Karen MacBeth’s recent letter to the SEC is right on point.
"Because these loans were applied for and granted on an expectation of the granting of [state] film tax credits that 38 Studios was never eligible for, I question if there is any violation of any banking or securities law, rule or regulation that the SEC has any jurisdiction over to investigate and prosecute,'' MacBeth wrote, in a letter that went out Tuesday to the regional director of the federal agency.
"I am formally requesting that the Securities Exchange Commission open an investigation into these loans, and upon the commencement or closing of any such investigation that your office informs the committee of the same," she wrote
This crazy deal could not have happened without financing and without the insiders who were pulling all the levers. Insiders planned the deal and Corso with his pals Fox and Murphy appear to have been involved months before Carcieri. He may be the key to the entire loan debacle. It was Corso who was the lynch pin here but he couldn’t have pulled it off on his own and without insiders help in the State. Plus he desperately needed a very highly placed individual at Bank Rhode Island to lend against possible film credits. I don’t think anyone would be surprised to find out that it was someone very high up in the bank who gave the wink and nod to the state and to Corso so that they could get this $8 million dollar loan done.
It is going to be fascinating to hear Corso spill his guts as to who at Bank RI approved the tax credit loan without collateral. Very few at the bank had this authority. Merrill Sherman surely fits the “insider” profile. When Bank RI was about to tank in 2008-2009 it was bailed out by both TARP and the Chace family. Sherman denied the Bank was in trouble. Speaking of insiders, perhaps Kim Chace was involved? In either case, both Sherman and Chace are likely fully aware of the person who authorized the uncollateralized loan. That’s who we want to hear from. Was that person fired by Sherman or Chace or was it one of them?
Rhode Island taxpayers are on the hook here and we deserve to know what bank executive at Bank RI extended the un-collateralized loan that allowed Moody’s to rate the $75 million dollar EDC debt offering as AA++. What was Moodys told? We need to subpoena Moody’s because they are not innocent here. Did that lender at Bank RI have a working relationship with Gordon Fox or Nicolas “let’s move on” Mattiello or even Steven “I’m now in Vermont” Constantino? Mr. Constantino recently revealed that “he didn’t knew anything” and he was “tasked by his superiors." Who were Constantino’s superiors? Could that be Gordon Fox, of Sushi bar extortion fame? Was that the combined finding of the work of Attorney General Kilmartin, RI State Police, the FBI and US Attorney Nehrona? Please, nobody is buying this crap.
Why do I think Gordon Fox is the “superior” Constantino referred to? Why do I think Speaker Mattielo knows about all of this? Shouldn’t Mattielo be subpoenaed and testify under oath as to what he knows about all this? Why does Mattielo get a pass? Follow the money someone once said. Not only should the SEC get involved but also the FBI. Mattielo needs to be investigated along with Corso, Constantino, Schilling and Bank RI executives Sherman, Chace and Meiklejohn.
How about it Speaker?
This whole episode smells even worse now and those involved in any way need to be scrubbed clean and hung from their ankles and testify under oath before taxpayers let them borrow one more penny. If you really want us to “move on” Mr. Mattielo , then grant subpoenas to whoever the Oversight Committee sees fit to question, including you. Until then, I think you are covering up and dirty.
Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity, and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC News, Yahoo TV, and CNBC.
EDITOR'S NOTE: This article was updated 12/4/2015 to correct two fact timeline inconsistencies.
Related Slideshow: 14 Biggest Political Stories of 2014
Cianci, the longest serving Mayor in the history of Providence, claimed a mountain of achievements in his quest to regain the office of the Capitol city -- but was also infamous for having been forced to resign from office, and for serving four years in federal prison for running a criminal enterprise.
However, it was Cianci's decision to run as an Independent -- and not enter the Democratic primary - that landed Cianci on the 2014 blunders list.
On March 21, a contingent of dozens of State Police officers, as well as Federal Bureau of Investigation and Internal Revenue Service officers swept into the iconic Rhode Island Capitol to raid files of the Speaker of the House - Gordon Fox.
"I've been around 27 years. We've arrested people at the State House, but I can't remember something like this before," said Rhode Island State Police Colonel Steve O’Donnell.
With 40.7 percent of the vote, Raimondo bested challengers Republican Allan Fung, who garnered 36.2% of the vote -- and Moderate Party candidate Bob Healy who got 21.4%.
The first newly elected Democrat in Rhode Island since 1992, Raimondo grew up in Scituate, boasting impressive educational credentials, graduating as Valedictorian from La Salle High School, and then going on to graduate from Yale, Harvard, and Oxford. Raimondo founded venture capital company Point Judith Capital before being elected General Treasurer in 2010.
The Pell campaign acknowledged the episode in a statement in March, in which Pell acknowledged contacting the police that week -- as well as another time when the car went missing the previous December.
The incident did not go away however, as social media continued to bring up the situation -- questioning whether between the voting, and the car, if Pell, the youngest candidate in the race, was ready to lead the state.
Pell finished third in the Democratic primary in September.
Corbishley was forced to resign from ProCAP in 2011 after a multi-month investigation by GoLocalProv. He had served in the role of Executive Director since 1991 when then-Mayor of Providence Buddy Cianci named him to the position. During the investigations that found ProCAP to be severely mismanaged, Providence Mayoral candidate Michael Solomon chaired the ProCAP board.
GoLocalProv learned that in a heated board fight at the South Providence’ John Hope Settlement Board, Williams forced Executive Director Taino Palermo out and replaced him with Corbishley.
The group called "Concerned Citizens for John Hope" continues to bring up issues it sees with the house.
In September, GoLocalProv obtained a copy of a confidential memo outlining the strategy by a group of predominantly East Side residents to create a secret fund of $1 million to defeat Buddy Cianci for Mayor of Providence in November.
According to a confidential memo emailed by failed Providence Mayoral candidate Lorne Adrain to a group of 29 including a number of former top level staffers to David Cicilline, the group’s goal was to create a 501(c)(4) fund – a fund that would not have to disclose its members.
The individuals listed on the memo included: top Washington Trust Banker Ned Handy, former top David Cicilline aides Carol Grant and Deb Brayton, former Providence Journal Editor of the Editorial Page Bob Whitcomb, and three-time candidate for Governor Myrth York, to name a few.
The move by the Republican gubernatorial candidates Allan Fung's campaign to shoot a commercial about small business in Rhode Island -- in Ohio -- not only landed Fung on the biggest blunders list, it was one of 2014's top political stories.
Fung's second quarter filing with the Rhode Island Board of Elections showed an expenditure to the Ohio-based Strategy Group (and a $139 hotel stay at an Embassy Suites in Columbus, OH early in June), as well as showed campaign contributions including $7,350 from partners or employees of the Strategy Group over the same time period.
The Strategy Group is a national Republican firm that has produced award-winning ads for Michelle Bachman, the "Restore America" campaign, and for multiple U.S. congressional and statewide campaigns. Six Strategy staff members maxed out with $1000 contributions to Fung during the reporting period -- when Fung was purportedly shooting the commercial in Ohio.
The formal announcement was made two weeks prior to the Democratic primary that Brett Smiley would be dropping out of the race for Providence Mayor and throwing his support behind Democrat Jorge Elorza, but the candidates dodged questions about whether a back room deal had been struck or what an Elorza/Smiley "dual ticket" would look like.
“What we have agreed to is that neither of us want to see our city go backwards and the handshake that we put on the deal was that Buddy Cianci and Mike Solomon cannot be elected mayor because it would bring our city backwards,” said Smiley.
“Brett and I had a discussion and the conversation entailed how we are going to win in September and how we are going to win in November. I look forward to working with Brett and I look forward to having his advice and his council,” said Elorza.
Now, Smiley has been tapped to be Mayor-elect Elorza's Chief Operating Officer.
State Ethics Commission filings by City Council President Michael Solomon showed the Providence Mayoral candidate had failed to report the correct information for his Conrad building PEDP loan between 2005 and 2010, and while an amended filing in 2012 corrected two of the years, other outstanding issues remained
The Conrad Building property, of which Solomon has an outstanding Providence city loan dating back to 1988 as a minority shareholder, was listed at its location at 385 Westminster Street in his ethics reports for 2009 through 2013. The Hummel Report's Jim Hummel first reported in that Solomon still owed the city 24 years later on the $500,000 loan
However, Solomon's reports for 2005 and 2006 listed "1355 Westminster"; 2007 lists no property on Westminster, and 2008 and 2009 list "1150 Westminster" -- and nothing at 385 Westminster.
Project manager Michael Rossi with SyNet, Inc. revealed a budget for work which he says shows at $25,000 line item for work to be done at Corso's Tazza Cafe in 2011 -- under a job order for the failed 38 Studios.
Warwick-based SyNet bills itself as "the premier design-build low voltage contractor of structured cabling, access control, surveillance and audio visual systems in the Northeast."
A study released in February by Congressional Quarterly analyzed murders, rapes, robbery, aggravated assaults, burglaries and motor vehicle thefts in more than 400 cities -- and since Taveras took over for Mayor for now Congressman David Cicilline, Providence has dropped from 44 spots in the national rankings and is now among the cities in the top 25% for serious crime.
During the four year period, Providence dropped from being ranked 314th in the United States to a ranking of 358th. In a bruising Democratic gubernatorial primary, the issue of crime in the city -- and how Taveras performed at the helm -- was a major point of contention.
The battle over RhodeMap RI began heating up in mid-November between supporters of the state's new economic planning initiative -- and opponents who began calling on the 35-member RhodeMap RI consortium to postpone adoption of its controversial plan until a more rigorous public debate ensued.
RhodeMap RI, billed itself as a "coordinated and forward-looking effort by the state to make Rhode Island a better place to live and work by mobilizing state and community assets in a whole new way. Through RhodeMap RI, the State seeks to strengthen our economy, meet current and future housing needs, and plan for future growth through the development of an integrated plan that will also include strategies for transportation, land use and environmental protection."
"What we see is a coordinated national-state-local scheme where federal agencies are poised to seize unprecedented levels of control over local land-use and housing issues," commented Mike Stenhouse, CEO for the Center for Freedom and Prosperity. "Property owners and local officials are about to lose sovereignty over their own affairs to the federal government."
A hearing in December brought opponents out in force, but the plan was ultimately adopted. However, the debate is sure to be far from over.
When first asked why Elorza brought up the arrest, his campaign manager, Marisa O’Gara said, “Much of his story is about his struggles as a young man, and how he turned his life around. He chose to be forthright about this because he believes strongly in transparency and ethics, and he wants to be completely upfront with the people of Providence. He wants them to hear directly from him how these struggles shaped his vision for Providence.”
Asked tonight why his confession was nearly identical to [Central Falls Mayor James] Diossa’s, O’Gara said an advisor had drafted the letter. She confirmed the advisor, whom she did not name, had also worked for Diossa. She said the campaign had not been aware of the similarity in language.
“A former advisor helped our campaign write the first draft of this letter, and this same advisor had also worked on James Diossa’s letter. Jorge relayed his personal story, our advisor presented us with this language, and Jorge felt it accurately described his personal struggle. If we had known the language was the same as Mayor Diossa's, we would have immediately corrected it. What was really important to Jorge was disclosing the truth about the mistakes he made as a young man, mistakes about which he has been forthright and upfront,” O’Gara said.
In a political story that spanned most of the year, the issue of investigating the failed 38 Studios deal -- and whether to pay back the bonds -- dominated General Assembly business, campaign messaging, and public attention throughout 2014.
From whether or not the SEC should investigate, to an 11th hour hearing during the General Assembly session, opponents continued to line up to battle paying back the beleaguered bonds -- but under threat of a diminished credit rating, Rhode Island leaders opted to once again pay back the obligation.