FALL RIVER, Mass, (WPRI) — Fall River Mayor Jasiel Correia was arraigned Thursday on charges that he defrauded investors who put money into his startup business, a stunning turn of events for one of the nation's youngest mayors.
Correia, 26, told reporters following his arraignment that he will "absolutely not" resign as mayor over the charges. "It has nothing to do with me as mayor," he said of the indictment. He denied all the allegations and predicted he would be "vindicated" after a trial.
Massachusetts U.S. Attorney Andrew Lelling's office said Correia used the money to "fund his own lavish lifestyle, burgeoning political career, and the needs of his other business ventures." The Democratic mayor has been dogged for more than a year by reports that he faced a federal investigation over an app company he founded in 2012, SnoOwl.
Correia, a Providence College graduate who was first elected in 2015 at the age of just 23, successfully downplayed the corruption accusations and easily won re-election last year.
The FBI's Boston office said Correia was arrested early Thursday morning in Bridgewater, where authorities said the mayor had been at a nightclub last night, by agents from the FBI, the IRS, and the U.S. Department of Housing and Urban Development's inspector general's office. (The FBI corrected an initial statement that he had been arrested in Fall River.)
Correia pleaded not guilty at federal court in Boston Thursday afternoon and was released on personal recognizance with conditions. He was ordered to surrender his passport Friday at a Taunton probation office, have no contact with anyone related to SnoOwl, and told he must "remain employed."
Correia, who wore a black polo short and black pants, was laughing and smiling at the arraignment.
"It's not my best Thursday - you know, it's raining. It's not my best Thursday. I don't like to be out in the rain," the mayor told reporters after.
Correia's legal team includes veteran defense attorney Kevin Reddington of Brockton, who was recently in the news when he represented Catherine Greig, the girlfriend of mobster James "Whitey" Bulger's girlfriend.
Just last month, Republican Gov. Charlie Baker trumpeted Correia crossing party lines to support his re-election bid, but Baker's campaign removed the endorsement from its website Thursday.
Terry MacCormack, a spokesman for Baker and Lt. Gov. Karyn Polito, said they "believe these federal charges are very serious" and will work "to ensure the city has the representation and leadership it deserves as this legal process moves forward."
According to an Oct. 4 indictment unsealed Thursday, Correia is facing nine counts of wire fraud and four counts of filing false tax returns. Prosecutors allege he misused $231,000 of the $363,000 he accepted from seven investors in SnoOwl, while misleading them about the business.
"The taxpaying public must have confidence that if a crime is committed, status as a political leader will provide no protection from federal prosecution," Kristina O’Connell, special agent in charge of the IRS's criminal investigations in Boston, said at a news conference with other law-enforcement leaders.
Watch the U.S. attorney's news conference here. Story continues below.
One month after receiving his first $50,000 investor check, Correia bought a 2011 Mercedes C300 AWD sports sedan, according to prosecutors. They allege he "systemically looted" the SnoOwl account to pay for the Mercedes, jewelry, designer clothes, plane tickets and luxury hotel rooms, as well as "restaurants, casinos, and adult entertainment." They also say he used $10,000 to pay his student loans to PC.
A sizable share of the money came from a Massachusetts orthodontist who was the father of Correia's friend, court documents say. In April 2016, after that investor asked his nephew to become an advisor to SnoOwl, the nephew allegedly emailed Correia about his apparent use of "a personal account to conduct company business ... after raising investment money."
"That is, at best, a horrible mistake, and, at worst, can be regarded as criminal if the funding gaps are not solved," the nephew warned. Prosecutors say Correia never replied to the message.
Correia is also accused of lying to investors by claiming that "when he was in college, he had developed, packaged, and sold an app to a venture capital group in Cambridge, who eventually sold it to Facebook." He told a similar story to a former girlfriend, prosecutors say.
In a televised debate on WPRI 12 last November, Correia claimed he had not been questioned by the FBI and characterized the speculation about an investigation as "rumors" stoked by his opponents.
"Nothing has happened," he said in the debate. "Nobody can confirm any of this. ... I haven't heard anybody come forward that has been a legitimate source that hasn't had an axe to grind with me."
However, the indictment says Correia had actually become aware of the investigation months prior to that debate, and had gone as far as amending two years of tax returns in response to the probe.
Watch the exchange here. Story continues below.
In January, Correia created a legal defense fund at the Massachusetts Office of Campaign and Political Finance. The fund had collected about $76,000 as of Sept. 30, including multiple transfers from Correia's campaign account, records show.
At Fall River Government Center, the mayor's secretary asked a reporter to wait outside his office. The city council's secretary said other Fall River officials were meeting with legal counsel and "trying to sort it all out."
Correia's indictment will extend a period of political turmoil in the city of 89,000 along Mount Hope Bay.
Correia won the mayor's office in 2015 by defeating former Bristol County District Attorney Sam Sutter. Sutter in turn had become mayor only the previous December in a special election after voters removed incumbent Will Flanagan - who lost in part because of an incident in which he allegedly flashed a gun at Correia, then a freshman city councilman, to intimidate him.
Leaving Government Center on Thursday morning, Fall River resident Gloria Saddler called the indictment "very shocking" and said she was "very disappointed in the mayor."
"I thought he was going to move beyond this," she said. "I never expected this."
Another resident, Edward Avilla, said he was not surprised by the news because it had been signaled for a year.
"I kind of hope we get a mayor, whether it be a female or a male, that they take Fall River at their best interest," he said. "We've lacked that for so long."
Jessica Pace and John Villella contributed to this report.