Michael Riley: The RI Treasurer Democratic Primary Race Gets Uglier

Tuesday, August 19, 2014

Michael G. Riley, GoLocalProv MINDSETTER™

The State Treasurer Campaign in Rhode Island has heated up as Seth Magaziner, the darling of the progressives and Clinton Family friend, has unleashed a series of ads meant to tarnish Former Treasurer Frank Caprio’s reputation. Magaziner clearly seeks to attack Frank Caprio’s “insider status” specifically capitalizing on Frank’s brother, David Caprio, having to resign his post as Rhode Island Democratic Chair in the last few weeks. David was involved in a potentially illegal bid rigging for State Beach concession contracts with Democratic State Rep Palumbo. The Caprio’s are well known in the State of Rhode Island and Democratic political circles. Seth Magaziner is unknown in Rhode Island but well known nationally as the son of Ira Magaziner, a Clinton family confidant.

Bill Clinton has made appearances and plans a rally for Magaziner in late August. The reason so much ammo and increased advertising is happening in August as opposed to October is that the Democratic Primary is considered the real election. No Republican even ran for the Treasurer’s office, a clear indication of the weakness of Republicans in Rhode Island and the national party virtually ignoring the State. The third place contender in the Democratic Party was Ernest Almonte and he may be the most qualified of the three, but was losing badly in the primary race and chose at the very last minute to run as Independent. Ernie will be on the ballot in November but either Caprio or Magaziner will not, hence the big primary battle.

Magaziner has most recently charged in TV advertisements that Caprio is an insider and part of old line politics. He has also made reference to a Wall Street Journal article in 2010 concerning campaign contributions coming from prominent lawyers to Caprio supposedly seeking RI contracts. Chafee made these same charges when they were both running for Governor in 2010. The Caprio campaign returned roughly $60,000 in donations at the time. Magaziner has made no such current charge. In fact Magaziner’s most recent ad looks eerily like Chafee’s ads of 2010.

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On the other side, the Caprio campaign's latest ads targeting Magaziner are exactly on point emphasizing Magaziners inexperience and the disturbing fact that he has chosen to lie about his job and track record. In my mind, that disqualifies Seth as a candidate. Who wants a treasurer that makes up his track record or resume? Misrepresenting or making up an investment track record is a clear violation of his own firm Trillium Asset Management’s Ethics Code. Seth has had plenty of time to walk back this poor judgment but he seems “Clinton-like” in his refusal to accept responsibility for his lies.

I have well outlined his proven lies and have sent numerous letters to his campaign & Trillium Asset Management. Trillium's compliance director and several partners have “CFA” designations that require them to address the claims made by Seth Magaziner in a proactive manner. Refusal to address the misstatements and lies of fellow employees may in fact place all of their hard earned charters in jeopardy. Someone at Trillium has decided Seth Magaziner is more important than the truth and has chosen to place all other Trillium employees with CFA charters in harm’s way. Shame on that person and shame on Seth for threatening their careers for selfish false claims.

An Ideal Treasurer

The Treasurer in Rhode Island will need to be thoroughly knowledgeable about pension reform, accounting, and GASB 68. These next few years both the state and major cities and towns will be under extreme pressure. The Treasurer should be experienced in investments and working toward transparency and lower fees without increasing risk to beneficiaries. The treasurer should also be a leading advocate for Financial Literacy in Rhode Island. Gina Raimondo has done that and I would hope the next Treasurer can double down on any efforts underway.

Update on Taveras & Wainwright Investment Counsel

Late last week I finally received some responses from Finance Director Mancini’s office in Providence regarding the status of their Investment Adviser.

Here were my most recent questions:

How long has the Investment Board of commissioners existed in Providence? Who is the current investment advisor to the commission? How long have they been advisor? What moneys have they been paid from Providence 2010 -2014? When was the last RFP for advisor conducted?

Answers

1) At least since 1993 there has been a board of commissioners. The current head is Angel Taveras.

2) Wainwright Investment Counsel LLC is the current investment advisor. HC Wainwright was first hired under Buddy Cianci and Finance Director Boyce Spinelli who made the intro in November 1995. HC Wainwright received $125,000 annually.

3) Wainwright Investment Counsel has been Investment adviser from 1995 until today.

4) Wainwright investment Counsel LLC is currently paid $165,000 annually. Providence provides no description for what they do and there is no indication of whether they receive placement fees or finder’s fees or any compensation from funds.

5) The last RFP appears to be in 1995.

These answers should frighten everyone. Providence has made no attempt to test the market for services or describe the relationship of their Investment Adviser. That is the function of the Advisory Board. The current head of that board is Angel Taveras. Similar to his efforts on the Rhode Island Pension Commission where he has not attended for two years, Mr. Taveras shows little interest in financial affairs. The next mayor should have an RFP on the adviser and clearly explain the costs and their role to the public. The lack of transparency here is alarming.

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Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity, and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC news, Yahoo TV, and CNBC.

Related Slideshow: RI Treasurer Candidates: Tale of the Tape

Below are GoLocalProv MINDSETTER™ Michael Riley's notes comparing and contrasting Ernie Almonte, Frank Caprio, and Seh Magaziner, candidates for State Treasurer.