- Associated Press - Tuesday, April 1, 2014

PROVIDENCE, R.I. (AP) - The new chairwoman of the House Oversight committee said Tuesday she wants to issue subpoenas to key figures related to the 38 Studios deal, including former House Speaker Gordon Fox, as the panel continues its review of the state’s failed investment.

Rep. Karen MacBeth said the committee could also seek to subpoena former House Finance Chairman Steven Costantino, as well as officials with, or formerly with, what was then called the Economic Development Corp.

“I would look to bring anybody that I think can give us answers,” MacBeth, D-Cumberland, said. “The state wants answers about what happened. I think it’s my duty to get answers now.”

She added: “This isn’t about a witch hunt.”

MacBeth was named chair on Tuesday by Speaker Nicholas Mattiello, who was elected to the top House post last week after Fox resigned following law enforcement raids on his Statehouse office and home. Fox has not commented on the investigation; authorities have declined to say whether he is a target.

MacBeth takes the helm of the committee partway through its review of thousands of pages of documents related to the EDC board’s approval of a $75 million loan guarantee for Curt Schilling’s startup video game company.

The EDC, now called the Commerce Corp., is suing the ex-Red Sox pitcher and others after 38 Studios went bankrupt, claiming the board was misled into backing the transaction.

The state is now on the hook for some $90 million related to the deal.

From her seat on the committee, MacBeth has been highly critical of Fox and others on 38 Studios, accusing the leadership of misleading her and other lawmakers before they voted in 2010 on a job-creation program under which the EDC provided the loan guarantee.

Costantino, who now serves as state health and human services secretary, was the lead sponsor of the bill. The others were Rep. Helio Melo, D-East Providence, and former Rep. Jon Brien, D-Woonsocket, both of whom MacBeth said could be subpoenaed.

Fox has said previously that he was aware of efforts to lure 38 Studios from Massachusetts to Rhode Island, but that the loan guarantee program was a separate discussion. He has maintained that the EDC - not top lawmakers - was behind efforts to pass the loan guarantee legislation to help the company.

MacBeth had previously wanted the Oversight Committee to issue subpoenas, mentioning a desire to hear from figures including former Republican Gov. Don Carcieri, who was instrumental in making the loan guarantee happen. Former Oversight Chairman Michael Marcello, who challenged Mattiello for speaker, called issuing of subpoenas premature at the time.

Any subpoenas must be approved by the speaker. The committee has not previously asked anyone to testify on 38 Studios voluntarily.

MacBeth also has been among those arguing the state should default on the debt it owes - and will owe in future years - related to 38 Studios. She reintroduced legislation this session that would block debt payments.

Gov. Lincoln Chafee and others maintain a default would harm the state’s financial reputation and significantly increase borrowing costs. Mattiello has said he doesn’t know yet whether it’s a good idea to make the payments. He’s waiting for the findings of an outside report called for last year by the General Assembly.

The debt payment the legislature will consider this year is $12.5 million.


Follow Erika Niedowski on Twitter at https://twitter.com/eniedowski

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