A Rhode Island grand jury has opened a criminal investigation into the Beacon Mutual Insurance Co.
The criminal probe of the state's dominant workers' compensation insurer came to light yesterday, following a divisive board of director's meeting which ended, shortly after 2 a.m., with the firing of Beacon's chief executive officer, Joseph A. Solomon, and a company vice president.
By mid-afternoon yesterday, Governor Carcieri, who had called for a ``complete overhaul'' of Beacon management, got wind of the board's split vote on Solomon's firing, and moved to oust the two dissenting board members: George Nee, secretary-treasurer of the AFL-CIO, and Henry Boeniger, government relations director of the NEA Rhode Island.
Board members learned at the start of the meeting on Wednesday after noon that an hour earlier, two people from the state police had delivered subpoenas for ``any and all records'' used in compil ing a report about Beacon re leased last week by the New York consulting firm Giuliani Security and Safety.
The report, compiled on behalf of a committee investigating Beacon headed by former Gov. Lincoln C. Almond, details how Rhode Island's dominate workers' compensation insurer gave breaks to some large policyholders and maintained ``inappropriate relationships'' with certain insurance agents.
Beacon's record-keeper has been ordered to appear before a Kent County grand jury on May 3.
State investigators will be as sisted in their probe by the FBI, said state police Maj. Steven G. O'Donnell.
Beacon, a nonprofit mutual, was created by the General As sembly to provide coverage to Rhode Island employers at the ``lowest-possible cost.'' It is now the state's dominant workers' compensation carrier, insuring about 90 percent of all Rhode Is land employers.
The state attorney general's office and the state police have been investigating Beacon since February, said Michael J. Healey, a spokesman for the state Attorney General's Office.
At the time, Carcieri had just released an internal draft audit given to Beacon board members about an anonymous caller's allegations of preferential treatment for certain companies.
In mid-February, the governor met with the attorney general and the U.S. Attorney for Providence, Robert Clark Corrente, to pass along a copy of the draft audit, said Carcieri's spokesman, Jeff Neal.
``The governor wanted to pass it on,'' Neal said, ``and express his desire that they look into it to see if it rose to the level where they could take action.''
"Governor Carcieri was un aware, until yesterday, said Neal, that the investigation had already begun.
"Board members were told about the subpoenas by the com pany's lawyers at the start of the Wednesday's meeting.
"Beacon's board met for more than 10 hours Wednesday and early yesterday morning. In the past, board members have been treated to catered dinners at the meetings, but on Wednesday they snacked on simple fare: crackers with cheese and pepperoni, a fruit plate and bottled water.
Shortly after midnight, the board called Solomon, Beacon's CEO, to join the meeting to an swer questions, said Beacon's spokesman, Bill Fischer.
Solomon was accompanied by his lawyer, J. Renn Olenn, said Fischer.
``He looked worn; he looked tired,'' said board member Brendan Doherty. ``He was a gentleman through the process.''
Solomon answered questions for about an hour, Doherty said, and then left.
An hour later, they voted.
By a show of hands, four of the seven members voted in favor of firing Solomon "for cause," which means Solomon, whose compensation last year totaled $558,210, will lose his $3-million severance pay, Fischer confirmed.
The board had already voted to fire Beacon's vice president of underwriting, David Clark, who last year earned $243,400, ac cording to company records.
One board member, Richard J. DeRienzo, who was appointed to the board on April 1, abstained from voting on Solomon. ``In good conscience,'' said Fischer, ``he could not vote one way or another based on his lack of involvement with the board prior to April 12,'' when the Almond committee released its report.
Nee and Boeniger voted against firing Solomon ``for cause,'' said Neal, the governor's spokesman.
Carcieri yesterday sent letters to Nee and Boeniger telling them to resign from the board by the end of the day on Tuesday or he will remove them from the board ``for cause,'' in accordance with Beacon's bylaws.
Both Nee and Boeniger hold gubernatorial appointee posts. Board members since 1994, both were appointed by former Governor Sundlun and reappointed by former Governor Almond. Boeniger, who serves as chairman of the board's subcommittee on compensation, last year earned $25,900, the highest of any board member.
Board members are paid $450 per board meeting, said Beacon's Fischer. Variations in board pay, Fischer said, reflect attendance at board meetings.
Nee last year earned $25,000 as a board member.
The letters from the governor were delivered to Nee and Boeniger by state sheriffs who provide security for the state courts and transport prisoners, said Neal.
Neither Nee nor Boeniger could be reached yesterday.
Both men had argued in favor of allowing Solomon to resign or be fired without the legal stipulation of cause, Neal said.
Adelita S. Orefice, the state's labor director and the board member who first alerted Carcieri to the allegations in Beacon's internal audit report, said that the company needs new leadership.
"We need to be in a position where we can build credibility, rebuild the trust for Beacon Mutual, and get it back on the right track," Orefice said, in a phone interview from North Carolina, where she is vacationing. "I think we need a new board to do that."
Doherty, a board member appointed by Carcieri, said, ``I have confidence the company will move on. There are good em ployees at Beacon.''
Solomon has been with Beacon for 14 years and the CEO since 2001.
``You find out in life that the most difficult decision to make is the easiest decision to make,'' said board member John A. Holmes Jr., ``because the facts get you where you need to be.''
Solomon could not be reached by phone yesterday, but e-mailed a Journal reporter at 4:35 p.m. to relay the following statement:
``My family and I are deeply hurt by last night's actions and are coping with this personal situation,'' Solomon wrote. ``I am proud of my 14 year involvement with Beacon. This decision cannot conceal the unqualified success that Beacon Mutual Insurance company and its policy holders have earned as a result of my leadership. It is my sincere hope that whomever is selected to run the company can duplicate, if not build upon, my success. I will truly miss working with the many fine professionals associated with Beacon."
The e-mail was signed ``Joseph A. Solomon.''
CORRECTION: An earlier version of this report incorrectly gave George Nee and Henry Boeniger's titles. Boeniger is government relations director for the National Education Association Rhode Island: Nee is secretary-treasurer of the AFL-CIO.
ARTICLE TOOLS: 
