The Gateway Affair:
A national union leader. A key Providence
official. Two old friends. How their private and public interests
crossed in a downtown real estate venture.
By Dean Starkman
Journal-Bulletin Staff Writer
Frank E. Corrente says his father was working
at a macaroni factory in the North End of Providence, when Arthur
A. Coia's father arrived and started to organize the workers into
a union.
The encounter, more than 50 years ago, began
a friendship between the families that has spanned four generations.
The sons rose in separate careers of public
trust: Corrente to the number-two job in the City of Providence;
Coia to the top of the entire Laborers' International Union of
North America.
But they stayed close, and one day got into
Providence real estate together. The venture was an office building
called Gateway. It never really lived up to expectations.
Last fall, the time came for the partners
to get out. And a union benefit plan, subsidized by the city and
run by Laborers' officers, put up the cash.
By 1974, Mayor Joseph A. Doorley had been
in office for almost 10 years, and the sharks were circling.
No fewer than four Democrats challenged him
in the primary, and they were hammering at his personal finances.
Frank Corrente was in Doorley's camp. Doorley
had given Corrente his first city job: fiscal adviser to the Providence
Redevelopment Agency.
The primary was touch and go, until the Coias
weighed in.
Young Arthur Coia, head of the Laborers'
Rhode Island District Council, endorsed Doorley, saying the mayor
had always shown concern for city employees.
And then, Coia's father, Arthur E. Coia,
second-in-command of the Laborers' International Union of North
America and a commanding figure in Providence politics, came out
for Doorley.
The elder Coia declared that Doorley had
given city workers some of their best contracts ever.
Doorley survived the primary.
"We did it our way," the mayor
exulted.
Two days later, Doorley signed a new contract
with Laborers' Local 1033. The contract included an innovative
benefit: free legal services, "prepaid" by the city,
through a new benefit fund.
It was to be called the Rhode Island Public
Service Employees' Legal Service Plan.
Doorley agreed that the city would contribute
five cents for every manhour worked by a union employee, or about
$120,000 a year.
The younger Coia, explaining the arrangement
at the time, said the plan would develop a "reservoir"
of lawyers to provide services to city workers.
So far, though, Coia acknowledged, the plan
had recruited only one lawyer: his associate, Albert J. Lepore.
As for Doorley, he lost the general election
that November.
Six months later, he surfaced in a new job:
the first administrator of the Rhode Island Public Service Employees'
Legal Service Plan.
The new mayor, Vincent A. Cianci Jr., denounced
the plan soon after taking office in 1975. He called it a thinly
veiled means of steering taxpayer dollars to Doorley and Lepore.
"As mayor, Mr. Doorley accomplished
something - taking taxpayers' money even after he left office,"
Cianci cracked.
But eventually, Cianci, too, would reconcile
himself to the fund.
In 1978, he doubled the city's contribution,
to 10 cents a manhour, or $320,000 a year.
In 1986, after Cianci had been removed from
office because of an assault conviction, his successor, Joseph
R. Paolino Jr., doubled the taxpayers' contribution again, to
20 cents a manhour, or more than $500,000 a year.
By the early 1980s, things were looking up
for Frank Corrente.
He had just been promoted from the Providence
Redevelopment Agency to city controller.
Then opportunity knocked again.
A private accounting client asked if Corrente
knew anyone interested in investing in an office building.
Corrente says he brought the idea to an old
friend, John F. Capaldi, a leading Rhode Island contractor.
Capaldi bought a majority interest; other
friends invested, too.
The Coias came in for 16 percent.
The project was arranged through the Providence
Redevelopment Agency, where Corrente had worked.
"This thing might turn out pretty good,"
Corrente recalls thinking.
For about $22,000, Corrente says he ended
up with about 18 percent of the deal.
The three-story building was completed in
1982.
Some familiar tenants moved in, including
Capaldi's company, for $47,500 a year, in 1986, and, later, Doorley
with the Legal Service Plan.
The 14-year-old building, at 410 South Main
St., sits near the funky galleries and coffee shops of Wickenden
Street, right off Route 195.
A sign on the side says, "Gateway."
In Providence, mayors come and go.
Joe Virgilio endures.
About once a month, he emerges from the Gateway
building, climbs into the back of a 1995 blue Oldsmobile Delta
88 with license plates "1033," and heads to another
private meeting at City Hall.
Virgilio, who started as an officer with
another union, joined the Laborers' when Coia first recruited
Providence city workers in the mid-1960s.
He's been there ever since.
At turns courtly and vociferous, gregarious
and secretive, Virgilio has ripped up proposals in the face of
city officials and defended zoo keepers fearful of approaching
Alice III, the ill-tempered elephant.
He has called the mayor "a maggot,"
City Council members "a bunch of clowns," and union
critics "creeps."
He is fiercely loyal to the union, and to
the Coias.
These days, when Virgilio arrives at City
Hall, the meetings are with an old friend, Frank Corrente, the
city's administration director.
Corrente says their close relationship never
compromises negotiations.
Indeed, he says, their talks can be "real
battles."
In 1992, Corrente says, he sent Virgilio
a list of tough demands, which included the elimination of the
Legal Service Plan. The subsequent talks grew so heated, Corrente
says, he walked out.
"You know what I did?" Corrente
says. "I got up and I said, 'This negotiation is over. I
don't care what you do.' "
"They're chasing me down the hall -
'When are we gonna meet again?' - I said, 'I don't care if we
never meet again!' "
Corrente says the phone rang at 9 the next
morning.
He recalls Virgilio's capitulation. "
'All right, Frank. You got what you want.' "
"And that," says Corrente, "is
the way the negotiations always went."
That year, the city's payments to the Legal
Service Plan rose another nickel, to 30 cents per manhour, or
$565,560 a year.
In 1993, Virgilio got a letter.
It was the City Council - again.
Over the years, council members had railed
against various aspects of the Laborers' contract: the two pensions,
the health-insurance-for-life, the days off on hot days, the soaring
disability rates.
"Grandstanding," Virgilio once
called the criticism.
This time, the council was after the Legal
Service Plan.
The internal auditor, at the council's request,
was asking for financial details of the fund.
Four months later, he was still waiting.
The auditor wrote again.
Eventually, Virgilio replied. But he did
not provide figures.
Instead, he wrote that he had asked Corrente
to arrange a private meeting with council members, but the meeting
had fallen through.
"Needless to say, I am disappointed,"
Virgilio wrote.
Last year, the city and the Laborers' agreed
to take 10 cents per manhour from the Legal Service Plan - and
put it into a new prescription benefit.
As a result, the city's budgeted contribution
to the Legal Service Plan for 1995 dropped to $550,000.
According to a labor negotiator for the city,
Virgilio promised to wait until at least next year before asking
for another increase for the Legal Service Plan.
A few years ago, Capaldi says, he called
the Gateway partners to a meeting.
He told them he wanted out. His company had
been sold and he needed to liquidate.
The other partners balked, Capaldi says.
Corrente says that while tenants were scarce and the cash flow
was "terrible," he thought the building would turn around.
Eventually, the partners went along with
Capaldi. One day, Corrente says, Capaldi came to him with good
news.
He had found a buyer.
Corrente says he did not ask who the buyer
was.
He did not pay attention to the details.
"Two million. One-eight. Two-million
five. Two-six," he says. "It's around that number."
The sale took place Oct. 12, 1994.
The buyer was the 410 South Main Street Title
Holding Company, a tax- exempt corporation, founded in December
1993.
The corporation is a subsidiary of the Rhode
Island Public Service Employees' Legal Service Plan. Doorley says
the Legal Service Plan put up the bulk of the down payment and
is the guarantor of the financing.
The Gateway building has about 24,450 feet.
At $2.3 million, its per-foot price was $94.
Details about the Rhode Island Public Service
Employees' Legal Service Plan are closely held.
The plan was created under federal laws designed
to protect union benefit funds from abuse. Contributions - from
an employer, the union or its members - are made to an independent
entity overseen by trustees.
The ground rules of such plans, including
who appoints trustees and how money may be spent, are established
by a trust agreement negotiated between the union and employer.
But the city does not have a copy of the
1974 trust agreement that set up the Legal Service Plan, according
to City Solicitor Charles R. Mansolillo.
He speculates that the document may have
been discarded during a previous administration.
And, while most benefit plans file detailed
financial disclosures with the Labor Department, the Legal Service
Plan files only "short forms." These don't say how the
plan's money is spent, or even who the trustees are.
According to federal rules, only plans serving
less than 100 people may use the "short form." Plan
executives in 1986 - one of the few times they said anything in
public about the plan - said it served more than 500 people.
The plan's latest filing, in 1993, says it
had $143,000 in assets.
The trustees of the Legal Service Plan are
all officers of the Laborers' union: Joe Virgilio, the local president;
Virgilio's daughter, Vicki, the local's recording secretary; and
Pasquale D'Amico, the local's secretary- treasurer.
Efforts since May to interview the trustees
have been unsuccessful.
A call to D'Amico at the city Public Works
Department, where he works as a supervisor, was returned by a
secretary of Local 1033.
Vicki Virgilio, reached in the city Personnel
Department, where she works as a supervisor, declined comment.
She referred questions to her father.
Joe Virgilio initially agreed to an interview.
"I would love to talk about the Legal
Service fund," he said in April. "It's the best run
in the country."
He asked the Journal-Bulletin to submit questions
writing.
The newspaper complied.
Virgilio has not responded.
The sale of the Gateway building last fall
came at a busy time for Coia.
He had only recently returned to work after
a months-long bout with cancer.
Now he was about to take on the Justice Department.
On Nov. 4, according to documents filed in
a civil suit, federal prosecutors told him he was the bullseye
of a three-year racketeering investigation. They wanted him out
of the union.
Coia hired a legal team to negotiate with
federal prosecutors. By February 1995, Coia had won an unusual
settlement: The Justice Department left him in charge of a union-wide
reform campaign. He also kept control of the union's Byzantine
finances.
A centerpiece of the agreement, which Coia
and the rest of the union's board signed five months after the
Gateway sale, is a new ethics code for union executives.
The code subjects violators to administrative
penalties, including expulsion.
One clause bans union officials from accepting
payments from contractors who employ union members.
Another clause bans self-dealing by union
executives. It says: "There shall be no contracts of purchase
or sale . . . which will result in the personal profit or advantage
of any officer or representative of the Union."
Since signing the agreement with the Justice
Department, Coia has returned to his role as a Washington luminary.
He is one of President Clinton's closest
advisers in organized labor. He shows up on TV talk shows and
at Democratic Party fund-raisers, and speaks with reporters on
subjects ranging from his recent illness to the Davis-Bacon Act.
In April, Coia sat for a three-hour interview
with the Journal-Bulletin, devoted mostly to the Justice Department
investigation and settlement.
He says the union's anti-corruption unit
was his inspiration, and, though it reports to him, he is as subject
to discipline as any shop steward.
Coia acknowledges that Coia & Lepore
has handled the bulk of the legal work for the Legal Service Plan,
but he says that his firm did not profit from the union. The plan
and the union are separate, he says.
"We don't do any work for the union,"
Coia says. "Doing work in that Legal Service (Plan) is not
doing work for the union. Do you understand that?"
"It's not the union. That's why there
are trustees there," Coia says. "It is . . . a freestanding
entity. I like that terminology. Freestanding entity - it's run
on its own."
And though rents paid from union affiliates
to Coia's real estate partnership may represent an ethical violation,
Coia says any lapse was short- lived. He says that not much money
was involved because the affiliates moved in less than a year
before the sale.
Coia says one of the few details he knows
about Gateway is that the investment resulted in a loss.
"We had an interest of $40,000, and
we recovered or will recover $5,000," Coia says of his family's
original investment. "I haven't gotten it back yet; another
loss."
Since April, Coia has declined to discuss
Gateway. Instead, he issues written statements through the union's
public relations office in Washington.
A statement May 10 said: "There were
no union funds involved" in the sale.
But a week later, spokeswoman Linda Fisher
said the issue of whether the money had come from the union "may
be a matter of semantics."
Another statement, on May 23, said the sale
price was below both an appraisal and the city's assessment.
"I was a passive minority partner in
the building," Coia's statement said. "I therefore am
not aware of many details."
"I have received no profit nor return
of my capital investment," the statement said, "and
have been advised that the proceeds of the sale have been used
to repay loans to the building."
On Thursday, in another statement, Fisher
wrote: "In response to your letter of June 26, please note
the LIUNA Ethical Practices Code was conceived and adopted in
February 1995, while the transactions at issue in your letter
occured in October 1994."
Joe Doorley has no doubt about who bought
Coia's building.
"It's an arm of the union," he
says.
Doorley, who is still the legal plan's administrator,
says Gateway offered the union extra space, "tremendous"
tax advantages, and, mostly, a highly visible location.
"It would be kind of nice someday to
see on the roof: 'Laborers International Union,' " he says.
Doorley says he never discussed the sale
with Coia.
"I thought he had divested himself of
his interest in that partnership," Doorley says.
Frank Corrente is not one to put on airs.
His desk is heaped with papers. His gray hair is tousled. He waves
his arms and pounds a desk to make a point.
At his cramped City Hall office, Corrente
says he had no idea until it was too late that a city-subsidized
union fund had bought his building.
"You know it's a funny thing,"
Corrente says, slapping his desk with a piece of paper for emphasis.
"I didn't know who bought the building. I swear, I did not
know."
He says he allowed Capaldi to handle the
partnership's affairs.
"I didn't know who was buying the building,"
he says, now clapping his hands. "Absolutely not. I didn't
care. I didn't care. The reason I didn't care is that John Capaldi
is the most honorable man I ever met in my life. If anything,
he will help a dog cross the street. That's the kind of guy he
is."
Corrente concedes he felt "chilled a
little bit" when he discovered the buyer was the city-funded
Legal Service Plan.
"But at that point, there was nothing
I could say," he says. "I had no control over it."
He says he is not sure if he will receive
any money from the sale, and it may result in a loss.
And he's less certain on the question of
whether city money, in fact, bought his building.
"I don't know how the money is intermingled"
at the plan, he says. "Maybe they borrowed it all. I have
no idea. Certainly, I can't tell them how to run their fund."
State ethics laws prohibit public officials
from engaging in transactions that conflict with their public
responsibilities.
Corrente says he never discussed the Gateway
sale with Virgilio.
"I want to make it very clear, it never
ever crossed my mind, the correlation of the building and me negotiating
contracts," he says. "Never. Never. And even if it did,
which it didn't, I realize my responsibility to the administration,
and the mayor, and the process. Believe me."
Two years ago, the law firm of Coia &
Lepore hired Coia's son-in-law as an associate.
His name is Darren Corrente, Frank Corrente's
son.
Frank Corrente says his son, who could not
be reached, does not handle clients for the Rhode Island Public
Service Employees' Legal Service Plan.
"He doesn't want to show any connection
between me and the city," Corrente says. "Darren is
a very careful kid."
In any case, Corrente says, Coia is on hand
to provide guidance.
"Arthur will protect his son-in-law,"
Corrente says, "and make sure he does the right thing."
Arthur A. Coia, general president of the
Laborers' International Union of North America, benefited from
a $2.3 million real estate sale to a fund run by officers of his
own union.
Coia was a top Rhode Island Laborers' officer
when the fund was created 21 years ago to provide legal services
to union members. Since then, his law firm has received most of
the fund's work.
A union ethics code, drafted this year to
avoid a government takeover, bans inside dealing by union executives.
The City of Providence has subsidized the
fund with more than $6 million.
City Administration Director Frank E. Corrente,
who negotiates with the union, was among Coia's partners in the
real estate venture.
Corrente has a direct say over how much the
city contributes to the fund.
State ethics laws bar public officials from
private transactions that conflict with their public responsibilities.
Arthur A. Coia:
General president, Laborers' International
Union of North America
Partner, Gateway Associates
Partner, Coia & Lepore, a Providence
law firm
As Rhode Island Laborers' official, oversaw
creation of the Legal Service Plan in 1974
Signed February agreement with Justice Department
placing him in charge of internal union anti-corruption campaign
Says the Gateway sale took place five months
before he agreed to a new union ethics code
Frank E. Corrente:
Administration Director, City of Providence
Partner, Gateway Associates
Longtime friend of Coia and Virgilio
Negotiates city contracts with Virgilio and
other union heads
Says he was not aware Virgilio's city-funded
legal plan bought his partnership's building.
Joseph A. Doorley Jr.:
Administrator, Rhode Island Public Service
Employees' Legal Service Plan
Mayor of Providence, 1965 to 1974
Called himself "No Dough Joe" for
his tight-fisted stance with unions
Approved the Legal Service Plan as mayor
in 1974
Took over as its administrator in 1975
Says he has no authority to discuss the plan's
finances
Joseph A. Virgilio:
President, Laborers' Local 1033, known as
the Rhode Island Public Services Employees' Union
Union fixture and Coia ally since mid-1960s
Negotiated the Legal Service Plan as union
official
Became head trustee
Trustees are responsible for plan's assets
Declines to discuss the plan
Copyright © 1997 The Providence Journal
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