The probe is not finished, said state police Col. Steven M. Pare, who warns those involved "in any of these actions . . . to come forward before we come looking for you.

01:00 AM EDT on Tuesday, April 19, 2005

BY MIKE STANTON, JENNIFER LEVITZ and SCOTT MAYEROWITZ
Journal Staff Writers

PROVIDENCE -- John A. Celona, the colorful former North Providence senator at the heart of a State House influence-peddling scandal, was indicted yesterday on state charges of using his public office for private gain.

Following one of the longest grand jury investigations of his tenure, Attorney General Patrick C. Lynch said Celona was charged with striking private financial deals with three companies he was in position to help at the State House: Blue Cross & Blue Shield of Rhode Island, the CVS drugstore chain and Roger Williams Medical Center.

Meanwhile, Lynch said, a "parallel" federal investigation is moving forward and could bear more fruit in the weeks and months ahead.

Federal and state authorities declined to say whether Celona is cooperating with the investigation.

The state police superintendent, Col. Steven M. Pare, joined Lynch at a news conference at the attorney general's office to warn reluctant witnesses to cooperate.

"If you are a witness, if you were involved in any of these actions and behaviors, come forward now,"said Pare. "I ask you to come forward before we come looking for you, because this investigation is not finished."

The statewide grand jury based in Kent County, which met for 13 months, charged Celona with obtaining money -- his Senate salary -- under false pretenses, a felony that carries as much as 10 years in prison.

He was also charged with four misdemeanors, three of them alleged violations of the state's Code of Ethics and a fourth charge of filing false financial disclosures with the state. Each misdemeanor carries a maximum penalty of one year in prison.

The charges involve Celona's role as a paid consultant for CVS and an affiliate of Roger Williams Medical Center, and his arrangement to host a cable TV show that received financing from Blue Cross, while he was in a position to influence legislation of interest to those companies.

Lynch announced a state police investigation of those relationships in December 2003, after Journal disclosures, a probe that widened to examine the private business relationship of former Senate President William V. Irons of East Providence, an insurance broker, to CVS and Blue Cross.

The controversy forced the resignations of Irons and Celona. Last spring, the FBI joined the investigation. Lynch said he welcomed federal involvement, noting yesterday that the federal government "has better laws than we do" to address white-collar crime and public corruption.

"This is not an isolated crime, but a series of events over an expanded period of time, involving innumerable transactions," said Lynch in an interview. "The statewide grand jury has completed its work, and for any further comment I defer to my friend, the U.S. Attorney, Robert Corrente."

CELONA, 51, of 51 Pinewood Drive, in North Providence, was not arrested yesterday, but was made aware of the charges. He is scheduled to be arraigned in Providence Superior Court on May 25, six days after his birthday.

Celona was elected to the Senate in November 1994 and resigned on March 9, 2004, under mounting pressure from his colleagues to step down and one day after the state police carted away boxes of records and computer equipment from his North Providence home. Celona, a Democrat, served on the North Providence Town Council from 1975 to 1980 and from 1984 to 1992, including two years as its president.

William Dimitri, Celona's lawyer, described Celona's reaction to the indictments as "concerned."

"It will be handled in a normal course, through a normal process and we will wait for the arraignment," said Dimitri. "What happens after that is anybody's guess."

Count 1 of the three-page indictment -- the lone felony -- alleges that Celona, from Feb. 1, 1998, to March 9, 2004, collected a salary from the state with the intent to "cheat or defraud" the public -- "under the false pretense that he was faithfully and impartially discharging the duties of state senator in accordance with his oath of office."

Dimitri, Celona's lawyer, said: "It certainly seems like a novel theory of charging someone. I think it's an unproven theory relative to the viability of the charge. But again I haven't seen the indictment."

Counts 2 and 3 allege that Celona violated the state's Code of Ethics by accepting employment with Roger Williams Medical Center and CVS. In each case, the indictment charges, Celona "did impair his independence of judgment" as a senator.

Count 4 charges that Celona, from April 1, 2002, to Feb. 2, 2004, used his public office "to obtain financial gain" for himself and a TV production company, CRI Communications, from Blue Cross.

Count 5 charges Celona with failing to fully report private income on his financial disclosure forms to the state Ethics Commission from 2000 to 2002.

While Celona did report his consulting agreement with the Village at Elmhurst, a subsidiary of Roger Williams Medical Center, he said after The Journal revealed his CVS consulting agreement that he had inadvertently failed to report that income.

H. Philip West Jr., executive director of Common Cause of Rhode Island, said he had "personal sadness" not about the indictment, but "that a major senator in this state has gotten himself into a situation like this."

"The sorrow that I feel involves the complete shattering of a reputation of someone who I believe started out in pubic service with idealistic intents," he said.

West said the behavior of some lobbying firms has been "troubling at the least."

"Hopefully, this indictment and the trial will demonstrate to the public some of the ways that some lobbying groups have sought to compromise public officials," West said. "Until now, CVS and others who paid Celona have come through unscathed."

Kim Keough, a spokeswoman for Blue Cross, said yesterday, "Obviously, the indictment surrounding Mr. Celona's actions are not allegations against Blue Cross whatsoever."

Blue Cross, she said, "has been cooperating fully with the state's investigation and will continue to do so from here on out."

In December 2003, The Journal reported on Celona's efforts to help CRI Communications, which produced Celona's cable TV show, obtain a $75,000 sponsorship from Blue Cross, over objections of Blue Cross staff.

Michael A. Sisti, a former Blue Cross marketing executive, said that staffers were overruled by Thomas Lynch, a former state senator who was Blue Cross' vice president for legislative affairs.

Sisti testified before the grand jury last summer. Lynch left his $250,000 post at Blue Cross last November; officials declined to elaborate on the circumstances surrounding his departure, but said it was not related to the criminal investigation.

CVS issued a statement, which in its entirety reads: "CVS has cooperated fully with the state investigation of the Senator Celona matter. That investigation has resulted in the indictment of Senator Celona. CVS will continue to cooperate with any and all inquiries into this matter."

Celona, who served as a $1,000-a-month "community outreach specialist" to CVS from February 2000 to August 2003, also chaired a Senate committee that blocked pharmacy choice legislation opposed by CVS. He was hired by CVS executives Jack Kramer and Carlos Ortiz, who oversaw the company's State House lobbying.

Last year, in the wake of The Journal's disclosures, former Attorney General Jeffrey Pine conducted an in-house investigation for CVS that concluded that the company had committed "errors in judgment" in hiring Celona, but no crimes. Thomas Ryan, CVS' chief executive, said Celona's consulting agreement was "the only one of its kind for CVS."

Brett Davey, a spokesman for Roger Williams Medical Center, declined to comment yesterday.

In 1998, an independent report commissioned by the executive committee of the Roger Williams board of trustees looked into alleged financial improprieties at the hospital, including Celona's $700-a-week consulting contract.

"We were asked to investigate the allegation that state Senator John A. Celona . . . was given a 'no-show' job at the Village at Elmhurst assisted-living center for his efforts on behalf of the hospital during the Columbia/HCA matter," said the report, referring to efforts by Columbia to buy Roger Williams. (Celona opposed a bill that would have hampered the merger, but the deal never went through.)

The report, from the Boston law firm of Goodwin, Procter & Hoar, noted that Celona's previous employment was as the proprietor of a store in North Providence that sold lawn mowers, snowblowers and other power equipment.

The law firm interviewed Roger Williams' chief executive, Robert A. Urciuoli, who hospital officials have since told The Journal had urged Celona's hiring. Last April, Urciuoli testified before the state grand jury about the contract, the hospital confirmed.

According to the 1998 Goodwin, Procter & Hoar report, Urciuoli "denied that the senator is a 'ghost consultant,' and stated that he had been active in senior citizen affairs and was qualified for the position," the report said.

The law firm, noting that Roger Williams' lawyer had obtained an advisory opinion from the Ethics Commission in support of the consulting contract, concluded that Celona had done work and "we find no basis for concluding that the contract was illegal or unethical."

LYNCH SAID that the Celona indictment is an example of "cooperation that will root out and strike at the very heart of those who betray the faith the citizens put in them."

He said that his office would be working with the U.S. attorney general and other law-enforcement agencies to "pursue other allegations."

Added Colonel Pare: "This investigation is not finished. We may open another statewide grand jury and some of this behavior may be referred to a federal grand jury as well."

Thomas Connell, spokesman for the U.S. Attorney's office, declined comment, noting only that yesterday's state indictment does not reflect the results of a federal investigation.

The state Ethics Commission still has 14 pending charges against Celona that stem from three separate complaints, according to staff attorney Jason M. Gramitt. The commission has found probable cause for the violations, and the next step is for a commission hearing on the charges, said Gramitt.

The Celona case prompted legislators last year to require lobbyists to report anything of value given to public officials -- a law West calls "one of the most comprehensive lobbyist disclosure laws in the country."

Senate President Joseph A. Montalbano, D-North Providence, did not return several phone calls seeking comment.

Lynch said: "As I have said on many, many occasions that regardless of a person's station in life, whether rich or poor; regardless of a person's race or religion, and regardless of political affiliation, you will be held accountable if you break the law in Rhode Island. If you violate the public trust, even worse, this office will prosecute you. Such an abuse of trust cannot and will not be tolerated."

With staff reports from Tracy Breton.

Mike Stanton can be reached at (401) 277-7724, or mstanton [at] projo.com

Read the full text of the indictment against former state Sen. John A. Celona, at:

http://projo.com/news/pdf/2005/20050418celona.pdf