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INVESTIGATION: Fox, Corso and 38 Studios

Friday, May 09, 2014

 

Fox and Corso, Corso and Fox - two of Rhode Island's most influential power players of the past 15 years have been, and are now, inextricably linked.

The relationship between Gordon Fox and Michael Corso goes back to the early days of both their professional and political careers in the late 1990's after each graduated from New England law schools and joined two powerful Rhode Island entities.

Corso joined developer Buff Chace's Cornish Associates. Chace is a member of one of Rhode Island's richest families (his cousin Kim Chace, was a leading Rhode Island investor and philanthropist and made Forbes 400 Richest List Annually before his death in 2011) and Buff Chace is best known as the developer who transformed Westminster street from vacant and under utilized desolate retail to Providence's version of Newbury Street.

As Cornish reports, "Cornish developed the Westminster Lofts, a collection of award winning, magnificently restored historic buildings comprised of just under 200 residential apartments, 40,000 square feet of retail space, and 27,000 square feet of office space. The Westminster Lofts include the Peerless Building, the Smith Building, the Burgess-O’Gorman Building, the Wilkinson Building, and the Alice Building. Cornish Associates is also responsible for the redevelopment of the Harkness Building, the Empire Building and the Biltmore Garage."

Westminster St, transformed with Tax Credits

Fox was elected to the House of Representative in 1992 and was appointed a member of the all-powerful House Finance Committee as a freshman in trade for his support for new Speaker - John Harwood. Both Corso and Fox went to RI public universities - Fox graduated from Rhode Island College and Corso from URI. And each to mid-level law schools. The similar paths would lead to more than a decade of friendship and a cross-pollinizing relationship.

Tax Credits

What brought their careers, fate and a central theme in the investigations now proceeding is tax credits. Most interesting is individually both Fox and Corso claim to be the author of Rhode Island's Historic Tax Credit Legislation. It was these tax credits that Buff Chace and other developers used to restore old buildings into restored apartments, that the Providence Journal fought to obtain for their downtown headquarters, and it was tax credits that were the ultimate down fall of 38 Studios.

The Historic Tax Credit Legislation was passed in 2002 and proved to be a spark to developments across the state. Corso and Fox were adjoined at the hip with the vision, the structure and a growing power structure.

Corso claims in his bio that just one of his companies - Tax Incentive Capital -- has placed over $150 million in state tax credits.

Literally, billions were invested in real estate projects that became viable and profitable for developers as a result of the hundreds of millions of taxpayer funded Historic Tax Credit Program.

Film Tax Credits

While Corso made millions on historic tax credits and was paid hundreds of thousands by 38 Studios for activities related to securing the $75 million in loan guarantees, Corso had tapped the Rhode Island State coffers for millions more in movie tax credits. As GoLocal reported in 2012;

"The Providence lawyer who pledged more than $14 million in Rhode Island motion picture tax credits that had not actually been issued as collateral in order to obtain an $8.5 million loan for Curt Schilling’s 38 Studios is now playing a behind-the-scenes role in a Michael Corrente movie that is slated to receive $625,000 in state tax credits," GoLocalProv has learned.

Michael Corso, a top tax credit broker whose loan agreement with BankRI is among several 38 Studios-related matters currently being investigated by state and federal authorities, is one of seven producers for “Backmask,” a horror film currently being shot in Exeter, according to IMDB. Corso’s business partner, Anthony Gudas, is listed as the executive producer.

The Relationship - Fundraising

Corso hosted fundraisers. One infamous fundraising event was held at one of Chace's restored apartment buildings - funded through tax credits - and was co-hosted Corso and fellow 38 Studios insider Steve Nappa. As GoLocal reported earlier this week, it was Nappa who handled the 38 Studios taxpayer funded buildout funded $25,000 of AV work at Corso's Tazza restaurant. The work was billed to 38 Studios.

The two hosted a private fundraiser at the Peerless Lofts for then-Majority Leader Fox in 2007. Nappa also helped build the movie screen located in the open space next to Tazza Caffe, the downtown café owned by Corso.

A GoLocalProv investigation in 2012 found that Fox failed to properly disclose the costs of the 2007 event and Fox's campaign was forced to amend reports after the reports disclosed the failure to report.

The Relationship - 38 Studios

There were two key elements to bringing 38 Studios to Rhode Island. First, the now infamous meeting held at Corso's office put the wheels in motion to bring former Red Sox Star Pitcher's gaming company from Massachusetts to Rhode Island.

In March of 2010, Tom Zaccagnino and Schilling met with then-Speaker Fox and former EDC director Keith Stokes in Corso’s downtown law office. Despite the meeting taking place after the legislative deadline, just a few weeks later the loan guarantee legislation was submitted by Fox's leadership team and in May the bill was pushed through the legislature. 38 Studios would receive $75 million in loan guarantees.

In the midst of Fox's difficult 2012 re-election bid, Fox denied that he was close to Corso and said the two no longer speak.

Fox's husband's salon was rented from Corso

The Relationship - Landlord

Fox and his husband Marcus LaFond rented space from Corso for the hair salon the Lafond operated until earlier this year. Records filed with the Secretary of State's Office of Business Regulation and Fox's Rhode Island Ethics Commission's Yearly Financial Statements.

Today - Fox and Corso

Today, Fox's world of influence is in massive decline. Fox's husband closed his salon on Chestnut Street.  Fox was fined by the Ethics Commission in January, and in March, FBI and IRS agents made an unprecedented raid on Fox's State House Office and home.  Fox resigned his Speakership and recently put his East Side home up for sale.

Corso, who lead a intricate series of companies relating to tax credits and financing, has been removed from each of the company's Websites. Corso's Sakonnet Capital Partners, Reel Capital LLC, and Tax Incentive Partners have all removed his name from the sites. Their offices are all located in the same building as Fox's husband's former salon location - 155 Chestnut Street.

In December of 2013 - Corso's Tazza Caffe closed.

 

Related Slideshow: INVESTIGATION: Fox, Corso and 38 Studios

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The Early Years

Early 2000s

Fox was emerging as a powerful leader in the House via his role on the Finance Committee and later as Finance Committee Chair. Corso served on the management team at developer's Buff Chace's Cornish Associates.

The two worked together to write and pass the Historic Tax Credit Legislation.

Bio attached from the early 2000's - Cornish Assoicates Website.

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Insiders

Insiders Had Hands All Over Schilling’s 38 Studios Deal

The owner of the construction company that was awarded a contract to work on the interior of 38 Studios’ downtown headquarters has close ties to House leadership and other prominent local politicians, GoLocalProv has learned.

Steven Nappa, who owns Nappa Construction Management, has contributed over $16,000 over the last decade to top politicians including House Speaker Gordon Fox, Congressman and former Providence Mayor David Cicilline, Providence Mayor Angel Taveras, former House Speaker William Murphy and former House Finance chairman Steven Costantino. In June 2011, Nappa also contributed $1,000 to the Fund for Democratic Priorities, a political action committee maintained by House leadership.

Nappa is also connected with Michael Corso, a Providence lawyer who has made a fortune helping to sell state tax credits and was involved in the earliest meetings between Schilling and Rhode Island officials. The two hosted a private fundraiser at the Peerless Lofts for then-Majority Leader Fox in 2007. Nappa also helped build the movie screen located in the open space next to Tazza, the downtown café owned by Corso.

Corso himself has contributed $11,625 to Fox, Cicilline, Taveras, Murphy and other local politicians in recent years.

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Movie Tax Credits

Corso and Movie Tax Credits

The Providence lawyer who pledged more than $14 million in Rhode Island motion picture tax credits that had not actually been issued as collateral in order to obtain an $8.5 million loan for Curt Schilling’s 38 Studios is now playing a behind-the-scenes role in a Michael Corrente movie that is slated to receive $625,000 in state tax credits, GoLocalProv has learned.

Michael Corso, a top tax credit broker whose loan agreement with BankRI is among several 38 Studios-related matters currently being investigated by state and federal authorities, is one of seven producers for “Backmask,” a horror film currently being shot in Exeter, according to IMDB. Corso’s business partner, Anthony Gudas, is listed as the executive producer and former State Rep. John Loughlin has a small role in the film.

 

On Monday, the Rhode Island Film and TV Office confirmed the film has received an “Initial Certification Letter” for the tax credits. Corso did not respond to a request for comment.

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Tazza Fundraiser

Questions Surround Speaker Fox’s Relationship with 38 Studios Insider

Several weeks after initial inquiries from GoLocalProv, House Speaker Gordon Fox still isn’t answering questions about a 2007 fundraiser held for him by the lawyer who would play a pivotal role in bringing Curt Schilling’s 38 Studios to Rhode Island three years later.

In March 2007, Michael Corso, Steven Nappa and Robert Britto of Nappa Building Corp. and former State Representative Ray Rickman were listed as the hosts of a private fundraiser held in the Peerless Lofts for the then-Majority Leader. The event, which helped Fox rake in approximately $10,000, was catered by Tazza, the downtown café owned by Corso.

But while Fox’s campaign finance reports from the time include details about several other fundraising events held during the first quarter of 2007, there is no information listed about expenses incurred for the Corso-hosted event, which may constitute a campaign finance violation.

“Speaker Fox has been extremely busy entering the final two weeks of the session, but he will soon be checking the campaign records from five years ago,” Fox spokesman Larry Berman told GoLocalProv on June 4. “If corrections are necessary to the report, he will make them.”

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Fox and Corso

38 Studios Insiders Have Been Connected Since May 2009

The lawyer at the center of the deal that brought Curt Schilling’s 38 Studios to Rhode Island had a business relationship with a top executive at the video game company a year before a piece of legislation that expanded the EDC’s Job Creation Guaranty Program was pushed rapidly through the General Assembly.

On May 29, 2009, Michael Corso, a top tax credit broker whose relationship with House Speaker Gordon Fox helped steer 38 Studios to the Ocean State, struck a deal to purchase credits handed out for the multi-million dollar Stone House hotel project in Little Compton from the Round Pond Management Corporation, whose President was Tom Zaccagnino.

 

By June of that year, Zaccagnino, who was also the co-managing director at the Wellesley Advisors Corporation in Maynard, MA, had become Vice Chairman and Lead Director of 38 Studios. A month later, Haymarket Capital, an LLC with the same address as the Wellesley Advisors Corporation, was involved with the seven-figure bridge loan a group of Rhode Island investors provided to 38 Studios.

In March of 2010, Zaccagnino and Schilling met with Speaker Fox and former EDC director Keith Stokes in Corso’s downtown law office. By May, the General Assembly had expanded the EDC’s loan guarantee fund from $50 million to $125 million, the exact amount the EDC awarded to 38 Studios later that summer.

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Crony's Bar

38 Studios Contractor Ordered to Install Equipment in Fox’s Crony’s Bar

 
A former subcontractor for 38 Studios is alleging that his firm was ordered to work on former Speaker of the House Gordon Fox's business colleague Michael Corso's bar as part of their contract - and has produced what he says is documentation to prove it.
 
Project manager Michael Rossi with SyNet, Inc. has revealed a budget for work which he says shows at $25,000 line item for work to be done at Corso's Tazza Cafe in 2011 -- under a job order for the failed 38 Studios.
Warwick-based SyNet bills itself as "the premier design-build low voltage contractor of structured cabling, access control, surveillance and audio visual systems in the Northeast."
 
Representative Mike Chippendale, Senior Deputy Minority Leader and Secretary of House Oversight who is leading the investigation into 38 Studios along with Rep. Karen MacBeth, told GoLocal, "[Rossi] has hit a number of things on the head, things he wouldn't have been able to have known otherwise. He was able to validate some things, and the State Police has said they have determined the [budget] document has credibility."
"We're moving in the right direction," said Chipendale, who along with Macbeth have both been the target of mail threats in the past month. "We've kicked the hornets' nest."
 
Rossi said when he was working at SyNet, he was aware the 38 Studios work could be a possibility. "When my boss called me to say we got the project, that I was going to oversee the [network infrastructure] work, I thought, "Wow...38 Studios. This is big."
 
"As soon as I started working, they told me to order cable right away," continued Rossi. "I didn't have a permit. Arguments went back and forth. I walk out, I say I don't have a budget, I'm not doing it. I get berated by my boss to get back on the job. Next day, I get the budget, I'm back on the site -- and there are walls up already, with no permits pulled."
 
A portion of the SyNet 38 Studios budget document with a line item for work on Corso's Tazza bar and restaurant.
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Galasso

Rhode Island Cartoonist Takes Aim on Fox and Corso

In the midst of Gordon Fox's 2012 re-election effort, he distanced himself from his longtime friend, Mike Corso.

Rhode Island's iconic catoonist took aim at Fox's claim and artfully tied Corso and Fox together.

 
 

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