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Rhode Island EDC implements tracking software following 38 Studios debacle
Following criticism of how it managed its $75 million loan to the now-defunct 38 Studios, the Rhode Island Economic Development Corporation (EDC) is implementing a new client relationship system to help employees track their interactions with businesses. The EDC's board of directors has agreed to pay $84,939 for a year of access to software from Salesforce. The related press release states the new system will help "maintain an accurate, reliable database of companies, improve response times to client requests" and "provide the ability to implement and track performance." The EDC's software plans follow the US Securities and Exchange Commission's investigation of the group's loan to 38 Studios, which Rhode Island taxpayers have already begun repaying.
SEC investigating Rhode Island's 38 Studios deal
The 38 Studios epilogue continues with the U.S. Securities and Exchange Commission investigating the $75-million loan provided by the state of Rhode Island to the defunct studio. WPRI reports the SEC probe is examining the taxpayer-backed loan the R.I. Economic Development Corporation (EDC) gave to former Red Sox pitcher Curt Schilling's failed operation. Neither the SEC nor EDC would comment on the specifics of the investigation. EDC spokesperson Melissa Czerwein told WPRI that lawyers were retained to deal with the SEC inquiry and the organization won't "discuss ongoing matters related to 38 Studios and maintains a level of confidentiality as requested by the SEC." Rhode Island taxpayers have begun paying back the loan, which Governor Lincoln Chafee (who inherited the debacle from the previous administration) said the State had a "moral obligation" to do. To the best of our knowledge, Rhode Island continues to hold on the Amalur intellectual property.
Rhode Island selling 38 Studios' game assets
Do you have a few million on you and a desire to preserve some gaming history? Then pick up the phone and call Rhode Island, as the state is getting ready to sell 38 Studios' assets, including its games. The state is looking to recoup some of it $130 million debt that it fell into once 38 Studios went belly-up. One of Rhode Island's lawyers says there "is interest" in the studio's assets, including concept art, design documents, and computer software. The sale of 38 Studios' IP includes the Amalur franchise, which encompassed the Project Copernicus MMO. The state is also set to begin a lawsuit this week against former 38 Studios execs, including founder Curt Schilling. The suit claims that the executives did not inform the state when they knew that the studio would have a hard time keeping afloat financially. Schilling has asked the judge to dismiss the suit.
Events 2012: 38 Studios
38 Studios was the video game story of the year with mainstream appeal. Much of that mainstream appeal had to do with Curt Schilling, the former baseball player for the Boston Red Sox who went on to found his own video game studio. But the story was way more than Schilling.The state of Rhode Island and its taxpayers were on the hook for a $75 million loan given to the studio as part of an economic development deal. As the video game industry in the US works toward tax incentives to stop the slow brain drain to the north, the very public collapse of 38 Studios and its relationship to the government is exactly what those working on industry tax breaks – especially in neighboring Massachusetts – did not need. 38 Studio is a saga, but we've selected a couple pieces to highlight here that took place in the middle of the studio's collapse and its aftermath. 'Editorial: 38 Studios and the Dunkin delusions.' As evidence mounted against 38 Studios' survival, Alexander Sliwinski took a post at the Dunkin Donuts across the street and listened. The TV Stuff: News Editor Alexander Sliwinski appears on WPRI's Newsmakers to discuss 38 Studios as part of roundtable. Sliwinski on WFXT on day of studio layoffs. The 38 Studios auction closes down studio, grossed approximately $650,000.
Architects of 38 Studios' $75M loan sued by Rhode Island EDC
The Rhode Island Economic Development Corporation (EDC), the quasi-public group that granted the $75 million taxpayer-guaranteed loan to 38 Studios, has filed a lawsuit against the architects of the 2010 deal. WPRI reports the defendants include 38 Studios founder Curt Schilling and CEO Jennifer MacLean, former EDC executive director Keith Stokes, Wells Fargo Securities, Barclays Capital and many, many more."I know you work hard for your paychecks, and for your tax dollars to be squandered is unacceptable. The board's legal action was taken to rectify a grave injustice put upon the people of Rhode Island," said Governor Lincoln Chafee in a prepared two-and-a-half-minute statement posted on YouTube (found after the break, with text transcript).The full complaint [PDF] alleges the former EDC board never ordered an independent assessment of 38 Studios' capabilities to finish Project Copernicus before the loan was approved, even though it was to do so. It also claims Wells Fargo received nearly $500,000 "in hidden commission from 38 Studios" that weren't disclosed to the EDC board.The recent public auction at 38 Studios' former Providence HQ grossed approximately $650,000. The auction at 38 Studios' Big Huge Games division in Maryland brought in $180,000. It's estimated 38 Studios owed $150.7 million when it declared bankruptcy, so far the state of Rhode Island has recovered about $830,000.Update: We got in touch with Law of the Game attorney Mark Methenitis to boil down exactly what Rhode Island is seeking in the suit. We've placed his analysis after the break.
Subpoenas issued over 38 Studios deal, Citizens Bank sues Schilling [Updated]
While the fallout from 38 Studios' collapse carries with it a human toll, it also has triggered a legal one as well. State and federal law enforcement agencies have issued subpoenas to both Bank Rhode Island and the Rhode Island Economic Development Corporation over the loans that enticed the game studio to the state. Currently, the RI state police, the state attorney general's office, the FBI, and the US attorney's office are jointly looking into the situation. Police are investigating the specifics of the deals in an attempt to figure out what exactly happened. The subpoenas requested records of the financial contracts and loans. Both the RIEDC's $75M in taxpayer bonds and Bank Rhode Island's $8.5M loan are unlikely to be repaid following the studio's bankruptcy. [Update: Massively reader Zaken tipped us off to the fact that Citizens Bank has announced it is suing 38 Studios' Curt Schilling to the tune of $2.4 million "in an attempt to recoup its money from the ex-ballplayer's personal assets."]
