Email: Frank Caprio ‘cut a deal’ on 38 Studios bonds

A top 38 Studios insider suggested then-General Treasurer Frank Caprio “cut a deal” to downplay his concerns about the $75-million transaction in exchange for getting Barclays hired as an underwriter on the bond sale, according to newly unsealed court documents.

Tom Zaccagnino, the lead director on the 38 Studios board who worked on its financing efforts, made the claim in an email on Aug. 10, 2010, as the $75-million transaction was being put together.

Asked about a letter Caprio sent to the EDC board at the time raising concerns about 38 Studios, Zaccagnino told CEO Jen MacLean: “frank should be relatively quiet as he cut a deal to do so in return for riedc bringing in barclays as co underwriter. Franks office has a tight relationship w barclays.” (The spelling and capitalization are in the original.)

During his deposition, Zaccagnino said he believed he was given the information about Caprio and Barclays by J. Michael Saul, deputy director of the EDC at the time and one of the original defendants in the 38 Studios lawsuit.

Caprio was not immediately available for comment Thursday. He was general treasurer and a candidate for governor at the time of the 38 Studios deal.

Asked during his deposition in the lawsuit whether his office played any role in having Barclays become the co-underwriter on the deal, Caprio replied: “I don’t recall.”

An underwriter is a bank that handles a financial transaction. In his deposition, Zaccagnino suggested 38 Studios might have preferred that its longtime bank, Wells Fargo Securities, was the sole underwriter, but eventually a second bank, Barclays, was added as co-underwriter. Both banks got six-figure fees for handling the deal. They are now defendants in the lawsuit.

An email introduced as evidence in the lawsuit suggests Caprio did get involved in Barclays coming on board, however. It was sent on Aug. 13, 2010, by Paul Haley, a managing director of Barclays Capital, to Caprio and Michael Solomon, who was an aide to Caprio in the treasurer’s office.

“Mike: It was nice to speak with you and the Treasurer today,” Haley wrote. He attached draft details on the 38 Studios transaction that had been provided to him and others by Peter Cannava, a banker at Wells Fargo, the other bank that worked on the deal.

Caprio said during his deposition that he knew Haley from working on municipal bond transactions but did not recall if he spoke to him on Aug. 13.

Back in 2010 Caprio initially said he would be “a cheerleader” for the 38 Studios deal when the EDC board approved it, but did an about-face later in the summer and became a vocal public opponent of the transaction. He lost the 2010 campaign to Lincoln Chafee, another 38 Studios critic.

Eyewitness News has a team of reporters digging through documents to cover 38 Studios: Inside the Scandal. Keep checking the 38 Studios live blog on and catch all the latest reports on Eyewitness News on WPRI 12 and Fox Providence.

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