Case File Shows Cozy Relationship Between Rhode Island Regulators and Casino

Files that have come to light in the case of the demotion of a Rhode Island regulatory official show that the state’s regulators may be too cozy with the casinos they regulate. In one case a high level regulator may have warned a casino operator of a possible investigation.

The recently released case file on a demoted business regulator in Rhode Island shows the sometimes-chummy relationship between regulators and casinos that they oversee.

The file comes from the case of Louis DeQuattro’s failed attempt to be reinstated after he was demoted from his position as deputy director of the Department of Business Regulation.

The file shows that a billionaire from Texas, Tilman J. Fertitta attempted to buy the Twin River Casino but was outmaneuvered by Twin River Chairman John Taylor. Later Taylor tried to get approval to borrow $60 million to pay a dividend to shareholders.

DeQuattro was demoted in March 2014, allegedly for warning a casino executive about the topic of a meeting that Lottery Director Gerald Aubin sought to have with Taylor. Aubin had wanted to hit Taylor with fresh questions and get unrehearsed answers. He was interested in a 2012 meeting Taylor had with Fertitta. At that meeting he allegedly warned the billionaire that state regulators would not permit Fertitta to make the purchase. Fertitta wanted to increase his 5 percent share in the company into a buyout.

Aubin wanted to find out if this comment indicated that Taylor had an inside source. Aubin was suspicious that DeQuattro had warned Taylor of his intentions ahead of time. DeQuattro has denied divulging any sensitive information to Taylor.

When Taylor and another Twin River executive met with Aubin they gave what Aubin considered “orchestrated” answers to his questions. He later wrote, “It was abundantly clear that both Mr. Taylor and Mr. Eaton were fully prepared to be asked’’ about the meeting with Fertitta.

One Twin River executive claimed that DeQuattro had warned them off Aubin’s line of questioning.