The Hummel Report

Investigative Reports That Get Results

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A Pyrrhic Victory

For years the city of Providence has maintained it had no accounting of how much former House Speaker Gordon Fox was paid to do legal work for a troubled business loan program - until a citizen activist and vocal critic of the program took her complaints to the attorney general. This week what newly-released records show and why Judith Reilly - who has since moved out of state - continues to push for information.

 

Click here to read Special Assistant Attorney General Lisa Pinsonneault’s opinion-letter on the case.

 

Click here to view the list of fees collected by Gordon Fox.

 

Click here to see our 2011 report and list of all loans from the PEDP.

 

SCRIPT:

Hummel: A months-long battle to find out how much former House Speaker Gordon Fox was paid to do legal work for the city of Providence ends with a grudging release of those records. This week: a look at what’s in those files, and the woman whose relentless efforts lead to the release of the information.

The headline in last Sunday’s Providence Journal seemed like a win for public records supporters, but for Judith Reilly it was a hollow victory.

We first met Reilly three years ago when she began raising questions about the troubled Providence Economic Development Partnership - her research showed a 63 percent default rate on loans to businesses under the administration of former Mayor David Cicilline. Reilly’s work also caught the attention of federal overseers, who launched their own investigation, which eventually led to the temporary suspension of the loan program.

In the fall of 2012 Gordon Fox, speaker of the House at the time, came onto Reilly’s radar screen as the closing attorney for dozens of loans - including one for a Cranston businesswoman who had used a phantom Providence address. But for five years the city had no record of any payments to Fox, although other filings showed he clearly did the legal work. That’s because Fox said he was a subcontractor for PEDP’s chief legal counsel Joshua Teverow, and paid by him.

Working on the city’s behalf, but not directly paid by the city. Fox admitted to not disclosing that income on his Ethics Commission disclosure form and paid a $1,500 fine to resolve the case last year.

The Hummel Report heard from many businesses that took out loans complaining the attorney’s fees were exorbitant, and Fox’s work mediocre.

The city said it didn’t have any records of Fox’s payments, so Reilly filed an official complaint with the Rhode Island Attorney General’s office in November. And last week she finally got a decision - seven pages of records that show a total of more than $70,000 in fees for Fox from 2005-2010.

We reached Reilly, who has since moved to the North Shore of Boston, by phone this week.

Reilly: ``My initial reaction was disappointment. I was hoping the attorney general might include in the ruling something about that alleged subcontractor relationship, which to seems to me to be largely fictional but the AG complete sidestepped that.’’

Reilly questioned how it is that Teverow told the city he had no records about Fox, then suddenly produced them when contacted by the AG’s office.

Hummel: ``These records didn’t exist and then all of a sudden they do exist. Does that trouble you?

Reilly: ``That deeply troubles me. First I tried getting documents directly from the city and PEDP, which is s part of the city, they said they had almost no records, just a couple of checks. The bulk of his work was not in their records. They didn’t have IRS 1099 forms, virtually they could supply nothing that would say what he personally was paid as opposed to what Mr. Teverow was paid, and then what portion was given to Gordon Fox. The attorney general got involved and then records mysteriously appeared.’’

So what do the records show? An initial review shows Fox receiving substantial fees for minimal work - certainly not illegal, but some businesses told us they had no choice but to use Fox or Teverow for legal work and no recourse to complain about steep rates. And that HUD, which provided the loan money, didn’t seem to care.

In one 2010 loan Fox received nearly $1,500 for a 25-minute closing. And Teverow received $300 on top of that for the same loan, although there’s no indication he did any work. Fox himself has said PEDP did all of the legwork and he took no part in the loan process other than to close.

Reilly also found that some businesses were charged ``origination fees’’ totalling several thousand dollars in some cases, supposedly to cover administrative costs, even though the Executive Director at the time, Thomas Deller, was being paid $30,000 in federal money above his six-figure city salary every year to oversee the PEDP. Deller left for what he called a dream job in Hartford within months of our original story on the PEDP in the fall of 2011.

Federal investigators have been looking at the agency’s records for 2009, but it’s unclear what they may be examining. Meanwhile Reilly has continued her quest for information, despite a move out of Rhode Island.

Hummel: ``Why do you do it?’’

Reilly: ``I just haven’t seen the problem rectified yet, although it’s gotten some excellent coverage from you and other folks, we all have to work on it we expect them to finally clean up all of the problems at PEDP.’’

Hummel: ``Do you think there’s still more to be uncovered?’’

Reilly: ``Yes. Absolutely.’’

In Providence, Jim Hummel for The Hummel Report.