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.

He wasn't clear on the price.

"Two million. One-eight. Two-million five. Two-six," he says. "It's around that number."

The sale took place Oct. 12, 1994.

The price was $2.3 million.

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.

D'Amico didn't call back.

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 Company.
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