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Costantino Fields Hours Of 38 Studios Questions From House Oversight

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The key sponsor of the bill later used to attract 38 Studios to Rhode Island returned to the Statehouse from his current out-of-state job Thursday even...

The key sponsor of the bill later used to attract 38 Studios to Rhode Island returned to the Statehouse from his current out-of-state job Thursday evening, distancing himself from responsibility in an hours-long meeting that was rich in theatrics yet thin on fresh details.

Former House Finance Committee chairman Steven Costantino said he set the $125 million size of the job creation guarantee program passed in 2010, and then applied to 38 Studios, with the idea of helping a number of businesses.

Depositions released as part of the state's 38 Studios lawsuit in September pointed to Costantino as the one who bumped up by $75 million the job creation guarantee program. That's the same amount later approved as a loan guaranty approved by the board of the state Economic Development Corporation to bring 38 Studios to Rhode Island.

During five hours of questioning in the House Oversight Committee, Costantino said he knew prior to the passage of the job fund in 2010 only that 38 Studios was looking for a large sum of money from the state, not specifically $75 million. He said he set the job creation guarantee program at $125 million with the idea of helping a variety of companies.

“To meet the entire business need, what do you need?" Costantino said. "Because I was concerned. My thought process was concerned that this was going to one company, and all that money. And I was not supportive of that.”

Costantino is now a top state health official in Vermont. He came to the Statehouse voluntarily after House Speaker Nicholas Mattiello signed a subpoena seeking his appearance.

A longtime former lawmaker, Providence mayoral candidate in 2010, and part of the family that owns Venda Ravioli on Federal Hill, Costantino began his appearance by trying to distance himself from the state's losing investment in 38 Studios.

In a theme he repeated throughout his testimony, Costantino said it was the state economic development agency, then known as the Economic Development Corporation, that fell down in doing the state’s due-diligence and was therefore responsible for the 38 Studios fiasco.

"I was not responsible for reviewing the details of the company’s finances to determine if it was prudent to assist with state financial support," he said during an opening statement. "I was not responsible for investigating the strengths or weaknesses of their business plan."

Asked whether he misled fellow lawmakers, Costantino said he felt he was misled. He said he was under pressure from the EDC not to discuss 38 Studios ahead of a legislative vote on the job guarantee program, while also pointing to a March 2010 story in the Providence Journal as a sign that 38 Studios' interest in Rhode Island was publicly known.

Friends and family members attended the committee hearing to support Costantino, including his brothers Joe and Greg, the latter a state representative. A handful of Statehouse employees stopped by to say hello to the once-powerful Finance chairman.

Costantino was invited to visit 38 Studios’ Maynard, Massachusetts, office early in 2010. Under questioning from Oversight Committee vice-chair Michael Chippendale (R-Foster), Costantino conceded that was because the company knew the Finance Committee was the vehicle for securing financing from the state of Rhode Island.

The Oversight Committee meeting moved at a slow pace due to a painstaking series of questions by William Dimitri, a part-time Statehouse lawyer, many of which seemed unrelated to the key questions involving 38 Studios and Costantino.

The pace picked up later on when Chippendale and Committee Chairwoman Karen MacBeth (D-Cumberland) asked sharper, more pointed questions.

It was during the later sequence that Costantino revealed he had been interviewed by state police and appeared before a grand jury - in 2014, he later told reporters. He said he was not aware of any criminal intent in connection with 38 Studios and the company's 2012 bankruptcy, which left Rhode Island taxpayers on the hook for more than $100 million.

The five hours of testimony offered a series of moments offering insight into legislative life. At one point, Costantino said he felt sorry for state Rep. Helio Melo (D-East Providence), who signed on as a co-sponsor for the job creation guarantee program, since he sat next to Costantino in the House and Costantino had asked him to do so, more from proximity than anything else.

MacBeth said the state has not yet been able to serve subpoenas on two key 38 Studios figures, company owner Curt Schilling and Michael Corso, a lawyer and tax credit broker close to former speaker Gordon Fox.

This post has been updated.

Costantino testifying before the House Oversight Committee.
Costantino testifying before the House Oversight Committee.