STATE OF RHODE ISLAND
BEFORE THE RHODE ISLAND ETHICS COMMISSION
In re: Gordon D. Fox Complaint Nos. 2003-6, 2003-7
INFORMAL RESOLUTION AND SETTLEMENT
The Respondent, Gordon D. Fox, and the Rhode Island Ethics Commission
hereby agree to a resolution of the above-referenced matters as follows:
A. Findings of Fact and Admissions
- The Respondent is, and was at all times relevant to the
above-captioned Complaint, a member and Majority Leader of the Rhode
Island House of Representatives. The Respondent was originally elected
to the House of Representatives in November 1992 and has served as
Majority Leader since January 2003.
- In his private capacity, the Respondent is an attorney, admitted in
1991 to practice law in the State of Rhode Island. Since January 2003,
and at all times relevant to the above-captioned Complaints, the
Respondent has worked as an attorney associated with the law firm of
Ferrucci Russo P.C., Providence, RI. The equity owners and officers of
Ferrucci Russo P.C. are attorneys W. Mark Russo and Joseph P. Ferrucci.
Pursuant to the terms of his association with Ferrucci Russo P.C., the
Respondent receives an annual stipend of seventy-five thousand ($75,000)
dollars, payable in weekly installments. This stipend is a flat rate,
not adjusted for client development, hours billed or results achieved.
- GTECH Corporation is a large, publicly traded corporation
headquartered in West Greenwich, Rhode Island, that has for many years,
among other things, operated the Rhode Island lottery. In late 2002,
GTECH began considering selling its West Greenwich property and moving
its headquarters elsewhere in Rhode Island or southern Massachusetts. In
early 2003, GTECH representatives began relocation discussions with
representatives of the Governors office, the Rhode Island Economic
Development Corporation (EDC), Senate President William Irons and House
Speaker William Murphy.
- By late March 2003, GTECH was still undecided as to whether to
relocate its headquarters to Massachusetts or to stay in Rhode Island.
The EDC and Governors office became more aggressive in attempting
to keep GTECH in Rhode Island, including an offer by the Governor to fly
to Frankfurt, Germany to attend a meeting of the GTECH Board of
Directors. This campaigning by the State ultimately led GTECH to develop
and consider a feasible option for remaining in Rhode Island.
- On the morning of April 5, 2003, GTECH officials met with several
Rhode Island officials in the Governors office. Among those
present were Governor Donald Carcieri, Speaker William Murphy, Senate
President William Irons, and representatives of Rhode Islands
federal congressional delegation. The Respondent was not in attendance.
At this time, GTECH had retained attorney James J. Skeffington of
Edwards & Angell, L.L.P. as outside counsel to assist in this
matter. At this meeting, GTECH proposed relocating its headquarters to
Parcel 9 in Providence, entering into a twenty-year master contract with
the Rhode Island Lottery Commission and supporting the development of a
downtown hotel. This meeting resulting in an agreement between the
Governor and GTECH to negotiate an agreement consistent with GTECHs
- The lead negotiators between GTECH and the State were Mark A.
Crisafulli, GTECH Senior Vice President and General Counsel, and Michael
McMahon, Executive Director of the EDC. Also involved in the
negotiations were members of the Carcieri administration, Speaker Murphy
and President Irons, and the finance and legal staffs of both chambers.
The Respondent was not involved in these negotiations. Because GTECH
would ultimately be seeking property tax relief for its new Providence
headquarters, Carol Grant, Chief of Operations for the City of
Providence, was also involved.
- As a result of these negotiations, on April 9, 2003 a Memorandum of
Understanding was entered into among the State of Rhode Island, the ECD,
the City of Providence and GTECH. In brief, the Memorandum of
Understanding called for the following actions: (1) Introduction of
legislation, supported by the Governor, Speaker of the House and Senate
President, authorizing the Rhode Island Lottery Commission to enter into
a twenty-year Master Contract with GTECH to become the exclusive
provider and processor of Rhode Islands Video Lottery Central
Communications Systems and Online Games; (2) payment by GTECH to the
State of $12,500,000; (3) GTECHs development and construction of a
new corporate headquarters in the City of Providence and a new
manufacturing facility in the Town of West Warwick; (4) GTECHs
investment, by the end of 2008, of one hundred million ($100,000,000)
dollars toward the construction and development of the new headquarters
and manufacturing facility and to replace or upgrade its hardware and
software assets deployed in fulfilling its business operations under the
Master Contract; (5) GTECHs receipt of sales and use tax
exemptions on taxable property used in the development and construction
of the new GTECH headquarters and manufacturing facility; (6) GTECHs
full-time employment, beginning in 2008, of 1,000 persons; and (7) good
faith negotiations among GTECH, the City of Providence and the Town of
West Warwick regarding long-term tax stabilization.
- The terms of the April 9, 2003 Memorandum of Understanding included
a provision that GTECHs obligations thereunder only became binding
upon GTECH if all of the obligations of the State and EDC, including
passage of the legislation and execution of the Master Contract, were
fulfilled by May 2, 2003.
- On April 10, 2003, Senate Bill 1011, "An Act enabling the Rhode
Island Lottery Commission to enter into a master contract with GTech,"
was introduced by Senators Irons, Montalbano, Algiere, Ruggerio and
Celona and referred to the Senate Finance Committee. The Act, in general
terms, authorized the Rhode Island Lottery Commission to enter into a
twenty-year Master Contract with GTECH that would amend the terms and
conditions of existing agreements between the Lottery Commission and
GTECH, and that would contain terms consistent with those outlined in
the Memorandum of Understanding.
- Following the execution of the Memorandum of Understanding,
representatives of the City of Providence began negotiating with GTECH
to arrive at a tax stabilization agreement. Working for the City on this
agreement were Carol Grant, Chief of Operations; Joseph Fernandez, City
Solicitor; and Scott Spear, outside counsel retained by the City.
Working for GTECH were Marc Crisafulli, GTECH Senior Vice President and
General Counsel and James Skeffington, outside counsel retained by
GTECH. It was understood that the draft agreement, once completed, would
go to the Providence City Council for approval.
- On April 14, 2003, the Providence City Council passed a "Resolution
Requesting the City Council President to formulate a GTECH
Proposal Oversight Commission, to review any proposed tax
stabilization agreement between GTECH and the City. On this same date,
the Council voted to retain the services of R. Kelly Sheridan as outside
counsel for the purpose of reviewing any and all communications,
documents and/or transmittals relative to GTECHs proposal.
- On April 21, 2003, GTECH hosted a reception at its corporate
headquarters for the American Legislative Exchange Council (ALEC). On
its website, ALEC describes its mission to advance the
Jeffersonian principles of free markets, limited government, federalism
and individual liberty among America's state legislators... The
Respondent, who was invited along with all other Rhode Island
legislators, was in attendance.
- Over one hundred Rhode Island business leaders and representatives
of several business law firms were also invited to attend the ALEC
- Attorney W. Mark Russo, principal attorney and President of Ferrucci
Russo P.C., attended the ALEC reception. At the reception, Russo spoke
with GTECHs General Counsel, Marc Crisafulli. Russo and Crisafulli
were familiar with one another through their former law firms.
Crisafulli was also familiar with Russos partner, Joseph P.
Ferrucci, from when Crisafulli and Ferrucci were both associates at a
large, Providence law firm. Russo inquired regarding whether Ferrucci
Russo P.C. could be of legal assistance to GTECH relative to GTECHs
move to Providence. Crisafulli was not informed that the Respondent was
in any way associated with Ferrucci Russo P.C., nor was Crisafulli even
aware at this time that the Respondent was an attorney. Crisafulli
invited Russo and Ferrucci to come to GTECH the next morning to discuss
the matter further.
- The next morning, on April 22, 2003, Russo and Ferrucci met with
Crisafulli at GTECH headquarters to discuss GTECHs retention of
Ferrucci Russo P.C. Again, Crisafulli was not informed that the
Respondent was in any way associated with Ferrucci Russo P.C., nor was
Crisafulli even aware at this time that the Respondent was an attorney.
Following a meeting of approximately 20 minutes, Crisafulli informed
Russo and Ferrucci that the law firm was hired to represent GTECH
relative to issues surrounding GTECHs move into the City of
Providence. Later correspondence from Ferrucci Russo P.C. to GTECH
describes April 22, 2003 as the date of our engagement.
- Later that day, on April 22, 2003, Russo, Ferrucci and Crisafulli
had a teleconference to discuss legal strategy going forward. This
teleconference lasted under one hour. The Respondent did not
- A legal bill prepared by Mark Russo for GTECH in early June 2003 for
the time period of April 22, 2003 through May 2003 contains references
to legal work performed on April 22, 2003 by Russo, Ferrucci and the
Respondent. This bill was prepared entirely by Mark Russo and his
secretary, without the submission of time sheets by the Respondent and
without the Respondents knowledge.
- This bill indicates that on April 22, 2003, Russo and Ferrucci each
billed 4.2 hours attributed to three items:
(1) the meeting with Crisafulli at GTECH;
(2) a conference between attorneys Russo, Ferrucci and Fox [the
Respondent] regarding relocation options and strategies; and
(3) a teleconference with Marc Crisafulli.
19. The April 22nd billing lists 2.4 hours for work performed by the
Respondent attributed to two items:
(1) a conference between attorneys Russo, Ferrucci and Fox [the
Respondent] regarding relocation options and strategies; and
(2) a teleconference with Marc Crisafulli.
20. Notwithstanding an indication to the contrary on the legal bill, the
Respondent in fact did not participate in the April 22, 2003 conference
call with Marc Crisafulli. This has been confirmed by the Respondent,
Crisafulli, Ferrucci and Russo. Russo describes this as a billing error.
Accordingly, the 2.4 hours attributed to the Respondent on April 22nd must
be reduced by the length of the teleconference, which was an hour or less.
21. Regarding the remaining legal services noted in the bill as having
been performed by the Respondent, Conference with Firm Attorney
(J.P. Ferrucci) and Firm Attorney (W. Mark Russo) regarding relocation
options and strategies, this portion of the bill is also inaccurate.
The Respondent did not submit any time sheets relative to this notation
nor was he aware of any time being billed. Rather, Russo created this
billing entry later from his own memory without consulting with the
Respondent. Russo has explained that this entry was meant to memorialize
the Respondents participation in several, general discussions among
attorneys at the firm regarding GTECH issues over the entire billing
period (April 22 through the end of May).
22. Given these billing issues, GTECH has formally requested that
Ferrucci Russo P.C. review its billing and provide GTECH with an
explanation as to any billing errors.
23. On April 22, 2003, House Bill 6351, "An Act enabling the Rhode
Island Lottery Commission to enter into a master contract with GTECH,"
was introduced in the House by Representatives Watson, Costantino,
Landroche, Montanaro and Almeida and referred to the House Finance
Committee. This bill was substantially similar to the previously
introduced Senate bill.
24. The House Finance Committee met on April 24, 2003 to hear testimony
on, and consider, House Bill 6351. The Respondent was not a member of this
committee, and neither testified nor participated in the hearing in any
way. Following the hearing, the committee voted to recommend passage.
25. The Senate Finance Committee met on April 29, 2003 to hear testimony
on, and to consider, Senate Bill 1011. The Respondent neither testified
nor participated in the hearing in any way. Following the hearing, the
committee voted to recommend passage.
26. On April 30, 2003, both bills passed the House and Senate. In the
House, the Respondent participated in the floor discussion of House Bill
6351. The Respondent seconded motions to pass both bills, and voted in the
affirmative for passage of both bills. House Bill 6351 passed in the House
with a vote of 62-1, with Representative Wasylyk voting in the negative.
Senate Bill 1011 passed in the House with a vote of 61-1, with
Representative Wasylyk voting in the negative.
27. Senate Bill 1011 passed in the Senate with a vote of 35-1, with
Senator Raptakis voting in the negative. House Bill 6351 passed in the
Senate with a unanimous vote of 31-0.
28. Governor Carcieri signed Senate Bill 1011 into law on May 2, 2003.
According to Marc Crisafulli, who made the decision to retain Ferrucci
Russo P.C., if the GTECH legislation had failed, then GTECH would have
scrapped its plans to move to Providence and the specific work that
Ferrucci Russo had been engaged to provide would no longer have been
29. On May 12, 2003, pursuant to the authority granted by the GTECH
legislation, the Rhode Island Lottery Commission and GTECH entered into
the previously negotiated Master Contract.
30. With the issues surrounding the Master Contract settled, GTECHs
focus turned to the City of Providence for negotiation of a tax
stabilization ordinance. For this issue, Ferrucci Russo P.C. took the lead
as GTECHs outside counsel. Beginning on May 1, 2003, the Respondent
began performing legal services for GTECH as a Ferrucci Russo attorney.
31. On May 5, 2003 there was a meeting of the City of Providence GTECH
Proposal Oversight Commission. Prior to the meeting, GTECHs Marc
Crisafulli met with Joseph Ferrucci and Mark Russo at Ferrucci Russos
downtown offices. As they left the law offices to walk to the meeting at
City Hall they were met by the Respondent, Gordon Fox, who joined them on
the walk to City Hall. Crisafulli recognized the Respondent as Majority
Leader of the House of Representatives, but did not yet know that
Respondent was an attorney for Ferrucci Russo. In fact, Crisafulli has
stated under oath that he was unsure, at the time, why the Respondent was
with them. It was not until the meeting of the GTECH oversight Commission
that Crisafulli came to understand that the Respondent was associated with
Ferrucci Russo and was acting on behalf of GTECH.
32. In May and June 2003, Ferrucci Russo attorneys, including the
Respondent, represented GTECH before the Providence City Council and its
subcommittees relative to a proposed tax stabilization ordinance. On July
2, 2003, the Providence City Council passed An Ordinance
Establishing a Tax Stabilization Plan and related Tax Stabilization
Agreement for GTECH Corporate Headquarters, As Amended.
33. The enactment of the Tax Stabilization Ordinance brought to a close
the principal focus of the legal work for which Ferrucci Russo was
retained by GTECH. Although GTECHs move to Providence will require
further legal assistance in areas such as permitting, labor and developer
negotiation, GTECH has not to date provided Ferrucci Russo with any
B. Travel of the Case
- Ethics Commission Complaint No. 2003-6 was filed on October 10, 2003
by Patricia Morgan. Ethics Commission Complaint No. 2003-7 was filed on
October 20, 2003 by Robert P. Arruda and Beverly M. Clay in their
capacities as officers of Operation Clean Government.
- The Complaints allege that the Respondent, Gordon D. Fox, a member
of the Rhode Island House of Representatives (hereinafter, "House"),
a state elected position, and current House Majority Leader,
participated in a vote of the House on April 30, 2003 to pass
legislation that would financially impact GTECH Corporation. The
Complaints further allege that at the time of said vote of the House,
GTECH Corporation had an attorney/client relationship with the
Respondent and/or the Ferrucci Russo P.C. Finally, the Complaints allege
that the Respondent failed to file a Statement of Conflict of Interest
pertaining to the aforedescribed conflict of interest.
- For the purposes of this Informal Resolution and Settlement,
Complaint Nos. 2003-6 and 2003-7 are consolidated into a single action
identified by both Complaint numbers.
- On October 28, 2003 and November 14, 2003, the Ethics Commission
initially determined that the facts alleged in the Complaints, if true,
were sufficient to constitute knowing and willful violations of the Code
of Ethics, and a full investigation was authorized. Pursuant to this
authorization, the prosecution undertook an extensive investigation into
the allegations of the Complaints. The Prosecution team interviewed
multiple witnesses, obtained sworn testimony via affidavit and
deposition and made use of the Commissions subpoena authority.
Commission investigators sought, obtained and reviewed hundreds of pages
of relevant documents and hours of audio and video tape recordings.
- Following this investigation, the relevant results of which are
detailed above and admitted by the Respondent, the parties have agreed
to resolve the Complaints consistent with the terms outlined below.
C. Conclusions of Law
- The Respondent, a member of the Rhode Island House of
Representatives, a state elected position, was at all relevant times
subject to the Code of Ethics in Government.
- Ferrucci Russo P.C. was retained by GTECH Corporation on April 22,
2003 to provide GTECH with legal services relative to issues surrounding
GTECHs relocation of its headquarters to the City of Providence.
The Respondent knew or should have known of the existence of this legal
and business relationship.
- The Respondent was a business associate of Ferrucci Russo P.C. This
business association existed on April 30, 2003, on which date the
Respondent participated in House discussion and vote relative to the
passage of House Bill 6351 and Senate Bill 1011.
- The legal work for which Ferrucci Russo P.C. was retained was
dependent upon the passage of the GTECH legislation. Accordingly, it was
reasonably foreseeable that the Respondents business associate,
Ferrucci Russo P.C., would derive a monetary gain by reason of the
Respondents official action in the Rhode Island House of
Representatives on April 30, 2003. For these reasons, the Respondent had
an interest that was in substantial conflict with the proper discharge
of his duties in the public interest, in violation of R.I. Gen. Laws §
D. Mitigating Factors
In mitigation of the conduct detailed above, and without in any way
depreciating his responsibility for this situation, the Respondent points
to the following factors which warrant the informal resolution and
settlement of this matter:
- The Respondent did not know that his business associates, Mr.
Ferrucci and Mr. Russo, had or were likely to secure a business
relationship with GTECH prior to the time that legislation involving
GTECH came before the House for vote on April 30, 2003, although he
should have known this was a significant possibility.
- The Respondent did not perform any work as an attorney for GTECH
Corp. prior to the House vote on April 30, 2003, although he believes
there may have been sporadic, informal references to the pending GTECH
project. In particular, the Respondent was not part of a telephone
conference with GTECHs counsel on April 22, 2003.
- The Respondent did not submit any time sheets to Ferrucci Russo P.C.
regarding GTECH Corp. for the time prior to the House vote on April 30,
2003, and he was unaware that Ferrucci Russo P.C. later billed GTECH
Corp. for time attributed to the Respondent for April 22, 2003.
- The Respondent has since learned that Ferrucci Russo P.C. did bill
GTECH Corp. for 2.4 hours of his time on April 22, 2003. This was an
error. The Respondent further understands that this billing was created
by Ferrucci Russo P.C. later on in May 2003, that this billing was
apparently an effort by Ferrucci Russo P.C. to recapture
time expended approximately a month earlier, and that the 2.4 hour entry
erroneously attributed to the Respondent may have been an effort to
estimate a total for a number of informal conversations occurring during
the early stages of Ferrucci Russo P.C.s relationship with GTECH
- The Respondent is not an employee of Ferrucci Russo P.C. He is an
independent contractor who received a fixed compensation for his work.
Consequently, he did not gain any additional benefit from the time
Ferrucci Russo P.C. apparently billed GTECH Corp.
- The Respondents association with Ferrucci Russo P.C. began in
January 2003, four months prior to the events at issue. In that
interval, Mr. Fox had not put in place a procedure which would inform
him efficiently of prospective business of Ferrucci Russo P.C. in order
that he and Ferrucci Russo P.C. might identify any actual or potential
conflict with the Respondents legislative responsibilities.
- The Respondent has had no prior complaints filed against him during
his tenure as a legislator.
- The Respondent, through counsel, went to the Commission shortly
after the complaints were filed and sought to resolve them through the
admission of responsibility he makes here. Since that time, he has
cooperated fully with the Commission.
- The Respondent believes that whatever business relationship Ferrucci
Russo P.C. had developed with GTECH prior to April 30, 2003, it did not
affect the House vote taken that date, or his activities as a
- The Respondent is terminating his relationship with Ferrucci Russo
P.C. in order to ensure that his legal practice does not create a
conflict with his legislative duties and that he be in a position to
maintain full control over the nature of the legal business which he
Pursuant to the above Findings of Fact, Conclusions of Law and
Mitigating Factors, the Prosecution and the Respondent agree, pursuant to
R.I. Gen. Laws § 36-14-13(d), to the imposition by the Commission and
to payment by the Respondent of a civil penalty of Ten Thousand ($10,000)
Dollars. The above terms represent the full and complete Informal
Resolution and Settlement for Complaint Nos. 2003-6 and 2003-7.
Jason Gramitt, Commission Prosecutor
Gordon D. Fox, Respondent
Lise J. Gescheidt, Counsel for Respondent
John A. MacFadyen, Counsel for Respondent
Note: The Commission accepted the settlement and imposed a $10,000 civil
penalty. (January 20, 2004)