Vermonters for Health Care Freedom is a 501 (c) (4) organization of individuals and businesses who are deeply concerned about health care reforms being implemented by Governor Shumlin, and seek patient-centered reforms that protect the traditional doctor-patient relationship.
Vermonters For Health Care Freedom
Health Care Reform Newsletter #53
DHVA Commissioner Steven Constantino Involved in Rhode Island State Financing Fiasco Court documents released on Thursday, September 24, 2015 by the Rhode Island Superior Court reveal that Vermont’s DHVA Commissioner Steven Constantino played a pivotal role in a failed R. I. state government financing scheme.
Discovery is now complete in the lawsuit over Rhode Island’s failed $75 million loan guarantee deal with ex-Boston Red Sox pitcher Curt Schilling’s video game company, 38 Studios. In 2012, less than two years after the State of Rhode Island offered Schilling $75 million in financing to move his company from Massachusetts to Rhode Island, the company went belly-up, leaving Rhode Island taxpayers on the hook to make the $75m bond repayments.
As reported in the Providence Journal, Rhode Island House Speaker Nicholas Mattiello acknowledged on Friday that he feels “betrayed” by his predecessor Gordon Fox and Fox’s right-hand man Steven Constantino. Mattiello has given the go-ahead for House oversight hearings into the stunning information disclosed by the newly released documents.
Former House Speaker Gordon Fox invoked his Fifth Amendment right more than 100 times during a deposition on August 18, 2014. The deposition came roughly five months after the State Police and the IRS raided Fox’s home and statehouse office. Fox is now serving a three year prison sentence in Federal prison on unrelated corruption charges.
Sen. James Sheehan, chair of the Senate government oversight committee, described the 38 Studios loan guarantee as “a virtual ‘done deal’, fashioned by an elite and powerful few, without the knowledge of the rank and file members of the General Assembly who unwittingly voted to approve the loan guarantee program”. That neither he nor anyone else in the House, including those on the House Finance Committee – knew the money was “earmarked for 38 Studios, that was a betrayal”.
Constantino’s Role: Constantino’s role in the transaction was critical. In 2010, he was chair of the Rhode Island House Finance Committee.
Former Rhode Island Governor Don Carcieri was then chair of Rhode Island’s economic development agency, called the Economic Development Corporation (EDC). During a closed session on June 9, 2010 the EDC Board was told by Carcieri of a “fairly significant transaction” that had presented itself to the EDC. The transaction was the provision of $75m in state loan guarantee funds to 38 Studios. According to the meeting minutes, EDC attorney Robert Stolzman “reported that both the House and the Senate Finance Committee have passed this legislation. He also noted that the legislature is aware of the Schilling matter and has done some due diligence in its consideration of this program”. In fact, the vast majority of legislators knew nothing about 38 Studios.
Newly released documents show that during that time, and without the knowledge of his House colleagues, Constantino was working behind the scenes to help arrange a financing deal with 38 Studios. These disclosures cast a new light on Constantino’s efforts to persuade his House colleagues to pass a bill to make the deal possible.
Over 50 minutes of House floor debate video from April 13, 2010 show that while his colleagues sharply questioned the expansion of the state’s $50m “Job Creation Guaranty Program” to $125m, Constantino repeatedly withheld the information that the additional $75m had already been earmarked for 38 Studios. Instead, he insisted that the loan guarantee program arose from a hearing two weeks earlier in which the business community encouraged the state to ramp up its portfolio of financial offerings and incentives.
Several lawmakers raised concerns about the bill, including one who said, “It’s easier to borrow money when you have the power of the State of Rhode Island guaranteeing the loan. So we’re going to end up with higher risk companies, and we’re putting taxpayer dollars – to the tune of $125 million – at risk”. (Listen particularly to Representative Charlene Lima here on April 13, 2010 as she questions the reason for the increase, and note Constantino’s responses). (add link here: Constantino Didn’t Disclose 38 Studios’ connection when pushing House bill).
Who Knew What and When? Unbenownst to Rhode Island taxpayers and legislators, the 38 Studios deal began to take shape in mid-2010 after a series of secret meetings among interested parties. A segment of the chronology here: (add link: Timeline of events preceding, after Studio 38 Deal.)
March/early April 2010: House Finance Chairman Steven Constantino, EDC’s Finance Director and others attend meeting at 38 Studios headquarters in Maynard , Mass.
April 1: In an email sent on April 1 – shortly before legislation to create the 38 Studios program had been introduced – EDC legal counsel Robert Stolzman said the draft bill pegged the program’s size at $125 million, “at the suggestion of House Finance Chairman Constantino”.
April 6: Constantino’s House Finance Committee holds hearing on loan-guarantee bill that was included in the state budget. The $125m is included in a supplemental budget bill that passed the House in April but is rejected by the Senate.
May 19: Rep. Steven Constantino moves EDC loan-guarantee program into a separate bill.
May 25: House passes Constantino’s bill.
June 11: Governor signs into law Assembly-approved bill authorizing EDC to guarantee up to $125m in economic development bonds.
June 14: EDC directors vote preliminary approval of a $75m loan guarantee for 38 Studios.
October 18: Now-Governor Gina Raimondo, then a candidate for state treasurer, calls the deal “as high risk a venture as you can find”. A venture capitalist, Raimondo said her colleagues looked at the deal and decided to pass.
2012: 38 Studios goes belly-up, lays off entire workforce including 300 Rhode Island workers.
2013 – 2014: State commences lawsuit against Schilling and other 38 Studios defendants.
Constantino did not win reelection to the House in 2011. He ran unsuccessfully for mayor of Providence, R.I. and wound up serving as Governor Lincoln Chaffee’s Secretary of Health and Human Services from 2011 through 2014.
January 1, 2015: Gina M. Raimondo elected Governor of Rhode Island. She does not keep Constantino on.
February 9, 2015: Steven Constantino hired by Vermont Governor Peter Shumlin to head the Department of Vermont health Access.
Constantino now heads the agency responsible for Vermont’s Medicaid program monies, Vermont Health Connect’s federal and state dollars, and all Vermont publicly funded health insurance programs. His testimony to Vermont lawmakers is critical as they strive to make decisions about the future of Vermont’s health care system.
The Rhode Island documents released last week, and the accompanying You Tube videos of Constantino’s responses to his fellow lawmakers, show that Constantino will be less than forthcoming or truthful if the occasion calls for it. This is a sombering revelation. Vermont cannot afford to have an individual with less than stellar integrity at the helm of this most important agency.
In light of these revelations, Vermonters For Health Care Freedom calls on Governor Shumlin to replace Steven Constantino as DHVA Commissioner immediately. The Governor must have known about the 38 Studios fiasco before hiring Constantino. The issue has been in the Rhode Island news for several years.
It appears that Shumlin has given Constantino a safe haven here in Vermont rather than hiring a person of integrity to run Vermont’s health care systems.
Related stories: (add links)
• Documents reveal the secret beginnings of the 38 studios deal
• 38 Studios: Who knew what when about the $75 million
• Verreccia said he relied entirely on EDC staff to report on 38 Studios finances
• Court documents: the 38 Studios paper trail