RI Senator Receiving $200K in Cash and Stock From Newport “Billionaire” Linked Company

RI Senator Receiving $200K in Cash and Stock From Newport “Billionaire” Linked Company

Sometime in 2022, Nicholas Schorsch, the man who is buying up some of Newport, Rhode Island’s most notable restaurants, breweries, and real estate, asked Rhode Island State Senator Lou DiPalma to serve as a director of a company in which he is the former CEO and a major investor in and now trying to take control of presently. 

Schorsch is a man of great means, a variety of economic interests, and numerous controversies, as GoLocal chronicled in Who Is the “Billionaire” Buying Up Newport — PART 1.

DiPalma accepted Schorsch’s offer.

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The Senator represents District 12, which includes Middletown, Little Compton, Newport, and Tiverton — much of the area in which Schorsch is making acquisitions and doing business.

DiPalma repeatedly refused or was vague in answering questions regarding the cash component of his compensation for serving on the board during a phone conversation and in multiple follow-ups. DiPalma has now served on the board for more than 18 months.

DiPalma joined the board of directors of American Strategic Investment Corp (ASIC) officially on December 14, 2022, according to documents filed with the Securities and Exchange Commission (SEC). Since he was appointed an "independent director," he has received compensation of approximately $200,000 in cash, stock, and fees.

Financial reports for ASIC filed with the SEC show DiPalma was paid $64,250 and received a stock award of $65,000 in calendar 2023 alone. He also received "fees" for attending meetings.

He is presently scheduled to receive the same this year.

DiPalma did not declare any monetary gain on his Ethics Commission Financial Disclosure form for 2022 from ASCI. “It may have been an oversight, I have to check,” said DiPalma in an interview with GoLocal.

He did disclose the board seat and that he received compensation of greater than $1,000 from ASIC in 2023 — the ethics disclosure form does not require the exact amount.

ASIC manages real estate in New York. It was formerly a real estate investment trust — a REIT — but was converted.

 

"No Rhode Island Connection," But CVS Is One of the Company's Largest Tenants

DiPalma says there is no conflict or even an appearance of a conflict relative to his serving on the board.

“ASIC has properties in New York City and nothing related to Rhode Island. The question what does ASIC get from the state of Rhode Island? The answer is nothing,” said DiPalma.

However, according to American Strategic financial documents, CVS is one of the company's top tenants, ranked as the 6th largest corporation overall.

CVS is headquartered in Rhode Island and has received tens of millions of dollars in tax breaks from the state. According to a website that tracks state and federal subsidies to companies — CVS has received $156,312,001 from the State of Rhode Island.

Most of those subsidy awards were during the period in which DiPalma served on the Senate Finance Committee — a committee that he presently chairs.

When asked about the potential appearance of a conflict of interest for him to serve on a board tied to Schorsch when Schorsch is becoming such a significant investor in Newport, DiPalma said, “The facts and data are clear, all the properties are in New York with regards to Rhode Island, there is no interaction with Rhode Island.”

 

Why DiPalma?

DiPalma said Schorsch asked him to serve on the board because of his experience as a state senator and his work at Raytheon.

According to DiPalma, he was selected for the board by Schorsch for two reasons,

“A couple things from the work that I've done, I'll say from a Senate Finance perspective as well as some of the things that come in front of that are things as it relates to financial reporting so you might have heard of a SOX [Sarbanes-Oxley Act] that's term, but it's really so for the work I've done in my day job as it relates to Oxley," said DiPalma. 

The Sarbanes-Oxley Act of 2002 is a US federal law that established financial regulations and auditing requirements for public companies. 

A Democrat, DiPalma has served the Senate Finance Committee for 16 years. 

DiPalma spoke glowingly of Schorsch. “He thinks strategically, acts tactically, and everything he does is top shelf,” said DiPalma.

The two meet via a mutual friend, and DiPalma has been a guest of Schorsch at one of Audrain Auto Museum’s events. Schorsch created the museum about a decade ago. The event has become a significant auto event in Newport each October.

As GoLocal outlined last week, Schorsch’s companies in Pennsylvania were repeatedly cited for environmental and health violations.  Schorsch was also cited by the SEC — those violations ended with Schorsch, his companies, and his top executives paying the government $60 million.

 

Schorsch Was CEO, He Is a Major Shareholder, and Now Trying to Takeover the Firm

According to SEC documents, Schorsch, c/o his Bellevue Capital Partners, is a major shareholder in ASIC.

 

 

Bellevue Capital Partners is located at 222 Bellevue Avenue — the same address as the not-for-profit Audrain Auto Museum.

"Bellevue Capital Partners, announced last that it has increased the purchase price of its previously announced tender offer to purchase up to 125,000 shares of American Strategic Investment Co. common stock from the previous purchase price of $9.25 to an increased purchase price of $10.25 per share (the "Tender Offer"). The Tender Offer will close on July 5, 2024," according to Yahoo Finance.

The company’s CEO is Michael Anderson — the same man who contacted GoLocal, representing that he is Schorsch’s general counsel.

About two years ago, the Company was run by Schorsch, who is a leading investor in the company and is trying to buy it.

There are four members to the companies’ Board of Directors, including Michael Weil, who is a long-time business associate to a variety of Schorsch REITs businesses, as well as a board member of the Audrain Automobile Museum Inc. on Bellevue Avenue.

And DiPalma.

The previous board, while Schorsch was the CEO and Chairman of the Board of Directors, included William Kahane, who is also on the board of Audrain and was Schorsch's business partner when his REITs business came under a flurry of lawsuits and a federal investigation by the SEC.

And, his critics say that Schorsch uses this elaborate scheme of companies to move assets and benefit from management fees.

“Mr. Schorsch’s empire was so interconnected that his companies were sometimes able to collect fees from both the buyer and seller in the same transaction, according to the TIAA-CREF complaint,” reported Investment News in a story in 2016.