PROVIDENCE, R.I. (WPRI) – Board members for the Providence Economic Development Partnership (PEDP) are scheduled to meet behind closed doors Wednesday to discuss potential litigation involving the troubled city lending agency.
A spokesman for Mayor Angel Taveras said he could not confirm the matter that will be discussed when the board enters executive session, but Target 12 reported last month that the FBI subpoenaed records related to a 2009 loan approved by the PEDP.
City officials have said the PEDP is not the target of the federal probe, but Taveras said last week the agency is fully cooperating with the FBI.
“This is obviously an important issue. I look at it as the people of the United States have a question about something regarding the city, and they deserve truthful and complete answers and they’re going to get those,” Taveras told WPRI.com.
The agency also retained a lawyer from Darrow Everett LLP to “ensure the PEDP is fully cooperating with federal investigators,” according to city spokesman David Ortiz. 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 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 loans are approved by a 15-member board that is chaired by the mayor. Under Taveras, the agency adopted new rules that require all loans to be approved by the entire board. Previously, staff members were allowed to sign off on loans of up to $75,000 without approval of the board.
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.
As it stands now, 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.
A spokesman for the Rhode Island U.S. Attorney’s Office said they would not confirm or deny an active investigation related to the PEDP.
The PEDP issued nine loans in 2009, totaling $847,364, according to a WPRI.com review of loan data. U.S. Rep. David Cicilline was the chairman of the board of the PEDP at that time in his capacity as mayor of Providence.
During a taping of WPRI 12’s Newsmakers last week, Cicilline said he had not been contacted by investigators regarding the PEDP.
“I think we don’t know what the investigation is about and I think it would be unfair and unwise to speculate on it,” Cicilline said.
The PEDP board meets Wednesday at noon.
Tim White contributed to this report.