Big chunk of a $225,000 state aid found its way to lobbying firm that hired Stokes after he resigned from EDC in the midst of 38 Studios implosion.

PROVIDENCE — The $225,000 bounced from here to there several times before a big chunk of this General Assembly-approved grant — for which no Rhode Island lawmaker takes credit — landed at the doorstep of the State House lobbying firm that hired Keith Stokes.

Stokes was back in the news last week.

He was accused by the U.S. Securities and Exchange Commission of "aiding and abetting fraud" in connection with the sale of the state bonds that financed former Boston Red Sox pitcher Curt Schilling's doomed video-game company, 38 Studios.

According to the SEC: the former executive director of the Rhode Island Economic Development Corporation agreed to pay a $25,000 penalty as part of a settlement with the SEC in which he did not have to admit or deny the allegations that he was, by his "recklessness or negligence ... responsible for the EDC’s failure to make complete and truthful disclosures in the offering document for the 38 Studios Bonds."

While the SEC complaint lives on against the EDC and Wells Fargo, the settlement would seem to mark the end of one long, dark chapter for Stokes. Something else happened last week, however.

The Raimondo administration raised questions about the use of a series of $225,000 state grants that, in recent years, have gone from the General Assembly to the EDC to the Newport County Chamber of Commerce. The chamber then gave $80,000 of these dollars last year to Stokes' current employer, the Mayforth Group, and another $15,000 to one of the firm's current lobbying clients, SENEDIA. (In a 2014 filing with the IRS, an arm of the chamber disclosed an overall $151,909 in payments to the Mayforth Group for "project management/lobbying.")

"It has come to our attention ... that the Chamber may have used some portion of its General Assembly grant funding to compensate the Mayforth Group for government relations services since at least 2008," Darin Early, the president and COO of the state economic-development agency now known as the RI Commerce Corporation, wrote the head of the Newport Chamber on March 8.

"We recognize that the grants to the chamber are directed by the General Assembly," he wrote. "Nonetheless, if grant funds are used to lobby members of the General Assembly, that would not seem to be an appropriate use of a General Assembly grant," he wrote.

The chamber's executive director, Erin Donovan-Boyle, a former vice president at the Mayforth Group, assured Early in writing "that no grant funds will be used to pay for lobbing [sic] the General Assembly," and none had been.

Mayforth Group founder Richard McAuliffe — a one-time aide to U.S. Sen. Jack Reed (when he was a congressman) and former U.S. Rep. Patrick J. Kennedy — also denied that any portion of grant money his firm receives went toward his firm's lobbying activities on behalf of more than three dozen clients last year, including the Newport County Chamber of Commerce.

It's a tale of long-standing relationships.

As reported often in the chronicles of his rise and fall, Stokes headed the Newport County Chamber of Commerce for 16 years. A third-generation Newporter proud of his African-American ancestry, Stokes had many fans in the community.

His friendship with Senate President M. Teresa Paiva Weed — dating back to their years at Rogers High School in Newport — helped him land the top spot at the EDC in 2010 when Gov. Donald Carcieri, the leading cheerleader for the doomed 38 Studios loan deal, chaired the board. In a court deposition, Carcieri's successor, Lincoln D. Chafee, said he kept Stokes, in part, because he was the Senate president's childhood friend.

Stokes resigned his top EDC post under duress in May 2012, as 38 Studios was imploding.

Four months later, Stokes landed a new job as president of "economic development" for the Mayforth Group, a local government-relations and State House lobbying firm founded by McAuliffe, who, in 2010, was nominated by Paiva Weed and then-House Speaker Gordon Fox to a coveted seat on the state's Judicial Nominating Commission.

In 2015, McAuliffe's firm was the $6,500-a-month lobbyist for the Newport chamber at the Rhode Island State House. But McAuliffe, in an interview last week, denied that the state grant money from the Newport chamber paid his lobbying fee.

He said the legislative grant to the Newport chamber dates back to 2002, and in recent years has helped pay for his firm's critical role in helping the state avert the loss of defense jobs during federal "base realignment" efforts, and win federal grants to put out-of-use Navy property to productive use.

Last year, he said, the Newport chamber gave his firm somewhere between $75,000 and $80,000 for its continued work on projects that, in recent years, have included Stokes' data-gathering for a Defense Sector Economic Impact Study produced by Bryant University and the successful pursuit of federal dollars for several big projects, including $1.7 million for the conversion of a shuttered school into a "business incubator."

The work drew Stokes back to the State House.

A February 2014 General Assembly press release advancing a meeting of the Rhode Island Defense Economy Planning Commission ended with this statement: "Finally, the commission will review the Defense Infrastructure Fund with Keith Stokes of the Mayforth Group." (The commission was created in 2010, by a resolution sponsored by Paiva Weed.)

Asked how the Newport chamber grant got into the state budget, spokesmen for the House and Senate leadership directed questions to the Commerce Corporation.

But Commerce Corporation spokeswoman Kayla Rosen said: "The Commerce Corporation did not request any grant to the Newport County Chamber of Commerce under this administration, and we’re not aware of the Commerce Corporation ever requesting a grant of this kind. The General Assembly directed that this grant be made."

She produced a July 14, 2015, "letter of intent" spelling out the intended use of $1,026,492 in state grants to her agency. The list included $5,000 for the Bristol Fourth of July Parade, $11,250 for Cape Verdean American Community Development, $15,188 for a Pawtucket Visitors Center, $140,000 for "Urban Ventures" and the $225,000 for the "Newport Chamber of Commerce (surplus Navy land)."

The letter, to Raimondo's director of administration, was signed by House Finance Chairman Raymond Gallison and Senate Finance Chairman Daniel DaPonte.

The accounting the chamber gave the Commerce Corporation of last year's grant to the Newport chamber showed $80,000 of it going to the Mayforth Group and $15,000 going to one of the Mayforth Group's current lobbying clients: SENEDIA, which stands for "The Southeastern New England Defense Industry Alliance." (SENEDIA's board of directors includes executives at Raytheon, General Dynamics and the Newport chamber's executive director, Donovan-Boyle.)

Asked how the money got into this year's budget, Gallison said: "It's just been in the budget since 2002, and we just continued it."

Paiva Weed also disavowed any role in securing the grant money for her hometown chamber of commerce, and ultimately for a government-relations firm that hired her friend from childhood at one of his lowest points.

She said money for the chamber's defense-economy efforts has been in the budget more than 14 years, and this year's grant "rolled over from last year. ...There was no discussion, quite honestly."

While taking no credit for the grant, she defended it: “The defense industry in Rhode Island employs 16,000 people and supports 33,000 jobs, accounting for 6.4 percent of all employment in our state. Since 2001, the state has worked with the Newport County Chamber of Commerce to ensure that the defense economy in Rhode Island continues to thrive."

— kgregg@providencejournal.com

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On Twitter: @kathyprojo