Former EDC head reacts to controversy

PROVIDENCE, RI (WPRI) A former director of the Rhode Island Economic Development Corporation believes General Assembly leadership knew about the 38 Studios loan guarantee ‘proposal’ before the law that made it legal was passed.

“I would’ve never done this deal,” Saul Kaplan said. “And I don’t think the Schilling deal moves forward without support from the governor (Don Carcieri at the time) and General Assembly leadership.”

Kaplan now runs the non-profit Business Innovation Factory and has also penned a book about 'staying relevant' in the changing world of building businesses.

Two years before the $125 million loan guarantee fund was created by the General Assembly and signed by Governor Carcieri, Kaplan was EDC director and had pitched the idea of a 'smaller' loan guarantee program.

“We had looked for a $50 million loan guarantee fund with the intention of spreading that over ten or more companies,” Kaplan said.

In April of 2010, then house finance committee chairman Steven Costantino introduced the expanded version without explanation about why an additional $75 million was added.

“Next thing I knew, it was $125 million with just surprisingly, $75 million going into the Schilling deal. So, leadership certainly knew. It’s not clear if rank and file members knew as well.”

Several lawmakers have told Target 12 they did not know about the 38 studios deal as they debated the $125 million dollar loan guarantee legislation. Rep. Jon Brien, (D) Woonsocket, was one of the three co-sponsors but has said he did not know $75 million would be aimed at 38 Studios by the EDC in July, 2010.

Co-sponsor Costantino, who is now a member of Governor Lincoln Chafee’s administration, referred questions to the governor’s office. The third co-sponsor, Helio Melo, (D) East Providence, did not return emails or phone calls.
House Speaker Gordon Fox, (D) Providence, has not said whether or not he knew about the 38 Studios proposal before the law that allowed it was approved.

Kaplan said the apparent fast tracked nature of the 38 Studios loan guarantee is proof to him that the lack of a ‘true two party’ legislature set the table for Schilling’s company to get the $75 million guarantee without any checks and balances.

“The government is so out of balance. Leadership can do a deal like this and move something through as quickly as they did in this case.”

Kaplan added that the more details that come out about the 38 Studios deal, the worse it looks.