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Alves case generates grand jury subpoenas

12:37 AM EDT on Friday, October 5, 2007

BY MIKE STANTON

Journal Staff Writer

Grand-jury subpoenas have gone out in the FBI’s investigation of allegations that state Sen. Stephen D. Alves abused his office by killing tax-incentive legislation in June.

According to people familiar with the investigation, subpoenas went out in the past few days to state Sen. Christopher B. Maselli, D-Johnston, and Jeffrey Britt, the lobbyist for trucking company A. Duie Pyle, the intended recipient of the tax break.

Michael J. Lepizzera Jr., Britt’s lawyer, confirmed that Britt was subpoenaed yesterday to testify before a federal grand jury later this month.

Maselli has also been subpoenaed to tell his story to the grand jury, which is investigating allegations of influence peddling at the Rhode Island State House.

“Since I don’t want to do anything to hinder the ongoing investigation by the FBI and the U.S. Attorney’s office, I will have no further comment about Duie Pyle,” said Maselli. “I’ve already publicly said everything I know.”

The Alves inquiry is part of Operation Dollar Bill, a larger probe that has also examined the possible intersection of Alves’ private investment business with his public office and reached into Johnston, Cranston, Lincoln, Woonsocket and West Warwick.

The subpoenas follow a story in The Providence Sunday Journal exploring allegations that Alves, a stockbroker and chairman of the powerful Senate Finance Committee, spiked a proposed tax break for Duie Pyle, a Pennsylvania trucking company building a distribution center in Johnston, as payback against Johnston Mayor Joseph M. Polisena for not steering him pension-fund business.

Britt told The Journal that Alves opposed the incentive, and that the West Warwick Democrat also expressed anger at Polisena for not giving him a piece of the pension-fund work. “Polisena screwed me,” Britt recalls Alves saying.

Alves calls Britt a liar. Alves initially denied that they had any discussions about Duie Pyle, then conceded in an interview with The Journal Wednesday that they did discuss the matter, but only briefly, at Moda, a Providence waterfront bar, in June. But Alves says he wasn’t aware that Johnston had transferred $29 million in pension funds to two other brokers at his firm, UBS Financial Services, in May.

Joseph Rodio, a lawyer for Johnston’s pension fund, said that someone from UBS said in a meeting with town officials in June that Alves was upset at not getting a crack at the business.

Alves denies that, saying he was negotiating at the time to leave UBS, which he did last month, to start his own firm, Dorrance Street Financial.

Maselli, a freshman senator, told The Journal that he went to Alves late in the legislative session, after the Duie Pyle tax incentive didn’t make it into the budget, and that Alves told him he couldn’t support the trucking company’s measure because it would “throw the budget out of whack.”

Polisena told The Journal last week that he has been questioned by the FBI. And people familiar with the probe say that investigators have also sought records on the Duie Pyle deal from the Rhode Island Economic Development Corporation, which recommended the tax incentive.

Rodio, who is also Duie Pyle’s lawyer, says that he went to the FBI in the summer, after the tax-incentive measure died. The EDC had recommended the incentive because Duie Pyle met the criteria of promising to create 120 well-paying jobs, two-thirds of them paying between $50,000 and $60,000.

The legislation would have exempted Duie Pyle from paying about $330,000 in sales tax on the materials used to construct its $9-million distribution center.

Alves said that the measure died because Duie Pyle and its advocates “dropped the ball” — failing to lobby him until it was too late.

Maselli says that he questioned Alves’ logic, since the state couldn’t count on any tax revenue from a company that wasn’t definitely coming at that point — and defeating the bill could have killed the deal, and all of the tax revenue that Duie Pyle will generate.

Rodio said that he advised Duie Pyle not to come to Rhode Island after the measure failed, but the company was committed to the project by then, and remains hopeful that support from Polisena and Governor Carcieri could still resurrect the incentive.

Alves, who has refused calls from Governor Carcieri and others to step aside as Finance chairman, yesterday received the public support of Senate President Joseph A. Montalbano, himself a subject of the investigation for his title work with banks.

Montalbano, who recently paid a $12,000 ethics fine for failure to disclose his title work for the Town of West Warwick, said that he is “100-percent” behind Alves.

“I don’t make leadership decisions based on newspaper articles,” said Montalbano. “He’s got a record of accomplishment. He’s a person of compassion.”

With staff reports from M. Charles Bakst.

mstanton@projo.com