The chairwoman of Rhode Island's House Oversight Committee wants the State Police and state Attorney General Peter Kilmartin to investigate advisor Michael Corso's activities related to the 38 Studios bond financing fiasco.
Speaking at Tuesday night's committee hearing at the state capitol in Providence, Rep. Karen MacBeth, D-Cumberland, cited newly released documents that said Providence lawyer Corso made $2 million off the transaction and stood to make $3.75 million for advising the failed video-game company owned by former Boston Red Sox pitcher Curt Schilling.
"It hit like a lightning bolt," said MacBeth.
Tuesday's hearing was the second by the panel, two months after state Superior Court Justice Michael Silverstein ordered the release of most documents connected with the state's lawsuit against multiple parties over a $75 million loan in 2010 to 38 Studios.
The loan was part of a $125 million jobs creation bill and intended to lure Schilling's company to downtown Providence from Maynard, Mass.
Rhode Island is looking to claw back some of the money lost after 38 Studios shut down and filed for Chapter 7 bankruptcy in 2012. After making payments the past two years on the debt, guaranteed by the state's moral obligation, Rhode Island was on the hook for $74.3 million on the debt including interest as of June 30, according to state documents.
Bond rating agencies have said the moral obligation debt is tantamount to general obligation and have threatened to downgrade Rhode Island if it didn't pay. Fitch Ratings and Standard & Poor's rate the state's GOs AA. Moody's Investors Service rates them Aa2.
MacBeth accused Corso of concealing his arrangement for a "success fee" of 5% of the deal's value by not registering as a lobbyist.
"Michael Corso is a lawyer and he knew all the laws," MacBeth said as the hearing began. "He never registered as a lobbyist, not because he didn't want to pay a $25 fee or because of a $2,000 fine. He didn't want us to know.
"If he registered as a lobbyist, we would know about his success fee. He intentionally did not. If we had known that a lobbyist was making as much as more than $3 million, the jobs creation bill would never have made it off the floor."
MacBeth, a fourth-year lawmaker, admitted to voting for the bill in 2010. "I was told this was a jobs-creation bill and I was lied to," she said in Bond Buyer interview in Providence last year.
Also in 2014, she and Rep. Michael Chippendale, R-Foster, said they received threatening letters urging them to "stop poking around" on 38 Studios.
Corso appealed an order by former Secretary of State Ralph Mollis that he register retroactively as a lobbyist or face a $2,000 fine. Nellie Gorbea, who succeeded Mollis early this year, dismissed the case in May.
Former U.S. Attorney Robert Corrente, whom Gorbea hired to investigate the matter, said "multiple procedural deficiencies in the existing lobbying statutes" would probably not pass state Supreme Court muster.
Corso was an ally to former House Speaker Gordon Fox, who is serving a three-year federal prison term for bribery, wire fraud and filing a false tax return.
