Costantino Says He Could Not Stand Up to Carcieri, Fox and EDC
Kate Nagle, GoLocalProv News Editor
Costantino Says He Could Not Stand Up to Carcieri, Fox and EDC
The fiery words between House Oversight Chair Karen MacBeth and Costantino fired at one another even before the hearing began. Representative MacBeth said before the meeting that she believed that Costantino had betrayed the trust of Rhode Islanders, and wanted answers.
“I hope he will give answers to people of the state. We’ve been doing our oversight hearings trying to get answers who knew what when — he had his deposition that fills in some of that, but it will be our first opportunity for him to go on record for us and the people what he knows and the timeline and who else,” said Chairwoman Karen MacBeth told GoLocal prior to the Committee hearing.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“When I asked the question on the House floor if there was any entity [a specific company was going to receive funding] being considered and we were told no, I think that was a betrayal of trust,” said MacBeth. “We put trust in our Chairman [Costantino].”
Costantino in his opening remarks took aim at MacBeth, saying comments she had made to the press after the issuing of the subpoena in December were “not reflective of evenhanded fairness” and showed “predetermined opinion.”
During the course of the nearly four hours of questioning, which was first led by Committee lawyer William Dimitri before it was opened up to committee members, Costantino repeatedly blamed the Economic Development Corporation for not following through on the oversight protections — and due diligence - as put forth in the legislation. Costantino said the pressure of the “economic atmosphere” in Rhode Island in 2010 to get a big win for the state was overwhelming, saying the deal was being pushed through by Governor Donald Carcieri, Speaker Gordon Fox, and the EDC. He said repeatedly there was nothing he could do.
“I believe if [the EDC] complied with the bill that we passed, much of this we wouldn’t be discussing today,” said Costantino. “If you looked at the hearing, you’ll see where we put protections in there. Page two of the bill. The assessment of the guaranteed risk — we asked them to validate the risk. In my opinion, it was ignored.”
Costantino's comments were unusual as the former Chairman was former Speaker Gordon Fox's closest State House ally.
Looking for Answers
During his testimony, Costantino showed much of the lack of remembrance of meetings, dates, and events that had been a common theme in his deposition with the state in its lawsuit. According to a review of Costantino's deposition conducted in July of 2014, Costantino was unable to recall facts, figures, dates, or names more than 200 times.
Costantino admitted he didn’t know that 38 Studios was a “pre-revenue” company at the time of the deal, again using the defense that it was up to the EDC to do is due diligence as prescribed by the legislation.
“The atmosphere was we have do something now. We had something like a 13% unemployment. My previous history was being critical for saying no to EDC year after year. They said we needed a menu of items. It’s easy now to forget what the atmosphere was like that year,” said Costantino. “I remember the pressures the state budget was under. We modified the income tax. We did all these things to change the economic climate of the state.”
Costantino said he feels he was “mislead” during the whole process.
Vice Chair of the Oversight Committee, Michael Chippendale asked Costantino if he had been interviewed by law enforcement relating to the criminal investigation. Costantino disclosed he has been interviewed by both the Rhode Island State Police and the Attorney General.
What Costantino Remembered and Forgot in His Deposition
What Costantino Did and Did Not Remember About the First Meeting
Page 32
Q. Now, going back now to 2009/2010 and 38 Studios, when did you first learn of 38 Studios' interest in coming to Rhode Island?
A. Approximately the end of March, beginning of April of '10.
Q. Okay. And how did you come to learn of this interest?
A. Actually, got a call from the Speaker. Yes, the Speaker, to visit 38 Studios.
Q. Okay. And did you visit 38 Studios?
A. I did.
Q. Do you know -- do you recall when that was?
A. Like I said, it was around the end of March, beginning of April. It's in that time frame.
Q. Okay. Fair enough. And who attended this meeting?
A. I know, obviously, the Speaker was there.
Q. Okay.
A. Curt Schilling was there.
Q. Was Tom Zaccagnino there?
A. I don't remember.
Q. Okay. Was Michael Corso there?
A. I don't remember.
What Costantino Did and Did Not Remember About the Creation of the Loan Guarantee
Page 37
Q. Okay. Who developed the legislation that was known as the Rhode Island Jobs Creation Guaranty Program?
A. EDC developed the legislation, but the staff
would review it.
Q. And can you -- did you have any meetings with
Keith Stokes relating to that legislation?
A. I do not remember.
Q. Okay. Do you ever recall telling Mr. Stokes that in order to accommodate the request of 38 Studios, a proposed $50 million program could be increased to 125 million?
A. No, I do not remember saying that.
Q. Do you know whose idea it was to increase the proposed $50 million Jobs Creation Guaranty Program to 125 million?
MR. DeSISTO: Objection. You can answer.
A. The reason it was $125 million was because that was the demand in the community.
Q. Could you explain what the demand in the community refers to?
A. So, I do remember -- and, again, I'm not sure with whom, but basically asking the question, well, "What's the demand out there in the business community that wants the program, that could use the program, the Loan Guarantee Program?" So what number would EDC need to fulfill its obligation to the entire need in the community? And that's what I remember as the figure being $125 million.
Q. Were you aware, at the time, that 38 Studios was looking for 75 million?
MR. DeSISTO: At the time of what?
Q. At the time that the program was proposed for 125
million?
A. I knew they were interested.
What Costantino Did and Did Not Remember About Michael Corso
Page 40
Do you know who Michael Corso is?
A. Yes.
Q. And who is Michael Corso?
A. Michael Corso is someone who over the years has been involved in certain issues at the State House, predominantly historical tax credits, where I had much of my interaction with him in the past. So, he, you know -- I know he's involved in the brokering of tax credits and those issues.
Q. Did you know -- how long have you known Mr. Corso?
A. I don't remember when I first started knowing him. Probably -- I just don't remember. I just know it started with the historical tax credit program.
Q. So the first time you met Mr. Corso, you were the House Finance Chair; is that fair to say?
A. It may have been before I was House Finance Chair. I can't answer it only because it's really tied to the date of when the Historical Tax Credit Program started, and I don't remember that date.
Q. Okay. Other than the Historical Tax Credit Program, did you have any interactions with Mr. Corso?
A. Any interactions? You mean like if I met him in the corridor and said "hi" to him?
Q. No, I'm sorry, it's a bad question. Did you have a personal friendship, or do you have a personal friendship with Mr. Corso?
A. No.
Q. Has Mr. Corso ever held any fund-raisers for you?
A. No.
Q. Has he ever donated to any of your campaigns that you're aware of?
A. I don't remember.
Q. Have you ever met with Mr. Corso outside of the State House?
A. There were two occasions that I remember. But, again -- I once -- we were in a restaurant, and I think I had a drink with him at one time. They were in my family restaurant at one point, as well, that I sat down and had a drink with him with a group of people. And, again, I would see him at in the corridor, the State House, or at Venda Ravioli and stuff like that.
Q. All right. Did you select Mr. Corso to be on a working group, or subcommittee, to study tax credits?
A. No.
Q. Did you ever discuss tax credits as a means for the financing of 38 Studios with Mr. Corso?
A. No.
Q. Did you discuss tax credits as a means for financing 38 Studios with anyone else?
A. No.
Q. Do you recall that ever being explored as a means for financing?
A. No.
Q. Now, did you have any conversations with Mr. Corso regarding 38 Studios?
A. I do not remember.
Q. Do you know if Mr. Corso had any conversations with Speaker Fox regarding 38 Studios?
A. I have no idea.
Q. Do you recall Mr. Corso having any meetings with Speaker Fox about anything?
A. I don't know.
Q. Did Speaker Fox ever tell you he met with Mr.Corso?
A. On this issue?
Q. On 38 Studios.
A. No.
What Costantino Did and Did Not Remember About Who Asked to Put in the Bill
Page 45
Okay. And who at EDC did you ask?
A. I don't remember --
Q. Okay.
A. -- who I asked, but I remember asking the question.
Q. Was this on a telephone conference or a meeting?
A. I don't remember.
Q. Now, I think you had said earlier you don't recall having any meetings with Keith Stokes regarding 38 Studios; is that correct?
A. Correct.
Q. Okay. Do you recall having any meetings with Keith Stokes regarding the Jobs Creation Guaranty Program?
A. I don't remember.
Q. Okay. Did you have any meetings with anyone from EDC regarding 38 Studios?
A. I don't remember.
Q. Did you have any meetings with anyone from EDC regarding the Rhode Island Jobs Creation Guaranty Program?
A. I don't remember. I don't remember.
Q. Did you have any meetings with Robert Stolzman regarding 38 Studios or the Jobs Creation Guaranty Program?
A. I do not remember.
Q. Okay. Did you have any meetings with Speaker Fox regarding --
A. I do not remember.
Q. Did you have any meetings with Governor Carcieri or anyone on his staff regarding either the Jobs Creation Guaranty Program or 38 Studios?
A. I don't remember.
Q. Did you have any meetings with anyone from the Senate regarding those issues?
A. 38 Studios, I don't remember. On the Loan Guarantee Program part of the process, if we can get back to the process.
Q. The process?
A. Obviously, the budget is an agreement between the House and Senate. So, we go through the articles together at meetings, so there was probably an agreement on the Loan Guarantee Program, and that's why it got into the budget.
What Costantino Did and Did Not Remember About If you and Fox Kept it Secret form the Other House Members
Page 51
Q. Did you have any discussions with Speaker Fox to the effect that -- strike that. Did you have any conversations with Speaker Fox about keeping the interest of 38 Studios secret during this process?
A. I do not recall.
Q. Did you have any conversations with anyone else about keeping the interest of 38 Studios secret during the process of the adoption of the Rhode Island Jobs Creation Guaranty Program?
A. I do not recall.
Q. Did either you or the House Finance Office ever receive any financial information relating to 38 Studios?
A. I do not recall.
Q. Do you know if -- do you recall ever reviewing any financial information relating to 38 Studios?
A. No.
Q. Do you know if the staff at House Finance reviewed any financial information relating to 38 Studios?
A. No. Sorry, I do not know.
What Costantino Did and Did Not Remember About a Key Memo
Page 56
Q. I've got what's been marked as Plaintiff's Exhibit 38, I'd like to provide to you. Now, this is an e-mail from Rob Stolzman dated Wednesday, March 31, 2010, to Keith Stokes, Michael Saul and Fred Hashway. I would direct your attention to the third paragraph. It says, "Michael Corso, for 38 Studios has already begun asking see the Kushner, and Sharon Reynolds from House Finance also called on behalf of Chairman Costantino, and we exchanged calls, so I imagine we will be under pressure to start circulating drafts tomorrow." Do you see that?
A. I see it.
Q. Have I read that accurately?
A. You have.
Q. Do you know why Sharon Reynolds would have been calling Rob Stolzman?
MR. DeSISTO: Objection, but, go ahead.
A. I do not.
Q. It indicates she was calling on your behalf?
A. Right.
Q. You don't recall?
A. No, I do not. Do I go through this memo?
What Costantino Did and Did Not Remember About Key meetings with Corso
Page 72
Q. Okay. And this reads in the first paragraph, "Hello, all. I just got a call from Michael Corso. He told me that his post meeting meetings went well last night and that Gordon and Steve C want to put the 'moral ob program' in the FY10 supplemental budget, which currently might be heard as early as next week. This coincides with Sharon Reynolds calling me from the House Fiscal while I was at your office and leaving a message that Steve C said I'll have something for her (while she didn't say what or for the supplemental). I've returned her call. Good news." Do you recall having --
MR. SHEEHAN: I have to take this. Excuse me, it will take one second.
(SHORT RECESS WAS TAKEN)
MR. MARTLAND: Back on the record.
Q. Do you recall having a meeting on March -- the evening of March 30, 2010 with Gordon and Michael Corso?
A. I do not recall.
Q. Would you dispute that there was a meeting that occurred?
A. I'm not able to dispute or confirm it.
Q. Did the "moral ob program" get put into the FY2010 supplemental budget?
A. I do not remember.
More than 200 times Costantino said he could not remember or recall key facts when asked during his deposition.
