Riley: A Corrupt Providence Approaches Default

Tuesday, June 23, 2015

 

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Providence will default on an illegal loan in just 8 days. Why does the fact that Providence is cheating and stealing from the Pension fund matter? I could say “well, first it’s obviously against the law," but is it?  Now before Rhode Island readers go “all 38 studios” on me, be assured that Providence behavior is against the law. We just have to figure out what laws. Can we just start by saying stealing pension beneficiary’s money has no excuse? Can we say this behavior is unwelcome even in Rhode Island’s corrupt sense of ethics? Isn’t it obvious that a town council or Mayor can’t just take money from the pension plan and spend it on other things, or use it like a rainy day fund?  That is exactly what Providence has done for at least a decade.

Checks and balances? Or just checks

Where are the checks and balances and Government oversight? Why has no accountant, either internal or externally hired, caught this rip-off of pension beneficiaries and taxpayers? Where are the auditors? The answer is the decay of Rhode Island leadership has led to total lack of accountability. The entire state has succumbed to “know a guy” politics and government ethics. The State of Rhode Island has lost its moral compass. It is corrupt to the core and seemingly constantly “moving on” or “moving forward” and away from a dizzying array of total public corruption and cover-ups. Our state should be totally embarrassed with not only the lying and obfuscation that led us to the 38 studios loan but even more horrified by the total cover-up and organized white washing of the general assembly’s involvement. There is not only no investigation or accountability for 38 studios  taking place, there is a stultifying air of “don’t you dare talk about it!” emanating from Gordon Fox’s right hand man and new William Murphy appointee Nicholas Mattiello. No amount of talking commerce and pro-growth to conservatives like me can erase the stench of 38 studios. I don’t want to “move on” from the corruption of 38 studios I want to learn from that debacle and punish those responsible. Yes, that’s right I want to make people accountable.

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Accountable in Providence

The smutty ugly greasy pall that hangs over this state is palpable to any business unfortunate enough to meet with Government Insiders. They must come to Rhode Island knowing if they talk to the right people and grease a few palms they are “in”. But then they’ll have to be part of the team. Some businesses or people just can get past that ethical void, like me, but some just call it the way of the world. Well, I don’t accept that should be the way Rhode Island does business and it frustrates me and people like me who want to compete on a level playing field with little or no government involvement. Rhode Island Government officials learn quickly the rules of the game. They learn they can outright lie without harm to their careers. They can use insiders to write reports and push agendas like RhodeMap RI. They can promise a forensic investigation and then act stupefied when they are called out on the lie and then run for president. They can promise full investigations into the Sports Institute of Rhode Island and then wait 5 years for any action and not even discuss the millions spent by our general assembly on the fraudulent institute. They know that 38 studios insiders shredded the carcass of Curt Schilling and his ill-fated video game dream. Yet all those who connived and schemed for his millions, now stand in the shadows silent and uncharged. Perhaps even “protected”.

In Providence there are at least 50 municipal officers, accountants and elected officials who have misled municipal bond holders. This has been going on for a long time with various cover-ups. There may be other as yet to be discovered issues such as accounting fraud or lying to government officials. But one thing is for certain, we will get to the bottom of this. We will correct the lies and give investors, pension beneficiaries and the public a true financial picture of Providence. Only then can Providence honestly take a real shot at recovery. True leaders take charge and confront problems. The Rhode Island mentality of “moving on” because it’s just too horrible to fix has caused us 50 years of bad Government. Can we please at least have some leadership and accountability or should we just settle in for another 50 years of corruption?

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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: Rhode Island’s History of Political Corruption

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Buddy Cianci

Vincent A. "Buddy" Cianci resigned as Providence Mayor in 1984 after pleading nolo contendere to charges of assaulting a Bristol man with a lit cigarette, ashtray, and fireplace log. Cianci believed the man to be involved in an affair with his wife. 

Cianci did not serve time in prison, but received a 5-year suspended sentence. He was replaced by Joseph R. Paolino, Jr. in a special election. 

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Joseph Bevilacqua

Joseph Bevilacqua was RI Speaker of the House from 1969 to 1975, and was appointed as Chief Justice of the State Supreme Court in 1976.  It was alleged that Bevilacqua had connections to organized crime throughout his political career.  

According to a 1989 article that appeared in The New York Times at the time of his death:

The series of events that finally brought Mr. Bevilacqua down began at the end of 1984... stating that reporters and state police officers had observed Mr. Bevilacqua repeatedly visiting the homes of underworld figures.

The state police alleged that Mr. Bevilacqua had also visited a Smithfield motel, owned by men linked to gambling and drugs...

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Thomas Fay

Thomas Fay, the successor to Bevilacqua as Chief Justice of the Supreme Court, resigned in 1993, and was later found guilty on three misdemeanor counts of directing arbitration work to a partner in his real estate firm, Lincoln Center Properties.  

Fay was also alleged to use court employees, offices, and other resources for the purposes of the real estate firm.  Fay, along with court administrator and former Speaker of the House, Matthew "Mattie" Smith were alleged to have used court secretaries to conduct business for Lincoln, for which Fay and Smith were business partners. 

Fay was fined $3,000 and placed on one year probation. He could have been sentenced for up to three years in prison. 

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Brian J. Sarault

Former Pawtucket Mayor Brian J. Sarault was sentenced in 1992 to more than 5 years in prison, after pleading guilty to a charge of racketeering.  

Sarault was arrested by state police and FBI agents at Pawtucket City Hall in 1991, who alleged that the mayor had attempted to extort $3,000 from former RI State Rep. Robert Weygand as a kickback from awarding city contracts.

Weygand, after alerting federal authorities to the extortion attempt, wore a concealed recording device to a meeting where he delivered $1,750 to Sarault.

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Edward DiPrete

Edward DiPrete became the first Rhode Island Governor to be serve time in prison after pleading guilty in 1998 to multiple charges of corruption.

He admitted to accepting bribes and extorting money from contractors, and accepted a plea bargain which included a one-year prison sentence.

DiPrete served as Governor from 1985-1991, losing his 1990 re-election campaign to Bruce Sundlun.

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Plunder Dome

Cianci was forced to resign from the Mayor’s office a second time in 2002 after being convicted on one several charges levied against him in the scandal popularly known as “Operation Plunder Dome.” 

The one guilty charge—racketeering conspiracy--led to a five-year sentence in federal prison. Cianci was acquitted on all other charges, which included bribery, extortion, and mail fraud.

While it was alleged that City Hall had been soliciting bribes since Cianci’s 1991 return to office, much of the case revolved around a video showing a Cianci aide, Frank Corrente, accepting a $1,000 bribe from businessman Antonio Freitas. Freitas had also recorded more than 100 conversations with city officials.

Operation Plunder Dome began in 1998, and became public when the FBI executed a search warrant of City Hall in April 1999. 

Cianci Aide Frank Corrente, Tax Board Chairman Joseph Pannone, Tax Board Vice Chairman David C. Ead, Deputy tax assessor Rosemary Glancy were among the nine individuals convicted in the scandal. 

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N. Providence Councilmen

Three North Providence City Councilmen were convicted in 2011 on charges relating to a scheme to extort bribes in exchange for favorable council votes. In all, the councilmen sought more than $100,000 in bribes.

Councilmen Raimond A. Zambarano, Joseph Burchfield, and Raymond L. Douglas III were sentenced to prison terms of 71 months, 64 months, and 78 months, respectively. 

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Charles Moreau

Central Falls Mayor Charles Moreau resigned in 2012 before pleading guilty to federal corruption charges. 

Moreau admitted that he had give contractor Michael Bouthillette a no-bid contract to board up vacant homes in exchange for having a boiler installed in his home. 

He was freed from prison in February 2014, less than one year into a 24 month prison term, after his original sentence was vacated in exchange for a guilty plea on a bribery charge.  He was credited with tim served, placed on three years probation, and given 300 hours of community service.

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Joe Almeida

State Representative Joseph S. Almeida was arrested and charged on February 10, 2015 for allegedly misappropriating $6,122.03 in campaign contributions for his personal use. Following his arrest, he resigned his position as House Democratic Whip, but remains a member of the Rhode Island General Assembly.

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Gordon Fox

The Rhode Island State Police and FBI raided and sealed off the State House office of Speaker of the House Gordon Fox on March 21--marking the first time an office in the building has ever been raided. 

Fox pled guilty to 3 criminal counts on March 3, 2015 - accepting a bribe, wire fraud, and filing a false tax return. The plea deal reached with the US Attorney's office calls for 3 years in federal prison, but Fox will be officially sentenced on June 11.

 
 

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