RI State Police join new probe of 38 Studios lobbying

PROVIDENCE, R.I. (WPRI) – The Rhode Island State Police are assisting the secretary of state’s office with an investigation into potential lobbying violations by insiders involved with the failed 38 Studios deal, all due to findings uncovered by Target 12.

Target 12 reported Monday that it had obtained a document showing Michael Corso, an associate of former House Speaker Gordon Fox, signed a contract with 38 Studios in 2011 to interact with government officials. Emails obtained by Target 12 also show Corso was closely involved in the 38 Studios deal from the beginning. Yet he never registered as a lobbyist.

Secretary of State Ralph Mollis announced Monday his office will investigate why no one from 38 Studios ever registered to lobby for the company when it was working to get a $75-million taxpayer-guaranteed loan in 2010. Amy Kempe, a spokeswoman for Attorney General Peter Kilmartin, said Kilmartin’s office contacted State Police Col. Steven O’Donnell on Tuesday “and suggested he reach out to the secretary of state to offer assistance if needed.”

Colonel Steven O’Donnell said he spoke with Deputy Attorney General Gerald Coyne, then called Mollis to offer help in the probe.

38 studios behind closed doors gfx
Watch the Target 12 investigation 38 Studios: Behind Closed Doors

Asked how he reacted when O’Donnell did so, Mollis told Target 12: “My response was, ‘Glad you called.'”

“After talking with him we both agreed it would be helpful to the investigation if we had a law enforcement agency involved because we don’t have investigators on staff,” Mollis said. “It would be helpful if state police would be able to assist us or work with us or guide as to how letters should be sent and how we get information.”

Mollis said he and O’Donnell plan to meet Wednesday to lay out a path forward in the 38 Studios investigation. “The end result is, I’m hoping after tomorrow’s meeting that they will play a very active role in this,” he said. “They can assist us in handling this expeditiously.”

O’Donnell said it was too early to say whether the effort would turn into a criminal investigation. “If it’s criminal, obviously, we will continue to pursue it,” he told Target 12. “If we find criminal violations then obviously we’ll go that path; if it’s non-criminal we’ll send it back to the agency for any administrative remedies they have.”

A Target 12 review of the state’s database shows no one from 38 Studios ever registered to lobby state lawmakers or the executive branch during the years the firm, founded by former Red Sox ace Curt Schilling, was known to be active in Rhode Island: 2010 to 2012.

That’s despite the fact former R.I. Economic Development Corporation (EDC) executive director Keith Stokes publicly acknowledged a $125-million loan-guarantee program was created in part to benefit the company, and even though 38 Studios insiders contacted state officials to secure taxpayer-backed funding and later to request tax credits.

This isn’t the first time the question of who has to register as a State House lobbyist has made headlines.

In 1996, former Secretary of State Jim Langevin – who is now a congressman – battled Providence Place mall developer J. Daniel Lugosch and his lawyer, Richard Licht, over whether Lugosch needed to register as a lobbyist during the debate over the mall. Lugosch eventually relented, according to a Providence Journal report at the time. Licht is now Gov. Lincoln Chafee’s director of administration.

In fact, Mollis backed Corso when the latter man argued in 2008 he was exempt from the lobbyist disclosure rules. At the time Corso was pushing to save the state’s historic tax credit program, according to a Journal story, which said Mollis was interpreting the law differently from the way Langevin had.

Mollis said Monday he planned to review legislative transcripts and records to see if anyone testified about the bill that eventually benefited 38 Studios. He also said he might call for State House hearings about the company’s lobbying as part of his probe – something he has never done in his seven years as secretary of state.

Kempe said Tuesday that Kilmartin’s staff was not aware of any violations by lobbyists ever being referred to the attorney general for criminal prosecution.

“If the secretary of state believes there is evidence of a crime, it should be referred to the Rhode Island State Police for investigation, and if warranted, criminal prosecution by the attorney general,” Kempe said.

Mollis acknowledged that he does not have subpoena power and cannot force people to come to the State House and testify during a hearing. But he added he can still find that someone violated the law even if they don’t show up to offer their own defense.

Fines for lobbying violations can reach as high as $2,000 per violation, in addition to the possibility of criminal charges being pursued by the attorney general’s office.

Mollis, a Democrat, was elected secretary of state in 2006 and re-elected in 2010 but is barred by term limits from running again. He is now running for lieutenant governor against Cumberland Mayor Dan McKee.

Kilmartin, also a Democrat, was a House lawmaker and a member of former Speaker William Murphy’s leadership team before the 38 Studios deal was struck. He was elected attorney general in November 2010, and is currently running for re-election against Republican Sen. Dawson Hodgson.

The moves by Mollis and Kilmartin came as McKee and Hodgson both criticized them over their handling of the 38 Studios matter.

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

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi

An earlier version of this story incorrectly said Kilmartin was a member of former House Speaker Gordon Fox’s leadership team; he was a member of former House Speaker William Murphy’s leadership team, and left the leadership when Fox succeeded Murphy.

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