Following the recent announcement that the State Of Rhode Island reached a $25.6 million deal over 38 Studios, and her opponent calling her out for her stance on the issue, Representative Lauren Carson (D-District 75, Newport) reached out to us and invited us to sit down on Friday, August 26th so she could share her thoughts and what she was doing about the controversial fiasco that is 38 Studios.

Rep. Lauren H. Carson (D-Dist. 75, Newport)

Representative Lauren Carson and over 1,000 pages of documents from the 38 Studios case met us at Empire Tea & Coffee on Broadway, here’s what we chatted about in regards to 38 Studios.

(While we had her, we decided to ask her a few questions about tourism, City of Newport Administration, small business and the upcoming election, some of that is included here but Part 2 of our discussion includes more) Part 2 – Chat with Representative Lauren Carson (Part 2): 38 Studios, Small Business, Retail & More…

LC: I went yesterday, this is the last document and really the most useful and I went to prepare all of these and couldn’t find this one. That’s why I went to the statehouse yesterday and went and met with the staff person from the oversight committee.

This is basically, I don’t even how to describe to you. But this one tells you everything the oversight committee has done. We’ve have had 19 hearings, starting a year before I got there, 2 years before I got there. Then this is all the different hearings that we’ve had. And these are all the presentations by whoever presented to us on a whole host of things. 12/15 is a discussion on the subpoenas for Constanino and Corso. This just keeps going on and on.

We have 9,000 documents in the Oversight Committee, so we’ve really done our work here.

RB: Is all of this paperwork and documents public?

LC: Yes, you can go look at all the videos of all of our hearings. They are all online, so that’s public.

Then we have the legal action, the different court cases. This is a very comprehensive review, I don’t know where you can get this. I would give this to you but I have to lend it to someone tonight, another colleague of mine.

When I picked these up yesterday, I thought “well I’ll show him this”.

I’m not sure where you want to start. I’m not sure where you want to start, do you want to talk about the content? Do you want to talk about my position? How would you like to start?

RB: Let’s start with your position

LC: I came to the house after this had already been done, I came to the house after the Oversight Committee had already started working on it. I came really midstream, so to speak. When 38 Studios occured I was not in office, and so I share the sentiment of Rhode Island citizens. I have to come to characterize 38 Studios as a perfect storm. I think that genuinely there were people that thought that this was really going to bring advanced industry jobs to Rhode Island.

I really do think that.

Here it was 2009 and we were in the depths of a recession and we were last on everyone’s todem pole to move businesses here. I do genuinely think that, I think that some people saw a way to make a quick buck. And I think it was the perfect storm, paired together.

It seems as thought from these documents and there’s one in here, I could have written on top…

RB: I’m going to stop you here for a second, if you think that there were some people legitimately did this to make a quick buck. If there still in office, do you think they should be…

LC: I don’t know who, from what I gathered. From the testimony that I heard, it really wasn’t legislators. It was, I mean one of the main persons was Michael Corso, he turned out to be someone who made an obvious amount of money.

I looked up this morning the changes that were made in the lobbying laws, and one of the changes that we made in the lobbying laws this year, we signed it into law into July, was to close some loop holes that allowed him to have such personal interaction with Gordon Fox. He was a friend of Gordon Fox.

I don’t even know where he is, I think he’s in Florida, he’s out of touch and out of sight for a while. We did subpoena him but he didn’t come. Because the subpoenas that we issues as a committee are not by a court and are not for outside of the state.

RB: So they would have to be inside the state and that’s what the issue was with Schilling’s subpoena?

LC: That’s exactly right. Which I unfortunately think he is in Florida.

We also don’t know if we can subpoena the Attorney General either. Which is where the documents are, that’s another loophole.

I can’t remember all the names, I remember going over this and hearing all the testimony and we went page by page in this book, we went page by page in this book.

RB: Well there has been a lot of names that have already been in litigation…

LC: Yeah, who’s left in litigation?

RB: According to a release on August 23rd “Rhode Island Commerce Corporation Reaches $25.6 Million Dollar Settlement Wells Fargo Securities, LLC and Barclays Capital Inc. in 38 Studios Lawsuit”

If the Court approves the settlement, the Corporation will have obtained settlements totaling more than $42 million, nearly half of the roughly $88 million state moral obligation on 38 Studios bonds for both past and future appropriations.

The Corporation is still engaged in litigation against other defendants who are not included in this or prior settlements, including First Southwest Company, Starr Indemnity and Liability Company, Curt Schilling, Thomas Zaccagnino, Richard Wester, and Jennifer MacLean.

That litigation will go forward in order to further reduce the taxpayers’ potential exposure on the remaining moral obligation and of course theyv’e already settled with..

LC: A whole list of people

RB: Yeah, Keith Stokes, Michael Saul, Robert I. Stoltzman and etc.

LC: So that’s actually all in here.

RB: Do you think we’ll ever get all of our money back, when I say “our” I mean the taxpayers. We’re at “half way” but we’ve also already spent a reported $9 million on lawyers

LC: I know that. Well that’s what the public wants. The public wants us to pursue it, you can’t have it both ways Ryan. You can’t have it both ways, if you want to pursue this thing. It costs money to pursue it.

When I’m out in the community, I mean… the first 6 – 9 months. Newporter’s in my opinion and this is not a scientific survey, half of them say they’re upset, aggravated and there frustrated and the other half say put it to bed and move on and pay for it. That’s my general sense.

RB: Do you think the average person to pursue getting this money back and going through this process of getting $20 million here and $20 million there…

LC: I don’t know. My experience is really it’s straight down the middle.

RB: Is there a benefit to go through it, or is it just keeping 38 Studios in the headlines…

LC: That’s a very good question, and I think about it a lot. I think and I think it’s good to continue to pursuing it. I really do. There have been some problems that have come out of it. When I got out of bed this morning I was thinking of all the things that I could tell you and I really wanted to empathize that these are the documents that were release to the Oversight Committee since I’ve been in office. When I went yesterday to get some documents from the office, she said you didn’t even see the other stack. I said “what”…

RB: I need to ask, how much paperwork do you think is left that hasn’t been released

LC: I don’t know what’s left. She said the same thing, she said I don’t know. But what I remember saying is that under former Chairwoman Macbeth’s leadership, which is what all this was about, I thought we were making progress. When I say we were making progress, I felt like there were seven members of the committee/attorneys, I’m not an attorney, but there were several attorneys that were incubating some ideas. We had actually gone so far them to draft legislative reforms, I had a few questions about some of the money when looking through some financial reports/spreadsheets. I was ready to pursue some of the money questions and how it was spent. And then she abruptly left the committee, which was really a disservice. I don’t know if you’re aware of that…

RB: I do remember

LC: It was a disservice to the committee I think, she left the committee, she was frustrated. She had her own issues with the leadership of the house. I don’t know what’s that about.

RB: I remember she swapped from Democratic to Republican and was going to run against Congressman Cicilline.

LC: Then she dropped out and now she’s not running anymore.

Then we have a new Chairwoman, who wasn’t even on Oversight. She came from another committee, she was a senior member of the house and she  got moved to oversight and here it was May, with two months left. I think that’s important to note. When folks like my opponent really challenge us, we really need to take a look at how things happen. So what Chairwoman Serpa did was she organized this meeting where she asked the staff to at least summarize everything we had done going back over the years and establish a base line. And that’s what this document is.

I asked her if she is going to pursue it, she said she is. I called her two weeks ago, and I told her that I was challenged, I told her what was she planning and then I spoke yesterday to Beth Cotter, the attorney for the Oversight Committee, and she works at the State House for years. I told her that my opponent wanted me to ask Pat Serpa to issue a subpoena for the documents. As I said earlier, she said “I don’t think you can subpoena the Attorney General” and I also met with a colleague of mine in the house yesterday, just for lunch casually, and he’s an attorney and that was his first response too.

So from what I understand, lawyers at the statehouse are looking into the legality of the subpoena. And that’s what my opponent wants me to do and I guess that I will say people are checking the legality of it. The other thing is that when Kilmartin and the State Police said they couldn’t find the criminal charges, they are keeping the case open. They haven’t closed the case.

They’re saying they don’t want to release the documents because they could really go back and use them. They are waiting to see what comes out of the civil case and they may keep the case alive. So I guess that’s the reason, if people really want the documents…let them out. But know they could have consequences. We’re i’m coming from is this has been a terrible situation and has put a black eye on the state of Rhode Island and we’ve made some reforms on lobbying, campaign finance, some ethics reform, we’ve reformed the tax credits steps, we try to deal with some things.

RB: What kind of consequences do you think would come out if everything was released?

LC: I have no idea what’s in it. I wouldn’t want it jeopardize the lawsuit, I wouldn’t want it to do that. I mean I want to see Curt Schilling on the stand. Curt Schilling keeps saying he’s going to come and tell the whole story.

Ok. Let’s see what he has to say. I’m among MANY people dying for him to be on the stand to see what he says.

RB: Do you think it will ever happen?

LC: I don’t know, it’s next month isn’t it? September?

RB: I don’t know

LC: I don’t know, he says he wants to do it. If those law suits are dropped then there will be no excuse to release the documents. There won’t be any. That would be the end of the legal train right there.

RB: So in that case, if the case is closed you’d fully support releasing the documents?

LC: Yea, yea..absolutely. I just, I’m a very processed oriented person and I do my homework (as you can see) and let’s take this through the process. Many citizens of Rhode Island don’t have confidence in the process, they’re frustrated with it and I understand that. I don’t know how to speak to that except that you know I’m being honest with you and i’m telling you what i’ve done. Judge me by what i’ve done, not by what’s happening three or four years ago. I mean that’s been my attitude…

RB: Do you think people need something to run on every year, last time around was the casino and in the past it’s been other stuff, do you think 38 studios, are you hearing from your…

LC: Actually no, i’m not hearing anything about it. I think that there’s a slow drum beat about it.

RB: What do you think people are/will run on? What are the challengers running on this year?

LC: Well they said they were going to run on Tolls, but it’s not really a big issue for us down here. I did get a lot of, it was very active during the time we were voting on it. I got a lot of hate mail, I actually got a lot of nasty mail. Which was unnecessary.

I mean we can agree to disagree, and I can tell you why i’m voting the way i’m voting but you know but some people were really nasty.I was like i’ve only been in office for a year, how can you hate me that much? I haven’t even done that badly. I’ve only been here 10 months, what are you talking about?

I’m waiting to hear what my opponent’s going to run on to tell you the truth. I think 38 Studios what the organized opponents have said, the Republican party has said they are going to beat us up on 38 Studios and on Tolls. They may still do that. I think maybe they are finding out that it’s not really resonating as much as they thought it would.

RB: What do you think 38 Studios today means to the average District 75 taxpayer?

LC: Time does heal all wounds. Other things come into the public conversation, this is not 4 or 5 years ago. I think the average person goes it was “oh, it was a bad deal”, I really do think that. But that doesn’t mean we shouldn’t expose it, I’m not minimizing those that want to see it.

You know I haven’t asked many voters at the doors, Ryan. Maybe it’s worth asking them. I have been walking. 38 Studios has not come up at all. No one has asked me about it, it’s an interesting point.

I’ve walked the entire Point, entire Historic Hill, I’ve walked by Cliff Walk and I’m in the Fifth Ward now. I will walk the entire district, I have plenty of time to do it.

RB: I’ve asked you before, what are the issues you are hearing at doors?

LC: Honestly, people are very frustrated with the way the City is operating, I hear that more often than not. And there’s really very little I can do about that. I try not to get in the middle of city affairs. People are unhappy of course with Broadway, their unhappy this week with the fire boat.

RB: That comes with people not understand how Government works

LC: A little bit. I voice to them that the City Council runs the city, the City Manager runs the city and if they (City Council/City Manager) need me I work for them. That’s kind of my attitude, if they ask me my opinion or if I have something to offer them I will give it to them. But my role is not there.

There was one woman’s door I knocked on, where she was really angry about the city…taxes…

RB: I’m hearing a lot of that frustration on social media, NextDoor and etc, I think more than ever.

LC: I don’t know why either, I really don’t know why. I think they (Newport City Council) are doing a good job, I really do.

RB: There’s more ways than ever for people to voice their frustration and see their neighbor is frustrated…

LC: That’s a good point, and you know there’s this one woman, and talking about voters not being that informed. We’re all busy and this city has been wild this summer as far as i’m concerned, people don’t really don’t have the time to study the stuff the way I have to study the stuff. This particular woman she was really upset and was disturbed about the hotel tax money all going to Providence. I told her that’s not how it goes, she really didn’t know how the hotel tax was distributed. 47 cents on the dollar goes to Evan Smith’s organization (Discover Newport) and 27 cents go to the City of Newport. There’s a small percentage that goes to the say and she was like “oh really”. So I try to inform voters about what’s going on, but your’e absolutely right they don’t have the time to spend studying this stuff.

RB: What’s interesting and I know you had sent me a message about the Hotel Tax because I had quoted a City Council Member who used that number and thought that the majority of the tax went to the state.`

LC: That’s right..

RB: So there’s even members of our own City Council who don’t understand what percentage of the tax stays here

LC: I can tell you that my House Tourism Study Commission, we’re studying the tax distribution formula. At my next meeting, which is going to be in October, we’re going to have someone from the House Fiscal Staff come and actually explain it to us in public. So wer’e going to remove the cloak of confusion publically on that.

RB: What’s interesting and I know this isn’t you at all but just a random comment. I’m looking at the state government press releases and the April Hotel Tax Report just came out.

LC: Oh really…

RB: I’m surprised that we can’t produce these reports more quickly

LC: That’s a good question that you’re asking. That’s something, upon re-election that i’d like to go back and look at that.

RB: The report for April was released on August 24th, that’s just odd..

LC: Let me speak to that, in my House Study Commission. We should be talking about this (38 Studios), but there’s lots I can tell you. In my House Study Commission which is extended through the end of the year, we have three work groups. We have one that’s looking at the distribution of the Hotel formula tax, we have one looking at state organizations who are running tourism organization and seeing/comparing to other states and we have one that’s looking at the metrics for measuring the success or the failures of the marketing or branding program.

Evan Smith is leading one on the metrics and it came out last Friday, at our meeting last Friday that there’s other pieces of tax information that we can’t get. Like for example he (Evan) commented last Friday that he’s wanted to try to find the sales tax revenue for Newport. Because he wants to look a full scale of metrics to understand what’s going on.  Which includes sales tax, hotel tax, meals tax, rooms rented and i’ve had that same problem of getting that information out of Revenue.

I sat next to a colleague of mine, Kathy Fogarty of South Kingstown and I turned to her and I said to her “we should really work on this next year”. I mean they (Revenue) may need money to upgrade their systems, I don’t know, they need something.

RB: I would think it would help the average small business to look at the report and know if they are having a good year. Right now they see a report from the fourth month of the year, right now they are asking themselves…”are we having a good year”?

LC: I hear you. I’m going to write that down so I get that on my list.

RB: I think it would be helpful for the average hospitality industry to have this info and numbers

LC: When I called them, I called them myself because I wanted the sales tax status of Newport. I was looking at the economic impact of flooding on my other study commission and I wanted to know what kinds of state revenue are generated in Downtown Newport, because we have all this tourism. Because the questions is what if that gets flooded, like Sandy, and we’re out of business for 3 months. How much is that going to cost the City and State? I went to Revenue about a year ago, I went to the Director of Revenue, and he couldn’t give me that. He said they didn’t have that and I remember that. That’s when I said Evan is on to something, that’s something I’d like to work on.

RB: Many residents will say/have said that they think Newport is the piggy bank for the state, is it possible there’s any truth to that “rumor”. I guess economic impact that we bring more people in.

LC: We are the draw for the state, there’s no doubt about that. I mean, Providence is bigger but I don’t really know the comparison between Providence and Newport.

RB: That would be a great comparison to see

LC: That’s something our Commission should look at. People do come to Rhode Island because of Newport, we all know that. They come to New England because of Newport. You know the Visitors Center is the highest (visited) visitors center in the region. Most visitors go through there, which is indicative to what’s going on here.

Are we the cash cow? I think that’s a little bit of an exaggeration. I think a lot of the money does stay here.

RB: Back to the lady who was upset about the hotel tax, do you think some of that came up because City Adminstration asked for an increase in the 1%.

LC: No, she wasn’t aware and that was on meals.

RB: That was on meals and beverage

LC: That’s correct

RB: That never made it anywhere, do you think it will be re-introduced?

LC: Joe (Nicholson, Newport City Manger) does want it. Joe is talking to me about it as a matter of fact. He has asked me to help him with that.

RB: and it’s Newport and Middletown?

LC: It’s interested it’s Newport and Middletown, Providence is interested in it as well. I know that from a former staff person from Mayor Elorza, and I mentioned it to her. She doesn’t work there anymore but she mentioned Providence would be interested in that also.

So Joe has approached on that, he wants to dedicated that money to infrastructure. Which is a whole other discussion.

RB: That is a wholoe other discussion

LC: But that’s what he wants it for. I saw Joe on Wednesday and touched base and he said he wanted to meet with me sooner rather than later on it. So at least we are talking about that.

RB: We’ll get back to 38 Studios, but know you have me on City thing. Did anyone from City Council, the Fire Boat was super controversial, did anyone reach out to you about this becoming state funded or anything especially with the area that they applied for it to cover?

LC: As I said earlier, I don’t want to pole around in City Council job. As I don’t want them poking around in mine. It’s a two way street there but if they ask me i’ll work on it. I really genuinely feel like I work for the City Council, they should come to me and tell me what they need and why. They are the leaders of Newport.

RB: How often do they come to you?

LC: They come to me on different things, Kate (Leonard) comes to me around, Kate’s somewhat systems oriented. She wants to make sure state government is working, we’re getting the services on the ground.  I’m working with her on DOT stuff which is also a whole other discussion. Lynne (Ceglie) has been very engaging with DOT, I’ve been working aggressively with DOT, we meet monthly with DOT.

RB: Because of Broadway?

LC: No, actually more because of America’s Cup and Memorial Boulevard. Much more because of that and that will be a story coming in the future. We meet once a month. There’s a whole host of issues on that road, changing of the lights, timing of the lights, cutting of the grass, the bike lanes, a person got hit down on Gibbs a couple weeks ago. I walked in that area by Cliff Walk and people were really upset about that.

So I spend a lot of time with DOT. There’s an interest by some of the City Councilor’s around delivery of services. John sometimes will ask me about state law. He’ll ask me about the ban the bag resolution, he asked me about state law on that. And I have access to State Attorneys. He asked me how Barrington did it, a few questions.

So he asked me more about the policy side.

RB: So they are reaching out to you?

LC: Yes, and they should reach out to me more. Really this is my job, I work for them. I have a good relationship with Joe, in the last 6 months we’ve been meeting on a variety things, largely infrastructerly, mainly around flooding, which I have an interest in.

It would be my wish that the City, or the recommendation for the city council, take it or leave it, that they consider hiring a Grant Writer. Because what I do see from my chair is that a lot of money becomes available from the state and federal government level and you really need to be ready, you can’t start writing grants when they announce it because Warwick and Providence are at the tee. You have to be at the tee.

I also think we have this perfect situation that we can use as a case study about this grant (Fire/Rescue), no one even know we had even applied for this grant.

RB: Nicholson said the other night at the City Council Meeting that had he looked at it before submitted that he would of changed some of the language.

LC: There’s another grant that got a little controversery and that’s the work that’s being done at the Discover Newport building, that’s another grant. I’d really like to see someone go for grants for the city, put it on the website, what grants we are applying for so that way it’s not a surprise that we’re taking the money in 2 weeks.

I’d love to see someone tee up for money. For example, we have a bond going on the ballot in November, the green ecenomy bond. There’s money there and I would work with that person (grant writer) to see when their doing the regulations, how they are going to spend the money and start teeing up for that money. There’s like $3 million up for grabs with that grant.

RB: Those big of grants may easily pay for that Grant Writer

LC: I would think so. That would be my hope. They could take or leave my advice but I see other city’s getting money. I see Providence money for things and I see South Kingstown getting money for things, and I think “how did they hear about this, where is this stuff”.

They also need to look at the budget and see where the money is. Last year, I didn’t do it this year, but last year I met with Paul Carrol and Bill Riccio and went over all the funding in the budget that was related to their departments and encouraged them to apply for the money. Bill Riccio did apply for the money, he didn’t get it but he did apply for some streetscape money. That’s what we really need to be doing.

We need to be going out and getting our share of the dough and….

RB: I think it would benefit every community to have a Grant Writer

LC: Even private money, there’s private partnerships that can put together. Maybe the City, there’s a project in Middletown with Sachuest Beach who got Sandy Money

RB: They partnered with Preservation Society of Newport County to bury all of the lines

LC: See in that case Middletown teamed up with two privates and that was Federal money. So there’s money out there. So there are imagine ways that we could be finding more money but we needed to be tee’d up and ready to go and I think that is somewhat of the confusion around the fire boat.

Part 2 of our discussion will be published soon

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Ryan Belmore has been the Owner & Publisher of What's Up Newp since 2012. He also currently works for Mountain News, where he serves as Senior Editor - North America for OnTheSnow. He previously worked for the New England Patriots and American Cancer Society. He currently serves as Vice President of Fort Adams Trust and is a member of Local Independent Online News (LION) Publishers and North American Snowsports Journalists Association (NASJA).