RI State Police to interview lawmakers about 38 Studios

PROVIDENCE, R.I. (WPRI) – Rhode Island State Police investigators are seeking interviews with state lawmakers who voted on the 2010 bill that created the 38 Studios loan program, officials said Wednesday.

In a statement, R.I. State Police Col. Steven O’Donnell said he made the request on Tuesday in an effort “to ensure that any legislator, who has relevant information regarding the 2010 vote on the ‘Job Creation Guarantee [sic] Program,’ provides that information to investigators.”

O’Donnell described the investigation into 38 Studios by the state police and Attorney General Peter Kilmartin’s office as “active and ongoing.” He said investigators want “to ensure that anyone with information, who has not been previously contacted, has the opportunity to present it.” He added: “No member of the legislature is suspected of wrongdoing simply because of their vote.”

O’Donnell also directly addressed questions being raised about whether it’s appropriate for Kilmartin, who was a sitting lawmaker in 2010 and voted in favor of the loan program, to be involved in a probe of the same legislation.

“I am aware that the attorney general, as a former representative, voted on this legislation,” O’Donnell said. “I remain satisfied that he has no conflict in this case, based upon his role as a legislator, and I have full confidence in the professionalism of the career prosecutors he has assigned to this investigation.”

Kilmartin spokeswoman Amy Kempe said investigators have not requested an interview with the attorney general about his vote, but she reiterated that he was unaware at the time $75 million from the new loan program would go to 38 Studios.

“It is our understanding that state police is simply asking legislators if they have anything new to offer and, if so, they want to talk to them,” Kempe told WPRI.com.

A law enforcement source with direct knowledge of the investigation told WPRI.com the request for interviews with lawmakers is not related to the state and federal probe swirling around former House Speaker Gordon Fox that led to raids on his home and office in March, but rather a separate and ongoing state-level probe into 38 Studios.

“This shows the investigation is active and ongoing,” Kempe said. “It shows neither the state nor the attorney general’s office will leave any stone unturned.” Kilmartin would not be involved in the probe “if there was ever any inkling or hint of any conflict,” she added.

The request to lawmakers from O’Donnell was first revealed earlier Wednesday by House Speaker Nicholas Mattiello.

“I have been contacted by the Rhode Island State Police and have been informed that they would like to ask questions of every member, past and present, who participated in the voting of the Job Creation Guarantee [sic] Program (2010-H 8158) on May 25, 2010,” Mattiello, D-Cranston, told his fellow representatives in an email sent just after noon.

Mattiello spokesman Larry Berman confirmed the authenticity of the email, which was provided to WPRI.com by two lawmakers. “I am fully cooperating with the state police and I am happy to assist them, and I thank them for the thoroughness of their investigation,” Mattiello said in a statement.

Mattiello said O’Donnell requested lawmakers’ cell phone numbers, which he said he would provide by 4 p.m. Wednesday unless someone objects, to interview them. Berman said 37 of the 66 lawmakers who voted for the loan program are still serving in the House.

O’Donnell called Mattiello directly on his cell phone Tuesday to “inform me his investigation was ongoing” and that he would be following up with all representatives who voted on the bill, the speaker told WPRI.com. O’Donnell followed up Wednesday with the specific request for cell phone numbers, he said.

Greg Pare, a spokesman for Senate President M. Teresa Paiva Weed, confirmed O’Donnell also called her to say he would be reaching out to senators for information about 38 Studios. “The Senate president thanked the state police for the work they are doing,” Pare said. “The Senate will assist in any way they can.”

The new wrinkle in the 38 Studios investigation comes as Rhode Island lawmakers race to finish their annual half-year session this week. All 113 House and Senate lawmakers must face the voters in November if they seek re-election.

Rep. J. Patrick O’Neill, a Pawtucket Democrat who was House majority whip when the 38 Studios loan program passed, said he was fine with Mattiello giving investigators his cell phone number. “If they want to speak to me I’m glad to speak to them about what I knew or, more importantly, what I didn’t know in 2010,” he told WPRI.com.

The bill referenced by Mattiello, H 8158, was sponsored by then-House Finance Committee Chairman Steven Costantino, D-Providence; Rep. Helio Melo, D-East Providence, who succeeded Costantino as chairman the next year; and former Rep. Jon Brien, D-Woonsocket. The legislation created a new $125-million loan-guarantee program at the R.I. Economic Development Corporation (EDC).

The bill was lawmakers’ second attempt to create the new loan program in the spring of 2010. The same proposal had been included in a supplemental budget passed by the House in April, but that measure died in the Senate, forcing Costantino and his colleagues to introduce the standalone bill on May 19.

The loan-guarantee bill passed the House on May 25, less than a week after it was introduced, on a 66-1 vote. Former Rep. Robert Watson, R-East Greenwich, cast the only vote against it. The Senate passed the bill on June 11, and then-Gov. Don Carcieri signed it the same day.

Less than two months after the legislation’s enactment, the EDC board used $75 million from the $125 million program to entice 38 Studios from Massachusetts to Providence.

Most rank-and-file lawmakers have since said they had no idea when they voted for the program that so much of the money would go to Schilling’s company, though many allege then-Speaker Fox knew what was happening. Mattiello was Fox’s House majority leader at the time, but he has since said he too didn’t know 38 Studios would receive so much of the money.

Fox, who remains a sitting lawmaker, and Costantino, who is now Gov. Lincoln Chafee’s health and human services secretary, have both refused to discuss 38 Studios with reporters in recent months due to the various investigations. Fox is separately fighting a subpoena from one of the defendants in the state’s civil lawsuit against the architects of the deal.

38 Studios collapsed in May 2012, leaving Rhode Island taxpayers on the hook for roughly $90 million in payments to investors who bought the bonds that funded the company’s move. The state budget passed this month included $12.3 million in taxpayer money to cover the next two payments to the bondholders, over the vocal objections of some lawmakers.

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

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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