State House Raid: Gordon Fox to Serve 3 Years in Prison

Former Rhode Island House Speaker Gordon D. Fox, 53, of East Providence, has waived federal indictment and is expected to plead guilty in federal court to three-counts  charging him with wire fraud, bribery and filing a false tax return. The charges stem from former Speaker Fox’s theft of $108,000 donated by campaign supporters to pay for personal expenses; his acceptance of a $52,000 bribe to advocate and move for issuance of a liquor license for an East Side restaurant while serving as Vice-Chairman of the City of Providence Board of Licenses in 2008; and his failure to account for these illegal sources of income on his tax returns.

An 18-month federal grand jury investigation led by prosecutors from the United States Attorney’s Office and the Rhode Island Attorney General’s Office, the FBI, IRS and Rhode Island State Police, included the execution of court authorized search warrants at the former speaker’s home and State House office in March of 2014; the issuance of more than 200 subpoenas; the examination of more than 36,000 bank, government, personal and campaign records belonging to former Speaker Fox; and forensic examinations of several computers and other electronic devices.

United States Attorney Peter F. Neronha, Rhode Island Attorney General Peter F. Kilmartin, FBI Special Agent in Charge Vincent B. Lisi, IRS Criminal Investigation Special Agent in Charge William P. Offord, and Rhode Island State Police Superintendent Colonel Steven G. O’Donnell today announced the conclusion of the investigation and the filing of the Information, together with a Plea Agreement which, if accepted by the District Court, will result in Former Speaker Fox being sentenced to three years in federal prison.

United States Attorney Peter F. Neronha commented, “When the search warrants in this case were executed nearly a year ago, there was talk about the State House being ‘the People’s House.’  I agree completely.  The People’s House should be occupied by elected officials who hold office to serve the people, not themselves.  As federal and state prosecutors, and federal and state law enforcement officials, we represent the people of the United States and the people of Rhode Island.  And we will go anywhere –anywhere – we can lawfully go to obtain the evidence we need to protect their interests.”

“Last year, as the federal case began against Speaker Fox, I pledged to U.S. Attorney Neronha, the support and resources of the Department of Attorney General should they become necessary.  During the investigation, when the evidence of the bribery was discovered, the State possessed the prosecutorial tools necessary to move forward with this charge.  It was that need and the state’s ability to move forward which helped secure a just resolution today,” said Attorney General Peter F. Kilmartin.  “The close working relationship between the Department of Attorney General and the United States Attorney’s Office allows both offices to leverage state and federal resources to bring those who violate our laws – and the public’s trust – to justice.  Hopefully, the state and its citizens can now move on from this case.  I wish to commend and thank Assistant Attorney General Patrick Youngs for his effort in this case.”

Vincent B. Lisi, Special Agent in Charge of the FBI’s Boston Division, added, “The citizens of Rhode Island put a lot of trust in their elected officials and once again another elected official has betrayed that trust by using his position to line his own pockets. Mr. Fox will now pay the price for his decision to put his personal greed before his duty to those he was supposed to serve.”

“Gordon Fox accepted a bribe, diverted campaign and PAC funds for his personal use, and omitted this illegal income from his federal income tax returns,” stated William Offord, Special Agent in Charge of IRS Criminal Investigation.  “No public official gets a free pass to ignore the tax laws, and IRS Criminal Investigation works to ensure that everyone pays their fair share”.

Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police added, “I commend the United States Attorney and the Attorney General and their prosecutors, agents from the FBI, IRS, and our State Police for their unwavering commitment to justice. Corruption impacts every aspect of our free society, and we stand committed to ferret out and to prosecute those who prey on the public’s trust.”

According to court documents filed in this matter, from February 2008 until March of 2014, just before the execution of federal search warrants at his State House office and home, former Speaker Fox repeatedly used money received from campaign donors to pay for personal expenses.  After transferring the money from his campaign accounts to his personal accounts, former Speaker Fox used the money - $108,000 in all - to pay the mortgage on his home, the loan payments on his car, and the balance on his personal American Express card, which he used to make purchases at various retail outlets.  To conceal this fraudulent conduct, former Speaker Fox falsified his mandatory Rhode Island Board of Elections filings.   According to documents filed in court, at the conclusion of 2013, his filing claimed a balance in the Friends of Fox campaign account of $212,060.66, when in fact the balance in the account was $52,403.02.

According to court documents, in the course of the investigation into former Speaker Fox’s fraudulent diversion of campaign funds for his personal use, prosecutors and investigators discovered that, in 2008, former Speaker Fox accepted a $52,000 bribe while serving as an appointed member and Vice-Chairman of the City Providence Board of Licenses.  As alleged in court documents, in 2008, the Shark Sushi Bar and Grill, a new restaurant on Thayer Street in Providence, applied for a liquor license from the Providence Board of Licenses. There was considerable neighborhood opposition to the application.  As alleged, in the face of that opposition, Shark Bar partners met with then Vice-Chairman Fox.  As a result of this meeting, Vice-Chairman Fox agreed to accept a bribe from the partners in exchange for supporting the Shark Bar application before the Board.  

According to court documents, at a Board of Licenses hearing on August 13, 2008, two Shark Bar partners testified in favor of the application, and members of the public voiced their opposition.  The Board took the application under advisement. At a subsequent Board hearing on August 29, 2008, Vice-Chairman Fox, pursuant to his agreement with the Shark Bar partners, spoke in detail regarding why the license should be awarded, and moved the Board to approve the Shark Bar’s application. The Board voted to approve the Shark Bar’s application.  

The investigation revealed that within a week following the Board’s vote to approve the license application, two Shark Bar partners delivered $32,000 in cash and checks to then Vice-Chairman Fox.  A third, silent Shark Bar partner delivered an additional $17,500 to Fox through one of the other Shark Bar partners. In all, Vice-Chairman Fox accepted a $52,000 bribe in exchange for his official action as Vice-Chairman of the Providence Board of Licenses on behalf of the Shark Bar.

Additionally, according to court documents, the investigation determined that for the tax years 2008 through 2012, former Speaker Fox filed false tax returns, in that he knowingly omitted from his statement of total income for each of those calendar years the personal income he received as a result of his receipt of the bribe in 2008 and his fraudulent transfers from his campaign accounts to his personal accounts.

The case is being jointly prosecuted in federal court by Assistant U.S. Attorneys Dulce Donovan and Adi Goldstein, and Rhode Island Assistant Attorney General J. Patrick Youngs.

Gordon Fox is scheduled to appear before U.S. District Court Judge Mary M. Lisi at 12:00 p.m. today for arraignment on the three-count Information and for a change-of-plea hearing.

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