State Rep. wants to stop paying bondholders following SEC fraud charges

The Chair of the House Oversight Committee leading a probe into the 38 Studios deal says Rhode Island taxpayers should stop paying bondholders.

"I don’t think the taxpayers should be on the hook for something that is fraudulent,” said Representative Karen MacBeth.

MacBeth’s statements come one day after the SEC filed fraud charges against Rhode Island’s Economic Development Agency and Wells Fargo. The court complaint accuses the two of making ‘materially misleading statements when they sold bonds to fund the deal.’

The Democrat tells ABC 6 News that she’s already called down to have legislation drafted that would halt those payments.

"If it’s ready today I’ll submit my notice under rule 70 that I will introduce it tomorrow,” said MacBeth.

House Speaker Nick Mattiello saying he has no intention of stopping payments.

“When you look at the situation, it is very nuanced. We’ve made a policy decision that we are going to pay the bondholders back because it was in the taxpayers best interest. There’s an on-going lawsuit we don’t want to jeopardize the outcome of the lawsuit,” said Mattiello.

MacBeth says she’s hoping to see more charges from the SEC, the FBI or State Police.

"This is the very first time that we’ve seen accountability. There’s been the lawsuit, there’s been settlements but this is the very first time that the people of this state can look and say ok there are businesses or companies being held accountable and there’s people in the EDC being held accountable. My hope is this is just the beginning,” said MacBeth.

As far as her legislation to stop paying the bondholders, MacBeth says there are two opportunities to address that, both in community and when the general assembly takes up the budget later this year.

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