Sep 10 2016

State Rep. MacBeth Asks SEC To Examine Bank Loans To Corso

PROVIDENCE, RI House Oversight Committee Chairwoman Karen MacBeth is asking the United States Securities amp; Exchange Commission to investigate $8.5 million in personal bank loans that tax-credit broker Michael Corso lined up for previous Red Sox ace Curt Schillings now-bankrupt video-game company: 38 Studios.Because these loans were used

for and given on an expectation of the giving of [state] film tax credits that 38 Studios was never ever eligible for, I question if there is any infraction of any banking or securities law, rule or policy that the SEC has any jurisdiction over to examine and prosecute, MacBeth composed, in a letter that went out Tuesday to the regional director of the federal agency.I am formally asking for that the Securities Exchange Commission open an investigation into these loans

, and upon the start or closing of any such examination that your workplace notifies the committee of the exact same, she wrote. MacBeths action centers on 2 Bank RI loans secured by $14.3 million in anticipated Rhode Island

film-tax credits that 38 Studios had usedrequested however ultimately never ever received. As included collateral, Schilling, the ex-Boston Red Sox star and founder of 38 Studios, installed his personal collection of 3,200 gold coins, valued at as much as$ 5.5 million.As The Journal reported in June 2012, Corso stated he lent the cashthe cash to 38 Studios to relieve a money crunch. Had 38 Studios got the

tax credits, for which it had actually received preliminary certification from the Rhode Island Movie amp; Tv Office, Corso had a deal to sell them, for a revenue, to Blue Cross amp; Blue Guard of Rhode Island, to lower the health insurance providers mention tax liability.But then-Gov. Lincoln D. Chafee balked at providing the tax credits after 38 Studios monetary difficulties emerged in Might. Among the reasons: the business was not signed up

in Rhode Island a minimum requirement. The company subsequently laid off its 400 staff members in Rhode Island and Maryland and stated insolvency after burning through all of its state-backed loan, leaving Rhode Island taxpayers on the hook for $112 million in revenue-bonds and interest payments. Corso, at one point, informed The Journal that he, in addition to Schilling, was responsible to repay the loans. The preliminary$ 1.5-million loan in January was protected solely by the anticipated tax credits. The 2nd loan, for$7 million in February, was secured by the tax credits plus Schillings individual warranty and gold coins. The document that ignited MacBeths interest is a 2012 quarterly filing with the SEC, in which Brookline Bancorp referenced$4.2 million in second-quarter credit losses scheduled in connection with 2 short-term commercial loans made immediately upon acquisition by the business subsidiary, Bank Rhode

Island.These loans were based, in part, on the issuance of tax credits which, due to the unforeseen and abrupt personal bankruptcy filing of an entity in Rhode island, related to the debtors, were not released. … The company has moved strongly to fix the credit problems and is examining all prospective sources of healing; nevertheless, additional healing efforts will be made complex and subject to added discussions with the appropriate parties, including the state of Rhode Island.While the filing does not mention 38 Studios, MacBeth stated the description is specificspecifies enough for her to send outcorrespond to the SEC and the bank.Among her questions: how did Corso secure the loans and why did the bank that ultimately acquired Bank RI vow in a July 2012 quarterly filing with the SEC, to seek extra conversations with the relevant parties, including the state of Rhode Island, as part of its healing effort.In action to a Journal questions, Guv Raimondos spokesperson Marie Aberger stated: The State has actually never made any payments to BankRI or other institution for loans

made to Mr. Corso. Similarly, Melissa Czerwein, the spokesperson for the firm previously understoodcalled the Rhode Island Economic Advancement Corporation, stated: The EDC/Commerce Corporation didnt pay the loan. The Journal has a pending demand for any state records showing the banks efforts to recoup the cashthe cash from Chafees administration, or the EDC.This is not entirely brand-new ground: In September 2012, federal private investigators revealed that they had actually closed out their examination into the situations surrounding the death of 38 Studios, after the business burned through a different state-backed loan. This workplace conducted an extremely directly focused evaluation for potential offenses of numerous federal statutes, including bank scams, Jim Martin, a spokesman for Peter Neronha, the US Lawyer for Rhode Island, said at that time. That evaluation is concluded and there will be no further review.On Tuesday, MacBeth likewise sent a letter to Paul A. Perrault, president and CEO of Brookline Bancorp, looking for informationinquiring on the 2 short-term industrial loans based on the issuance of tax credits made immediately after the acquisition your Companys subsidiary, Bank Rhode Island, which led to$ 4.2 million in credit losses. As part of this ongoing review I request that the business offer the committee with all records connected to these two commercial loans including all records in regards to healing attempts of the$4.2 million dollar loss by November 23, 2015 … Once I get the files from your business I will set up a hearing of the committee

and invite an agent from Brookline Bancorp who is experienced about the loan documents to testify.In action, Corsos legal representative, Michael J. Lepizzera Jr. stated: We are talking about advanced celebrations that are participating in a loan deal … Do you believe BankRI is mosting likely to offerprovide a loan unless there is a letter from the state of Rhode Island stating that you certifyget approved for … Time out. You pre-qualify. We are setting aside X quantity of tax credits for you.Without that, he stated: They wouldnt provide out a loan for … not 10s of countless dollars, millions of dollars.There was no instant reaction from the bank.