Central Falls to hold election after former mayor stung by fraud

Mon Dec 10, 2012 6:42pm EST

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Dec 10 (Reuters) - Residents of formerly bankrupt Central Falls, Rhode Island, will elect a new mayor on Tuesday after former mayor Charles Moreau pleaded guilty to corruption charges.

The election pits front runner James Diossa, a 28-year-old who has been a city councilman since 2010, against former police Chief Joseph Moran. The winner will serve out the remainder of Moreau's term.

Diossa won 59 percent of the vote in a special primary election on Nov. 6, with Moran coming in second among five contenders, with 18 percent of the vote.

A judge approved the impoverished city's bankruptcy plan in early September, setting the stage for it to emerge with a budget balanced by slashing pensions, hiking taxes, revising labor contracts and cutting employees.

The case garnered attention for its treatment of the city's bondholders, who emerged unscathed. The city went bankrupt because of steep cuts in state aid, revenue shortfalls and an unfunded liability of about $80 million for pension and retiree health benefits.

Later in September, Moreau resigned and agreed to plead guilty to a federal fraud charge for allegedly taking gifts from his long-time friend and political supporter Michael Bouthillette in exchange for contracts to board up foreclosed houses.

Moreau is scheduled to be sentenced on Feb. 12.

As part of the approved bankruptcy plan, city officials must enact a budget plan devised by the state receiver for the next several years.

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