PROVIDENCE, R.I. (WPRI) – A top aide to Gov. Lincoln Chafee confirmed Wednesday he met twice with Michael Corso, the controversial local attorney closely associated with the 38 Studios deal, in 2011 and 2012 to discuss the faltering company’s efforts to get tax credits from the state.
Richard Licht, director of the R.I. Department of Administration, told WPRI.com he and Corso met in his office in December 2011 and again somewhere else in the spring of 2012. Licht said the discussion at both meetings revolved around 38 Studios’ need to obtain tax credits.
Notably, the December 2011 meeting took place four months before a pivotal April 2012 meeting at 38 Studios where Chafee was asked by its executives to sign documents allowing the cash-strapped company to get tax credits and bridge financing.
Former House Speaker Gordon Fox, who attended the April meeting with Chafee, told WPRI.com two months after it took place that he and the governor had been blindsided by 38 Studios’ request for assistance there and hadn’t even realized the company was in financial trouble.
On Wednesday, Licht acknowledged he never informed Chafee about the meeting the previous December with Corso and other 38 Studios insiders. “It was a routine meeting I would have done with anybody,” Licht said, adding: “They wanted to understand how it worked. I don’t even remember a lot about the meeting.”
Patrick Rogers, who was still Chafee’s chief of staff in December 2011, said Wednesday he was not informed about Licht hosting the 38 Studios meeting. “This is the first I’ve heard of that meeting to my knowledge,” Rogers told WPRI.com. “I don’t recall hearing about that until this moment.”
According to Licht, the December meeting came about when Corso called him to request information about how 38 Studios could tap into Rhode Island’s program of tax credits for film and TV productions. He said he told Corso he’d set up a meeting and get David Sullivan, Rhode Island’s tax administrator, to join them.
“They were trying to see if the film and tax credits would apply to gaming,” Licht said. “That’s really what they wanted, to understand it. … That was purely informational.”
Sullivan confirmed that he attended the December 2011 meeting in Licht’s office, and said the others he recalled being in attendance there included Licht; Corso; 38 Studios founder Curt Schilling; and Tom Zaccagnino, the lead member of 38 Studios’ board of directors, who was closely involved with its financial affairs.
Sullivan said it was already clear at the meeting that 38 Studios planned to apply for film and TV tax credits. “I think that all they were asking basically was how do you go about applying for film tax credits and what the process is, what is eligible for film tax credits, what’s in it – very general,” he told WPRI.com.
Licht said he met with Corso about 38 Studios for a second time the following spring, when the company was in financial turmoil, though he couldn’t recall the location.
“I don’t know how the meeting came about – I can’t remember whether it was a political fundraiser or if he asked to meet with me or someone else would have asked me,” Licht told WPRI.com. “I saw him and he told me how crucial it was to save 38 Studios, that the tax credits be given. … I think they were talking to anyone they could talk to and press how crucial this was to save the company.”
“The second meeting, which was several months later, when they were more in – there was more of a crisis situation that they needed these credits, and I can’t remember what they asked me or didn’t ask me,” he said.
Asked how he responded, Licht replied: “I just sat and listened.”
While the development of a video game was ultimately found to be eligible for film and TV tax credits, state officials found 38 Studios itself was not eligible to get them because it wasn’t incorporated in Rhode Island. That decision was one of the factors that helped trigger the company’s financial collapse in May 2012.
“I had not been involved with 38 Studios at all before or since,” Licht said of the December 2011 meeting. “I didn’t know what their contracts or understandings or agreements were. They asked for information, and I was happy to give it to them.”
Licht said the R.I. Economic Development Corporation always had primary responsibility for 38 Studios within the Chafee administration. “I think I was just contacted because people always contact me when they try to get messages to the administration,” he said. “It’s not unusual for me to be contacted for something I don’t have direct responsibility about.”
Sullivan sounded a similar note. “Being that Richard probably knows every living person in Rhode Island, a lot of times they’ll call Richard and say, ‘Hey, I have this issue,’ and Richard will call a meeting or refer them to me,” he said.
Sullivan also said it’s “not out of the norm for us to do these types of things. I mean, obviously if a business or a corporation in this state has these questions, we are always more than willing to explain it to them. In [the Division of] Taxation, we’d rather explain the rules up front.”
Licht said the two meetings are the only times he’s met with Corso since becoming director of administration in January 2011, when Chafee entered office. Licht is a former Democratic state senator and currently a leading candidate for a judgeship.
Rogers, whose departure as Chafee’s chief of staff was announced in December 2011, said he was never informed during his time in the governor’s office that 38 Studios might seek to receive state tax credits.
But Rogers did say he was approached by David Gilden, the EDC’s former general counsel, in the fall of 2011 to indicate that 38 Studios might request one or more waivers from the Chafee administration that would allow the company to avoid making some of the payments called for under its original agreement with the state.
“I do recall telling Gilden that given the governor’s skepticism about the transaction that he would be – while I would faithfully report the request, to the extent he was taking my temperature I indicated the governor would probably be loathe to waive any covenants or be lenient in any way,” Rogers said.
Rogers said he informed Chafee about the message from GIlden, and said they were both “relieved” when Gilden soon said the company wouldn’t need the waivers after all. “I think we saw that as good news,” he said.
Rogers also said the idea was presented to him as a sign of 38 Studios’ success, not that the company had financial troubles. “My recollection was that the company was doing well,” he said. “This was an indication of the company growing quickly, maybe more quickly than their projections, and that they needed some additional capital.”
As for Corso, Rogers said he doesn’t recall ever meeting with him about 38 Studios.
Tim White and Dan McGowan contributed to this report.