Candidate Whitehouse and Beacon

The ProJo’s Mike Stanton helps to narrow the focus on the Beacon imbroglio to the Senator Sheldon Whitehouse’s involvement:

The report also focused on efforts by Beacon’s then-CEO, Joseph A. Solomon, to solicit campaign contributions for Whitehouse’s Senate campaign. From May 27, 2005, to June 30, 2005, the report says, 14 Beacon employees, board members and related consultants gave $15,600 to Whitehouse.
“Based on discussions with several of the donors, Solomon offered to personally reimburse them for their donations, and two employees told us that they accepted his offer and were reimbursed,” the report said.
Reimbursing contributions is illegal. A Beacon spokesman said last night that the company learned of the contributions last summer, and referred the matter to the Federal Elections Commission and the Rhode Island State Police.
During the same period, the state’s auditors also found e-mails among Whitehouse, Dufault and Beacon executives discussing pending Beacon legislation at the Rhode Island State House. As an aide to then-Gov. Bruce Sundlun in the early 1990s, Whitehouse had helped reform Rhode Island’s troubled workers’ compensation system, resulting in the creation of Beacon.
The e-mails “appeared to provide the candidate with possible material for a commentary in favor of the Beacon-proposed legislation,” the report says….Beacon later asked Whitehouse to hold off, and no commentary was published.
Whitehouse told The Journal last night that he had asked Solomon to organize a fundraiser, but that Solomon instead collected checks. Whitehouse said it was “unfortunate” — and he was unaware — that any donors had been reimbursed.

Regardless of whether or not Whitehouse was aware of how Solomon rounded up the cash, the fact is that Whitehouse was clearly willing to help promote Beacon and a close reading of some of the emails excerpted in the report (go to pages 296-7) reveal a possible quid pro quo. Whitehouse was prepared to advocate for Beacon by submitting a commentary to the ProJo. Further, the emails give strong evidence that the potential commentary piece was actually “ghost-written” by Beacon and Guy Dufault: Whitehouse just needed to put his name on it. However, for reasons explained in the emails excerpted in the report, Whitehouse ultimately did not submit a piece to the Journal. Thus, there is no conclusive evidence that a quid pro quo was exercised even if the intent seemed to be there.
The summary of the pertinent emails is in the extended section of this post.

During the period 6/16/2005 and 6/23/2005, we found several Emails between Solomon, a vice president, the owner of Cornerstone and the candidate {Senator, then-candidate, Sheldon Whitehouse-ed.} which appeared to provide the candidate with possible material for a commentary in favor of the Beacon-proposed legislation. On 6/16/2005, Solomon wrote to the candidate and provided documents which he claimed, “address the ‘lowest possible price’ concern.”
On 6/16/2005, the candidate replied to Solomon and stated, “[The owner of Cornerstone] {Guy Dufault–ed.} said he’d draft something for me to look at, and I’m not sure what your key issues are in all of this. There is the ‘lowest rates’ issue, the out of state business issue, the mutual fund issue (what does this do to for-profit status?), the NCCI issue, the board changes (BM or just the sub?) and the general great job done point. I need some focus. Thanks.” Solomon forwarded this response to the owner of Cornerstone on 6/17/2005.
On 6/22/2005, a vice president sent the candidate an Email with a three-page document, written in the first person, but for which the author is not identified; it appears to be a letter or statement in support of the Beacon-supported legislation. In his Email, the vice president wrote, “please accept this rough draft for your consideration.”
On 6/23/2005, the same vice president sent another Email to the candidate and stated, “before you submit anything to the Journal–we may have hit a snag at the state house. Inexplicably, the Speaker put the bill over until Friday. This, of course, limits the availability of a veto override. [Solomon] is to meet with the speaker at some time tonight. he is here now…just wanted to give you the heads up before you submit anything. We’re worried about some kind of deal, thus the delay…as always, thanks for the support.
Later on in the day on 6/23/2005, the vice president sent the candidate another Email and copied Solomon and the owner of Cornerstone. In the subject line, he wrote, “I just spoke to [a Beacon board member], can you hold off on the commentary piece until we know the date of the override? Thanks so much.”
An Internet search for news stories on or shortly after 6/23/2005 did not identify statements made by the candidate related to Beacon.

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16 years ago

This is just one of several skeletons for Sheldon, skeletons that, inexplicably, never haunted him during the campaign.
These bundled BEACON contributions were obvious to anyone who researched the FEC database, so there’s no excuse for the media’s failure (nor Chafee’s, for that matter) to pick up on this during the campaign.
An overarching issue here is that Sheldon created Beacon and then failed to discharge his regulatory responsibility as DBR director, or his law enforcement responsibility as AG.
Shameful, yes, but equally shameful is the fact that there was NO focus on this during the Senate campaign despite all of the publicly available information on the issue . . .
If Fountain St. is ready to let Mike Stanton loose on Sheldon, then some of these darker matters may finally come to light . . .

16 years ago

For the record, I suggested making Beacon an issue in the Senate race on this blog. Ironcially, I thought it would have been a great issue for Laffey. Whitehouse is knee deep.
If you go back, you’ll see that the response from some of Laffey’s supporters was that I was wrong because the Beacon issue was a red herring, it was a state issue, the state would lose the lawsuit, etc.
From April 22, 2006–
“OK, nobody from the Laffey camp has picked up on my previous comments so I’m just going to spell it out for you guys.
The biggest scandal in the state right now involves Beacon Mutual where Boeniger and Nee (UNION BOSSES!) may sue the State of Rhode Island (TAXPAYERS!) to keep their $25,000 year board appointments despite the fact that the company they oversaw is under grand jury investigation (CORRUPTION)!
Steve Laffey’s claim to fame is that he “took on UNION BOSSES and saved TAXPAYERS money in Cranston” while “ending CORRUPTION” and now “can do the same for RI.”
HELLO?!? Where is Steve Laffey and his press people? This statewide Beacon scandal is custom-tailored to his talking points and waiting for him to take advantage of it.”

16 years ago

Anthony —
I don’t really blame Laffey for failing to pick up on Sheldon’s problem . . . he was running in a primary.
My question is; Why didn’t Chafee, or the ProJo, see the pattern in these contributions, all of which were available from public sources? Why didn’t they question Sheldon about his role in creating Beacon? Why didn’t the explore his failure, as DBR director, to exert any control?

16 years ago

I’m not really sure. It was probably a lack of resources or maybe forethought in both cases.
Both the Chafee and Laffey campaigns were broke coming out of the primary, so it might have been a matter of not having the money to get the message out. I remember Chafee tried to tie Whitehouse to Roger Williams and Cianci, but for some reason Beacon never came up. Maybe Chafee’s people just weren’t paying attention to Beacon at the time.
As for the Projo, it basically publishes New York Times articles with a handful of reporters covering Rhode Island. When you only have one investigative reporter, it’s tough to cover a state like RI. Stanton might have been tied up with Dollar Bill at the time.
In RI, I go by the old adage “where there’s smoke, there’s fire”. Given the cast of characters at Beacon, it was safe to assume there would be more dirt when you turned that rock over.

Marc Comtois
16 years ago

Actually, guys, Sen. Chafee tried, but it didn’t stick.

The Chafee camp also cited $10,350 Whitehouse got last year from top executives at the embattled Beacon Mutual Insurance Co., including the ousted former president and CEO Joseph Solomon and the former vice president for underwriting, David R. Clark, who was indicted last week on felony conspiracy, insurance-fraud and cover-up charges.
The indictment was described as the first in a widening criminal investigation of the state’s dominant workers’ compensation insurer, which was created by state lawmakers in the early 1990s to rescue Rhode Island from an insurance crisis. More recently it has been shaken by revelations of unfair pricing practices and preferential treatment of some of the state’s big businesses.
With recent polls giving Whitehouse a slight edge, the Chafee campaign went for the jugular.
“Mr. Whitehouse presents a sanitized image to the public, but his campaign contributions show that he is beholden to some questionable individuals and organizations,” said Lang.
Asked why – more than a decade after Whitehouse had any involvement with Beacon – he should be held accountable for its recent troubles, Lang singled out this finding in a report commissioned by Beacon’s board as evidence the structure was flawed from the beginning: ‘Over time…the reformers who built Beacon created a corporate culture that rewarded an incestuous nest of insiders.”
Whitehouse, who was the point-man for former Gov. Bruce Sundlun in the discussions that led to Beacon’s creation, did not respond directly to Chafee’s accusations. His campaign tried instead to shift the spotlight

Unfortunately, this was too little, too late (the article is from October 24, 2006).

16 years ago

Thanks, Marc. It looks like it just got lost in the noise immediately before the election.

David Davis
David Davis
16 years ago

Did I miss something? When did Laffey run against Sheldon? When did Laffey debate Sheldon? or better yet
When did your boy Linc ask Laffey for help?
Right never.
You being an insider in the lackluster Linc camp should have done more to get Ian “Heineken” Lang to persue the issue.
I’m sure if the National Republicans stuck around to help as they did in the Primary they would have had the brains to know how to pursue this and many other issues that would have put Sheldon under. But of course they bailed after the primary and Linc’s campaign was then left with only a half a collective brain.
Anthony listen carefully, the primary was a year ago, you have had more than enough time to “HEAL”. Linc lost because of you losers on the inside not because of anything that Laffey did.

16 years ago

David “Old Milwaukee” Davis: pursue is spelled pursue, not persue.
I should have done more to “to get Ian “Heineken” Lang to PURSUE the issue.”

16 years ago

Another victim of an education system dominated by a public labor union.

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