FBI reviewing PEDP records from 2009 loan

PROVIDENCE, R.I. (WPRI) – Federal investigators are scrutinizing a taxpayer-funded loan that was issued by the Providence Economic Development Partnership (PEDP) in 2009 as part of a FBI probe, sources tell the Target 12 investigators.

As Target 12 first reported, records were subpoenaed from the PEDP last week, but city officials say the troubled agency is not the focus of the investigation.

“The PEDP is cooperating fully,” David Ortiz, a spokesman for Mayor Angel Taveras, told Target 12. He added that the subpoenaed records “predated the Taveras administration.”

Ortiz would not say who is the target of the investigation nor what agency issued the subpoenas, but sources tell Target 12 the FBI is handling the case.

A spokesperson for the Boston office of the FBI and the Rhode Island U.S. Attorney’s Office said they would not confirm or deny an active investigation.

Ortiz confirmed that the PEDP has retained a lawyer from Darrow Everett LLP to “ensure the PEDP is fully cooperating with federal investigators.” Providence law firm Moses, Afonso, Ryan is also part of the agency’s legal team and has been since 2011, according to city records.

The PEDP issued nine loans in 2009, totaling $847,364, according to a WPRI.com review of loan data. US Rep. David Cicilline was the chairman of the board of the PEDP at that time in his capacity as mayor of Providence.

Cicilline was unaware of the probe until he was contacted by a reporter, according to a spokesman.

The PEDP functions as a wing of the city’s planning department, providing low-interest taxpayer-funded loans to small businesses that have been rejected by traditional lenders, but has come under fire from the U.S. Department of Housing and Urban Development in recent years for a lack of oversight over the program.

The agency was forced to recover or repay $1.3 million to cover 16 loans it never should have approved last year, according to a report issued by HUD. The PEDP was also required to reimburse HUD $618,000 for dozens of purchases – including a limo ride, two parking tickets and a gift for a sick employee – made between 2005 and 2011.

The PEDP’s loan portfolio currently has 134 loans worth $15.4 million. Of those loans, approximately 35.8% were at least 121 days past due as of Jan. 31, according to records reviewed by WPRI.com.

Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Twitter: @danmcgowan

Tim White ( twhite@wpri.com ) is the Target 12 investigative reporter for WPRI 12 and Fox Providence. Follow him on Twitter: @white_tim

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