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MacBeth demands Studio 38 subpoena

September 13, 2013

PROVIDENCE – Cumberland Rep. Karen MacBeth (D-Dist. 52, Cumberland), a member of the House Government Oversight Committee that is currently investigating the 38 Studios debacle, says she wants the panel to issue subpoenas to learn how the Economic Development Corporation’s (EDC) loan guarantee program went so wrong.

“We can follow the money a lot more closely than we are able to with the documents we have,” MacBeth told The Times Friday. “Who was on the payroll? People made lots of money on this business, I believe, fully knowing that it wasn’t going to make it.

“That is the information I want to find out,” she said. “Who made the money and who knew about it? Lots of people made money on it and the taxpayers are the ones on the hook.”

“Instead of asking a staff member from the Statehouse what their thoughts are on something, we can certainly get members of the EDC and the former governor (Donald Carcieri, who initiated the 38 Studios deal) to answer questions. And if they choose not to answer those questions, then we have that on the record.”

MacBeth said she plans to make a motion to issue subpoenas at the committee’s next meeting, which is yet to be scheduled. She said she is confident her motion will get a second, and therefore will come to a vote, but she is unsure what the outcome of the vote will be.

The committee chairman, Rep. Michael Marcello of Scituate, said in a telephone interview Friday that the idea of issuing subpoenas is “way premature” and “a waste of time” because it would likely result in the panel receiving the same “thousands of pages” of documents it has already obtained from the EDC.

“It is pretty easy to tell when there are missing documents,” Marcello said. “There is no basis in fact to suggest that they haven’t given us all the documents” that the committee has asked for.

To the extent there is a problem, Marcello said, it is that “the real story is that there is a lack of documents, which tells you there is a lack of oversight. Even a subpoena can’t produce a document that doesn’t exist.”

There are two types of subpoenas, Marcello explained: a records subpoena, which demands the production of documents, and a witness subpoena, which compels a person to testify before the committee.
“I haven’t even asked, without a subpoena, for anyone to come before the committee,” the chairman said.

“I intend to do so once I’m convinced that our review of the records is thorough and we have a basis to ask these individuals questions. I’d prefer to ask for a voluntary appearance before the committee and give them an opportunity to come and if they refuse to come or don’t want to come, then I think we have to seriously look at the issue of a witness subpoena.

“Just because you the authority to do it (subpoena witnesses) doesn’t mean you have to use it. There are other ways to get people before the committee. I fully expect that some people, maybe not all, when I ask voluntarily that they will appear. It’s just a common courtesy. Why force a subpoena on an individual when it may not be needed, when they are willing to appear voluntarily?”

Even if the committee votes to issue subpoenas, the request would have to be approved by House Speaker Gordon Fox.

Asked whether Fox would give his approval, Fox spokesman Larry Berman used the same word Marcello did in reference to subpoenas: “Speaker Fox believes it is premature to be talking about subpoenas because the House Oversight Committee is still in the process of reviewing the thousands of pages of documents supplied by the EDC,” he said in an e-mail. “Chairman Marcello and the committee members need to have the opportunity to read the material and discuss it before they seek additional tools. He would like to see the ongoing investigations, including a civil suit, take their course.”

The watchdog group RI Taxpayers backed MacBeth’s call for subpoenas.
“Rep MacBeth is absolutely correct that the committee needs this power,” RI Taxpayers’ President Larry Girouard said in a written statement. “Already, the committee has limited the scope of its hearing to documents only and has called no witnesses so far. Why does the chairman wish to further narrow the information reviewed by the committee? Rhode Islanders have the right to answers about the 38 Studios loan fiasco.”

Noting that Fox must sign off on a committee’s request for subpoena power, Girouard said, “Speaker Fox’s repeated claim that he did not know that 38 Studios would receive a $75 million taxpayer-backed loan guarantee has strained credulity. Additionally, a friend of Speaker Fox, Attorney Michael Corso, represented 38 Studios and stood to also receive substantial fees from the state tax credits that he attempted to obtain for 38 Studios.”

“Rhode Islanders are paying the price for our state officials’ disastrous handling of the 38 Studios loan guarantee,” Girouard asserted. “So they absolutely have the right to learn the truth in this matter. Is the chairman attempting to run interference for those state officials by limiting the scope of the hearing?”

Follow Jim Baron on Twitter @Jim_Baron

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