that the judge would be likely to be tempted to depart from the expected judicial mien — either to advance her relative’s interest or make it appear that she has not.”

The Rhode Island Code of Conduct can be found HERE.

Repeated requests for comment of Craig Berke of the Rhode Island Courts for comment by Superior Court Presiding Justice Alice Gibney and Judge Krause were received by Berke, but not responded to. Gibney has previously ruled in favor of Kilmartin's request to keep the 38 Studios Grant Jury documents sealed. 

GoLocal has filed suit against Raimondo, the Director of Public Safety, and the Superintendent of the State Police for the release of State Police interview documents -- some of those materials have been released and that suit continues.


Related Slideshow: William Murphy Transcript


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