Governor Gina Raimondo's week. See what happened, and the impact.
This week was Gina Raimondo’s worst week as Governor both substantively and maybe more importantly, long-term politically. She has had bad weeks before, as all Governor do, but this week the fragility of her policies and her political acumen were exposed — the long-term impact may be significant both to the state financially and to her political future.
Each of the events tie Raimondo closer to the perception that she sides with wealthy and powerful out-of-state forces over the interests of Rhode Islanders, a label that has been tagged on the former venture capitalist who seems more comfortable at Wall Street Fundraisers on Central Park West than at the Columbus Day parade on Federal Hill.
Raimondo spearheaded charge to funnel $3.6 million dollars to Lance Robbin’s company. He was reported to be one of the most notorious slumlords in Los Angeles for decades, but moved his operations across the country. GoLocal uncovered lawsuits in North Carolina and Connecticut and a number of small business owners in Rhode Island claiming that Robbins has damaged their businesses.
One of the top advocacy lawyers in the country, Lauren Saunders, told GoLocalProv.com following the announcement on Tuesday, “Robbins was one of the most dishonest and unscrupulous people I have come across in my career working for vulnerable tenants and consumers. I cannot imagine entrusting any (public) money to him.”
Saunders, who is now Associate Director of the National Consumer Law Center in Washington, DC, had battled with Robbins when she represented tenants in Los Angeles, where Robbins operated before relocating to Rhode Island.
2) White Flag by Magaziner on Raimondo’s Hedge Fund Strategy
Earlier this week, Seth Magaziner announced a new "Back to Basics" investment strategy for the Rhode Island pension fund, following unanimous approval by the State Investment Commission.
The recalibration will reduce its investment in the hedge fund strategies that Raimondo implemented as General Treasurer. Magaziner will move more than $500 million over the next two years, and reallocate these funds to more traditional asset classes. The move locks in the losses of the fund and is functionally an admission the Raimondo’s strategy was fatally flawed.
The failure of Raimondo's’s hedge funds will ensure a requirement of greater contribution of existing state workers and the state to hold the line on the unfunded liability.
3) Raimondo’s Favorite Hedge Fund Pleads to Massive Global Fraud
If Magaziner’s rejection of her investment strategy was not bad enough, the Securities and Exchange Commission hit Och-Ziff, Raimondo’s favorite hedge fund with more than $400 million in penalties. Och-Ziff received more fee income from Raimondo’s tenure as Treasurer than any other hedge fund.
The SEC’s investigation of Och-Ziff found that the fund "used intermediaries, agents, and business partners to pay bribes to high-level government officials in Africa. According to the SEC’s order, the illicit payments induced the Libyan Investment Authority sovereign wealth fund to invest in Och-Ziff managed funds. Other bribes were paid to secure mining rights and corruptly influence government officials in Libya, Chad, Niger, Guinea, and the Democratic Republic of the Congo.”
The SEC reported, “Och-Ziff engaged in complicated, far-reaching schemes to get special access and secure significant deals and profits through corruption,” said Andrew J. Ceresney, Director of the SEC Enforcement Division.
The SEC action again goes to reinforce the unholy alliance between Raimondo and Wall Street interests.
Owning 38 Studios
Raimondo who had limited culpability on the 38 Studios debacle, but is now putting her own signature on it by pursuing a strategy of delay and blocking the effort of GoLocalProv to gain access to the State Police interviews and corresponding notes via the public access strategy in Rhode Island. Instead of taking on the role of the reformer and leading transparency, the Governor seems trapped in a swirl of legal advice from those who may have vested interests.
Talk the Talk
The pay gap between men and women on Governor Gina Raimondo’s staff has grown dramatically over her first eighteen months in office — from 14 percent to now a gap of 25 percent. She is Rhode Island's first female Governor.
In January of 2015, GoLocalProv.com looked at the pay of the men and women on Raimondo’s staff and found that despite her campaigning on the pay equity issue, the examination of staff salaries found that the gap was 14%.
Eighteen month later, the fifteen men on Raimondo’s staff have an average salary of $96,892 while the average salary for the twenty women staffers is just $72,535.
GOP party chair Brandon Bell: "This is the worst week for our Governor (arguably) since the Cooler Warmer debacle."
"Governor Raimondo wants people to think she is an investment whiz but her hedge fund picks turned out to be losers. The Governor's approach to picking hedge fund managers to control pension funds was financially unsound from day one. I don't know why it took the General Treasurer so long to figure this out. But better late than never, and we commend the General Treasurer for the political courage to recognize the Governor's Wall Street crony hedge fund folly," said Rhode Island Republican Party Chair Brandon Bell.
"Additionally, one of the beneficiaries of her corporate welfare program at the Commerce Corp has an unsavory background. Granting tax credits to a developer with a questionable reputation is an example of Raimondo and CommerceRI corporate cronyism," said Bell. "These types of decisions could be planting the seeds of RI tax major ethical embarrassment. Instead of making the structural reforms to make RI more competitive, the Raimondo Administration is making problematic tax deals that working families will have to pay for with no guarantee of a bright economic future for their children. The Rhode Island Republican Party is monitoring these corporate welfare deals and will make them a issue in the next gubernatorial election."
Sam Bell with the Rhode Island Progressive Democrats of America said he thought Raimondo's week was "mixed."
"I don't think it's her worst week. Raimondo has had a lot of bad weeks. Actually, this week saw Raimondo come out with a decent minor policy proposal (the open textbooks initiative), which was a rare change for an administration with relatively few common-sense non-ideological proposals. Certainly, it was bad news for her that Seth Magaziner rolled back her disastrous hedge fund push, but it was good news for Rhode Island. Reversing some of Raimondo's failed policies will lead to better economic performance, which will probably help her approvals in the long run," said Bell.
"More concerning for her is the yet another scandal from the controversial agency that did the 38 Studios deal, which Raimondo drastically expanded. The heavy focus on payments for politically connected corporations is one of the most concerning aspects of Raimondo's tenure. This new scandal only underscores how important it is for Rhode Island to change course and adopt a Massachusetts-style economic development program that doesn't rely so heavily on payments," continued Bell. "Raimondo's refusal to support release of the 38 Studios documents reveals an administration concerned about public scrutiny of corporate welfare deals, which makes sense from a strategy perspective. Despite a well-run professional PR operation, public concern over these corporate welfare deals is growing, and increased scrutiny may lead to yet more calls for a policy rethink."
Related Slideshow: Lance Robbins Controversies Through the Years
There are dozens of issues and hundreds of articles about Robbins controversies. GoLocal has broken down a dozen of the conflicts that have taken place across the country over the past 30 plus years.
Residents of a dilapidated building who say they regularly fight off armies of giant rats, swarms of cockroaches and youth gangs that roam their hallways have sued the building's owner for $10 million.
Attorneys for the Spanish-speaking residents related nightmarish stories of cockroaches biting sleeping children, a rat they said tried to drag a baby from its bed and another that allegedly attacked a man in the shower.
They said tenants feel rats crawl over them at night and some stand guard over babies all night, fighting off the rodents with brooms and slingshots.
The lawyers opened roach traps on the front steps of the South Union Street building near downtown to display dozens of huge cockroaches, some still crawling, which they said were caught in the building overnight.
The lawsuit, filed jointly in Superior Court by four private and public- interest law firms, accuses building owner Lance J. Robbins and his associates of refusing to make repairs, curb vermin infestation or provide reliable water, electricity or security in the 40-unit building, which houses large families in one-room apartments.
Robbins said Wednesday that none of his employees in the building have seen any rats and, ''I wouldn't be a bit surprised if a lot of this at the news conference was staged.''
Real estate broker and attorney, Lance Robbins, both owned and managed numerous "slumlord" apartments in the city of Los Angeles. This, as acknowledged by Robbins's attorney, was an extremely lucrative business. The record suggests, though, that Robbins took less than adequate care of the apartments under his control. Between 1985 and 1995, Robbins had been convicted of some 50 municipal building code violations. He was twice disciplined (1991 and 1994) by the State Bar for "facts and circumstances surrounding habitability violations in properties" that he owned.
In January of 2001, Robbins pleaded nolo contendere and was convicted of three misdemeanor violations of the fire protection and prevention provisions of the Los Angeles Municipal Code. He was fined $100 and placed on summary probation for 18 months. In March of 2003 the Department of Real Estate filed an accusation alleging that Robbins's convictions constituted cause for the suspension or revocation of his license as a broker.
Lauren Saunders of the National Consumer Law Center is one of the top tenant advocacy attorneys told GoLocal on Tuesday.
Robbins was one of the most dishonest and unscrupulous people I have come across in my career working for vulnerable tenants and consumers. I cannot imagine entrusting any city money to him.
Lance Robbins was the worst slumlord in L.A. history. The city's Slum Housing Task Force prosecuted him numerous times for horrible conditions at his buildings. He also ran up huge water bills at his buildings that he refused to pay, and the city was reluctant to shut off the water for fear of harming the tenants. I filed a False Claims Act case against him and he was forced to pay $1 million in back water bills.
He was also extremely ingenious about using a complex web of sham corporations to avoid liability. After the fines from his slum violations and his back water bills started adding up, he started foreclosing against himself and putting his buildings into receivership to escape accountability. His buildings were in numerous different corporations and partnerships and he put loans in other names against his own buildings, then started a foreclosure action. He then asked the court to appoint a "neutral" receiver who he chose who actually just let Robbins stay in control of the building. We detailed that in the same lawsuit.
Developer Getting $3.6M in RI Tax Credits Sued by N. Carolina Town for Backing Out of Project
Urban Smart Growth (USG), the developer who just received nearly $3.6 million in tax credits from Governor Gina Raimondo and the Rhode Island Commerce Corporation, was sued by the Town of Belville, North Carolina, in 2015 for backing out of a project, GoLocal has learned...
Robbins and USG stated on Monday that they are intending to utilize the Rhode Island tax credits to complete a $38.9 million project to develop 150 loft apartments at Hope Artiste Village in Pawtucket.
However, in North Carolina, a stalled USG project has led to the Town of Belville to seek arbitration, following its 2015 lawsuit against USG, who in 2007 had entered into a twenty-year agreement to develop a mixed-used project along the town's waterfront.
Not only did the project never come to fruition, press reports show that USG engaged in discussions with the adjacent town of Leland to annex Belville's downtown and undertake the project with them instead.
"We need to bring [Robbins] to light. It's really a shame-- he goes and buys up cheap property and tries and hoodwinks the local city councils to fund this kind of development," said Peter Schardien, who is the husband of Belville Commissioner Donna Schardien, of Robbins. "He's an attorney, or he used to be, and he knows how to get around things. He's no good."
Former Business Partner of Robbins of USG Sued and Received $28M - and Warns RI
Frank Gamwell, a former business partner of Lance Robbins of Urban Smart Growth (USG), has said that he would "never do business with him again" after suing Robbins for $28 million and ultimately receiving the amount in arbitration.
Now, Gamwell is warning that Rhode Island should be doing its "due diligence" in dealing with Robbins.
On Monday, USG was awarded $3.6 million in tax credits from Governor Gina Raimondo and the Rhode Island Commerce Corporation to develop lofts at Hope Artiste Village.
"This Just Isn't Fair,” Says Restaurant Owner About Developer Robbins Getting $3.6M in RI Tax Credits
A former restaurant owner at Hope Artiste Village said that she "wished she had sued" Urban Smart Growth (USG), the management company that was awarded $3.6 million in tax credits from the RI Commerce Corporation this week.
Rosinha Benros, who had opened and owned the restaurant "Rosinha" at Hope Artiste Village, said she had a number of issues with USG -- including having had gas being turned off due to USG not having paid their National Grid bill.
"I opened that space, I created that place," Benros told GoLocal on Thursday, of the restaurant she ran for over three years. "I can't even drive by, I loved that place so much. It just breaks my heart."
Benros said that issues with the change in management, coupled with having problems with The Met being located next door, led in part to her closing the restaurant.
USG's CEO and principal is controversial developer Lance Robbins, who in California was cited with 105 health and building-code violations, piled up 32 convictions, paid a $1 million fine, to name a few of his legal problems, according to press reports.
RI Security Firm Says Developer Robbins of USG Won’t Pay $23K Bill
A former security services vendor for Hope Artiste Village is claiming that owner Urban Smart Growth (USG) never paid them $23,583 for services in a six-month span starting in 2013.
“We started services on December 13, 2013 and ended services on June 21, 2014. They paid a total of six invoices during our services,” said Karen Voisard with Metropolitan Public Safety, who provided the check stubs from USG. “As of current standing with the company we are owed $23,583.00 for eighteen overdue invoices. That doesn't include any of the late charges as stated in our contract.”
Former Owner of Blaze Restaurant: USG’s Robbins “Threatened to Bankrupt Me”
Phyllis Arffa, the originator and owner of the restaurant Blaze, said that Lance Robbins of Urban Smart Growth threatened to bankrupt her when her business was struggling at Hope Artiste Village.
Arffa, who owned and operated Blaze on Hope Street in Providence before moving to Hope Artist Village in 2015, said that she has had to go back to working in a kitchen to pay back $70,000 in debt that she accrued while trying to make Blaze work under Robbins, which she said she ultimately had to step away from due to financial and health reasons.
"I wish I never met [Robbins]. I had money in the bank, we were all set to relax for a little while," said Arffa after moving from Hope Street to the Hope Artiste village. "Now, I'm working 12 to 12 to just to pay back what I owe."
Arffa showed a text sent by Robbins threatening to bankrupt her.
The former owner of the Bread Lab at Hope Artiste Village, which is owned by controversial developer Lance Robbins, said she found him to be “morally bankrupt” as she was forced to close her operations in 2015.
Deana Martin, who had owned the Bread Lab with her husband, said that she battled with Robbins over a number of issues -- including the insurance money following the destruction of her bakery equipment due to the mill’s sprinklers going off one night.
“If you don't give him what he wants, he'll use whatever leverage he has to get what wants,” said Martin. “If it furthers his benefit, he'll take it from you, and the legal proceedings are just that — if he wins, he claims he’s not ‘guilty.’
