PROVIDENCE, R.I. (AP) - The mayor of struggling Central Falls is facing federal charges amid a corruption investigation and will plead guilty, a person with knowledge of the investigation told The Associated Press on Wednesday.
The person is not authorized to speak about the case and asked not to be identified. It is not known what charges Mayor Charles Moreau faces. Moreau resigned effective at noon, according to the Secretary of State's office.
Moreau did not answer calls placed to his phone and a message could not be left. His lawyer, William J. Murphy, did not immediately return a call for comment.
Central Falls had a deficit of more than $6 million on an annual budget of about $16 million by the time a state-appointed received filed for bankruptcy on its behalf, the first time ever in Rhode Island, in August 2011. Moreau was stripped of his duties - along with his key to City Hall - about a year earlier when the state stepped in.
Moreau has been the target of a years-long investigation by federal and state authorities into whether he improperly accepted gifts from a local businessman in exchange for awarding him a lucrative contract to board up houses in the city. About a quarter of the city's 19,000 residents live below the poverty level, according to census data, and the city has one of the state's highest foreclosure rates.
Federal and state law enforcement agencies have called a 2 p.m. news conference to discuss the conclusions of an unspecified investigation.
City Council President William Benson Jr. told the AP on Wednesday he is disappointed and that he's "sorry that it's come to this."
"It's terrible for the city," he said. "I feel real bad. The city's going through enough problems as it is."
He said he is waiting to hear from the receiver, John McJennett III, and City Hall on next steps.
Under the city charter, the president of the City Council would serve as the acting mayor in Central Falls. But the receiver, under state law, has the powers of both the mayor and City Council.
Moreau was first elected to lead the state's smallest city in 2003. He would have been up for election next year and planned to run again.
Moreau, who sold his house in Central Falls last year but said he was staying with a friend, often referred to the receivership as a "dictatorship." Along with several City Council members, he took a challenge of the state receivership law all the way to the state Supreme Court, arguing unsuccessfully that it violated their rights as elected leaders and infringed on the city's constitutionally-protected sovereignty.
A report on the city's financial problems by the first receiver, Mark Pfeiffer, didn't place blame solely on Moreau or the rest of the elected leadership. It cited $80 million in unfunded pension and benefits obligations, a loss in state aid and anticipated revenue that never materialized. But Pfeiffer also noted a "culture of government" that allowed the crisis to spiral.
A federal judge this month signed off on a five-year recovery plan for Central Falls, paving the way for its exit from municipal bankruptcy and, eventually, the return of its elected government.
State Revenue Director Rosemary Booth Gallogly will determine when the elected leadership comes back, but only after she feels confident they understand and will implement the plan. The budget for the current fiscal year has them returning in January.
A spokeswoman for Gov. Lincoln Chafee, Christine Hunsinger, said Wednesday the governor has faith in McJennett and Gallogly to provide oversight in Central Falls. She could not immediately answer questions about what will happen next given Moreau's resignation.
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