‘Free College,’ Paid For by Pell: RI Democratic Party Chair’s Husband Indicted in $20M Ohio Racketeering Case

What happened

GoLocalProv reported Monday that Michael Perik, husband of Rhode Island Democratic Party chair Elizabeth “Liz” Beretta-Perik, is one of three people indicted in Ohio in an alleged scheme to divert about $20 million from Eastern Gateway Community College, a public two-year college in Steubenville that has since closed.

According to the Ohio Auditor of State, a Jefferson County grand jury returned a 24-count racketeering indictment, announced Oct. 8, against Perik; Nicole Rowe Colclasure, president and part owner of Perik’s Student Resource Center (SRC); and Michael Geoghegan, the college’s former CFO and president. Perik and Colclasure each face a dozen felony counts, including engaging in a pattern of corrupt activities, aggravated theft of $1.5 million or more, bribery, telecommunications fraud, money laundering, receiving stolen property and having an unlawful interest in a public contract.

The state alleges that SRC ran a “Free College Benefit Program” for union members and their families. Under its 2017 contract, the college reimbursed SRC’s costs and then paid it 50% of the surplus revenue, which included tuition, state subsidy and Pell Grants. Prosecutors say the “scholarships” were presented as union-funded but were in fact largely paid for by Pell Grants meant for needy students plus large tuition write-offs at taxpayers’ expense. They also allege that Perik’s companies were not the independent third parties federal law requires and instead controlled enrollment, attendance verification and access to financial aid, which made the profit share illegal incentive compensation.

From 2017 to March 2022, the auditor says, enrollment grew from about 8,500 to more than 60,000, more than 90% online and about 80% out of state. The U.S. Department of Education’s final program review found more than $44.4 million in liabilities and projected more than $259 million after the college closed without the required records.

Perik’s Ohio attorney, Brad Barbin, told GoLocal there “was no crime or lack of transparency.” He said the college’s operations were reviewed for a decade by state and federal agencies, that the Justice Department agreed in 2024 to dismiss a federal court action, and that Perik “followed all the protocols and received sign-offs from agency lawyers.” He called the case “purely political payback.” GoLocal reports that Liz Beretta-Perik is not implicated.

The Periks live in Jamestown. The Providence Journal reported in 2023, when Beretta-Perik became chair as House Speaker Joe Shekarchi’s handpicked choice, that each of them had given more than $100,000 to Rhode Island politicians. GoLocal now puts the couple’s giving to local Democrats at more than $270,000. Before becoming chair, she was the party’s treasurer and finance chair for Attorney General Peter Neronha from 2018 to 2023.

Update (Oct 20): RI Democratic Party Chair Resigns a Day After Saying Indictment Had ‘Nothing to Do’ With Her

Liz Beretta-Perik has resigned as chair of the Rhode Island Democratic Party. Party executive director Katherine Riordan confirmed the resignation to Rhode Island Current on Tuesday. RI Current reports that she sent a one-sentence email to Rep. Arthur Corvese, a North Providence Democrat and secretary of the state committee, at 12:22 p.m. WPRI reports she emailed the party’s executive committee and said the resignation was effective immediately. On Monday, according to RI Current, she had said her husband’s indictment had “nothing to do” with her or her role as party leader.

Who called for it. Democratic gubernatorial nominee Helena Foulkes called on her to resign Monday night: “These are serious and concerning allegations. While everyone is entitled to due process, we are weeks away from a pivotal election that will determine the future of our state for years to come. I thank Liz for her service, but in the best interest of the future of Rhode Island, she should step aside at this time.” Michael Perik gave Foulkes $2,000 during her 2022 campaign. Foulkes spokesperson Angelika Pellegrino said the campaign is “in the process” of donating Perik’s contributions to a scholarship at the Community College of Rhode Island. Republican nominee Aaron Guckian also called for her resignation. Independent Ken Block said he would “leave it up to Democrats.”

Who defended her. An hour before he learned of the resignation, Democratic national committeeman Joe Paolino Jr. told RI Current: “This is her husband, not her. Why get penalized by her spouse?” After she resigned, House Speaker Christopher Blazejewski and Senate President Valarie Lawson thanked her for her “strong leadership and dedication to the Rhode Island Democratic Party over the last four years,” WPRI reported, and said her “resignation should not take away from the integrity and professionalism she always applied to her work on behalf of Rhode Island Democrats.”

Update (Oct 21): Speaker Hand-Picks Freshman Rep. Jenni Furtado as Party Chair; Committee to Ratify Later

The Speaker has named the replacement. House Speaker Christopher Blazejewski announced Wednesday that Rep. Jenni Furtado, an East Providence Democrat, will be the next chair of the Rhode Island Democratic Party, replacing Liz Beretta-Perik. Furtado is 33 and a freshman, first elected in 2024 to House District 64, which covers parts of Pawtucket and East Providence. She is unopposed on Nov. 3, according to Rhode Island Current.

Blazejewski said in a statement: “These are difficult times, and Democrats need a chair who knows what working families are up against. Jenni does, and I’m grateful she’s willing to take this on.” Furtado thanked him in her own statement: “I’m honored by the opportunity to serve as chairwoman of the Rhode Island Democratic Party, and I’m grateful to Speaker Blazejewski for his support.”

Announced first, ratified later. According to RI Current, the 150-member Democratic State Central Committee is expected to meet to ratify Furtado “in the coming days,” although the date and time have not been set. NBC 10 likewise reports that Blazejewski said the committee will meet to ratify her.

How it’s done in Rhode Island. RI Current notes that the House speaker has historically played a prominent role in picking party leaders. In 2014, then-Speaker Nicholas Mattiello backed Rep. Joe McNamara as chair after Rep. David Caprio resigned. The Providence Journal reported in 2023 that Beretta-Perik herself took the job as Speaker Joe Shekarchi’s choice.

Update (Oct 21): Before Ohio, a Company Perik Led Admitted Faking Tutoring Attendance in a Federal Program; Perik Was Not a Defendant

An earlier case. GoLocalProv reported Wednesday that years before the Ohio indictment, The Princeton Review faced a federal fraud case covering a period when Michael Perik was its CEO. According to the company’s July 2007 announcement, which GoLocal quotes, Perik became CEO that month.

What the federal record shows. On Dec. 20, 2012, the U.S. Attorney for the Southern District of New York announced a settlement of a civil False Claims Act case against Education Holdings, Inc., which was known as The Princeton Review, Inc. until May 2012. The case involved the company’s after-school tutoring in New York City under Supplemental Educational Services, a federally funded program for students at underperforming schools. The release says the claims cover 2006 to 2010. In the settlement, the company “admitted, acknowledged, and accepted responsibility for engaging in fraudulent conduct while it was doing business as PRINCETON REVIEW, including falsifying student attendance records and submitting claims for reimbursement for tutoring services that it did not provide.”

The company admitted that site managers “routinely falsified entries on daily student attendance sheets, including by forging student signatures,” and that directors received bonuses when reported attendance hit 60% or more. It also admitted the invoices “ultimately resulted in the payment to Princeton Review of millions of dollars in federal funds for thousands of hours of SES tutoring that Princeton Review never in fact provided.” It agreed to pay up to $10 million: $200,000 up front, $800,000 when it sold its remaining business, and up to $9 million more depending on the sale price. Then-U.S. Attorney Preet Bharara said: “Every dollar wrongly taken in this case was taken from a child who was entitled to help in achieving academic success and through that a better life.”

Who was named. The defendants were the company and, according to the DOJ’s 2012 complaint announcement as quoted by GoLocal, a former employee, Ana Azocar. The court-approved settlement names one executive: Robert Stephen Green, then the vice president in charge of the New York City program. It says he “was put on notice of the above-described falsifications of student attendance, failed to take adequate remedial action, and, through this and other conduct, allowed the falsifications to continue.” Perik was not a defendant, and the settlement does not name him.

The parallel. Both cases involve allegations of inflated student records used to collect federal education money: fake tutoring attendance in New York, and, as Ohio prosecutors allege, aid paid out for ineligible students at Eastern Gateway. The difference matters, though. In New York the company admitted civil fraud and no individual executive was charged. In Ohio, Perik is personally charged and denies the allegations.