Rhode Island
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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.
Lawsuit against Curt Schilling and 38 Studios allowed to proceed
According to a report in the Boston Globe, a Rhode Island judge has ruled that the state's lawsuit against baseball star Curt Schilling and his merry band of 38 Studios execs will continue, in spite of the defense's movement to dismiss the case outright. The suit, which began in May, was filed by Rhode Island's economic development agency, which alleges that 38 Studios' representatives knew the studio was financially unsound and effectively defrauded the state when it accepted its $75 million state loan three years ago. The studio was working on MMO Project Copernicus before it imploded and defaulted on that loan. Schilling has rejected those accusations and previously called Governor Lincoln Chafee a "dunce of epic proportions" in a daring bout of real-world smacktalk. So what's in it for Rhode Island? Aside from saving face, nothing much, just the reclamation of a cool $75 million in bonds it doesn't want to absorb plus triple in damages from Schilling and other executives. But let's not get ahead of ourselves, Rhode Island; the judge did rule that RI can't sue for the whole package just yet.
Curt Schilling discusses life after 38 Studios
There's not a lot of love in the gaming world for Curt Schilling. The closure of 38 Studios that left the state of Rhode Island with a $75 million debt and hundreds of people out of jobs has colored perceptions. A recent piece from the Boston Globe takes a look at Schilling with a slightly gentler approach, discussing the heart attack he suffered eight months prior to the studio's closure and the stress he's felt over the failure. Schilling once again puts the blame for what happened at the feet of Governor Lincoln Chafee, who he claims failed to help 38 Studios when assistance was required. The article goes into more depth discussing the many assets from Schilling's baseball career that were auctioned off to pay damages, as well as his retirement from public life in favor of coaching his daughter's softball team. Those still interested in the fallout can take a look at the full article for more perspectives from both Schilling and his wife.
Rhode Island set to pay 38 Studios bonds. Probably.
38 Studios collapsed upon itself in a heap of flaming disaster last year, and Rhode Island taxpayers ended up stuck with the bill. The state used a $75 million loan, acquired through the sale of taxable bonds, to convince 38 to operate within its borders, and RI is now on the hook for around $89 million after the studio declared bankruptcy. Some state lawmakers in Rhode Island flirted with the idea of "walking away" from the debt, which is apparently a privilege afforded to a government and not its citizens. However, the state's House Finance Committee has approved a budget that includes, at the very least, making an interest payment of $2.5 million on the debt in May 2014. If Rhode Island is running off the plan it talked about last month, this first payment will be followed by yearly payments of $12.5 million until the debt is repaid. The budget hasn't passed; it still needs to get through the state's House and Senate. Future interest payments will also have to be approved by the state legislature.
Rhode Island holding public hearings over 38 Studios, exploring loan default
The story of 38 Studios as a video game developer is long over, but the financial fallout from its $75 million in taxpayer-backed loans continues in the state of Rhode Island. The Providence Journal reports two developments this week, as the state will shortly begin a public hearing process over the debacle and consider whether it will pay back the loan. House Oversight Committee Chairman Michael J. Marcello said the state will launch the hearing process shortly based on the "thousands of pages" of documents it received this week, in response to a public information request made over a month ago. The committee will focus on two issues: Did the state properly retain an independent, third party to monitor and assess 38 Studios' financial standing? And what happens if the state decides not to pay the loan, which amounts to nearly $113 million after interest. Governor Lincoln Chafee's administration believes the state, which has no legal necessity to pay the loan, does have a "moral obligation." Chafee's proposed state budget (which needs to be approved by July 1) does factor in an initial $2.5 million payment, with $12.5 million paid out over the next seven years.
Rhode Island explores ditching 38 Studios debt
To pay back or not to back, that is the question that Rhode Island is exploring after being saddled with $112.6 million in combined debt and interest when 38 Studios went kaput, taking Project Copernicus with it. RI governor Lincoln Chafee still believes that lenders should get their due according to his spokeswoman Christine Hunsinger, but the administration is gathering data to explore the cost of not paying back to get an understanding of "the ramifications of what that decision would be." Currently the state is planning to pay investors back over the course of 10 years, with a $2.5 million payment the first year and subsequent installments of $12.5 million thereafter.
38 Studios vs. State of Rhode Island court case begins
We'll never see Project Copernicus come to light, and for some people that's the last that needs to be said about 38 Studios. For the state of Rhode Island, however, there's quite a bit more at stake, with the state alleging that 38 Studios tried to hide its financial condition and essentially defrauded the taxpayers of Rhode Island. Opening arguments have been heard today for the case, with the 14 individual defendants seeking to have the case dismissed as completely spurious. When 38 Studios folded, that left Rhode Island in the hole for a $75 million loan. The lawsuit is seeking restitution from Curt Schilling and 13 other individuals, including former members of the Rhode Island Economic Development Corp that originally supported the loan. According to the EDC's lawyers, substantial evidence exists that this loan was based upon intentional misdirection on the part of upper management, although the defense claims these allegations are ridiculous. At this point, it's up to the courts who's in the right.
Rhode Island prepared to sell 38 Studios' Amalur intellectual property
The state of Rhode Island's last keepsake of 38 Studios – beyond a $100-million-plus loan debt – is the company's Amalur intellectual property, which it's planning to sell off shortly. The Providence Journal reports there is interest in the asset, but the lawyer in charge of the sale hasn't revealed a value. Meanwhile, a hearing in the state's lawsuit against the architects of the 38 Studios loan is scheduled for this Wednesday, after studio founder and former Boston Red Sox pitcher Curt Schilling was unable to get the suit dismissed in March. The sale of the studio's physical assets net the state approximately $830,000. Following the sale of the IP, Rhode Island tax payers will have to pay off the rest of the debt.
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.
Rhode Island attempting to default on 38 Studios' debt
The AP is reporting that Rhode Island is attempting to default on the debt it owes for 38 Studios' $75 million loan and subsequent bankruptcy. The state has a proposal before lawmakers that would keep it from having to make any payments to bond holders. Supporters of the move to default say that the insurance company will compensate bond holders, while the EDC, which approved the loan, says that defaulting will hurt future project and bond ratings. One lawmaker and default proponent, Rep. Charlene Lima, said that the 38 Studios fiasco harmed the reputation of the state and constricted its future economic development. The proposal is being opposed by Governor Lincoln Chafee, who wants to see the debt repaid.
38 Studios may have 'actively masked' its financial hardship
Just when you thought the world might let the wound where 38 Studios and Kingdoms of Amalur were ripped from your heart heal over, along comes some new drama. Max Wistow, the lawyer for the Rhode Island Economic Development Corporation, filed documents on behalf of the state claiming that 38 Studios needed more than $75 million in loan guarantees before the company ever moved to Rhode Island. He argues that folks at 38 Studios knew that the funds they were receiving from the state would be insufficient. The company netted about $50 million from an EDC bond sale, and Wistow is claiming "crushing evidence" that 38 Studios actively masked its financial shortfall.
Schilling asks judge to throw out lawsuit over $75 million loan
Curt Schilling, founder of defunct 38 Studios, asked a judge to throw out The Rhode Island Economic Development Corporation's lawsuit that alleges Schilling and studio executives misled the agency in securing a $75 million taxpayer-guaranteed loan. The lawsuit accuses Schilling and his crew of fraud, racketeering and conspiracy.Schilling's lawyers filed documents on Friday to Superior Court Judge Michael Silverstein, asking him to throw out the lawsuit. The documents claim Schilling and other board members repeatedly disclosed 38 Studios' financial situation to the EDC, and that the EDC knew $75 million wouldn't be enough to finish its MMO, Project Copernicus."Given the EDC's admissions concerning 38 Studios' disclosures to the EDC's executives, attorneys and financial advisor, it is impossible for the EDC simultaneously to claim that the 38 Studios defendants supposedly defrauded the EDC," the filing reads.
Curt Schilling asks judge to dismiss 38 Studios fraud lawsuit
Let's assume for a moment that you're Curt Schilling, formerly of the Red Sox and formerly of the now-defunct 38 Studios. You're facing a massive lawsuit for fraud regarding a $75 million loan from the state of Rhode Island. What do you do? It appears that Mr. Schilling's first approach is to ask the judge on the case to throw out the case entirely, claiming that the basis of the case is itself fraudulent. The crux of the lawsuit is the state's claim that Schilling and the 38 Studios board of directors willfully obfuscated the company's status from state lawmakers. Schilling has put forth that 38 Studios fully disclosed its status to the state investors on numerous occasion, providing them with an accurate picture of the company's financial situation. Due to this disclosure the allegations of fraud and obfuscation are simply not possible, hence the request for dismissal. Schilling goes on to claim that the entire suit is politically motivated and that the company's failure is chiefly due to Governor Lincoln Chafee not doing enough to save 38 Studios from bankruptcy.
A video retrospective on 38 Studios discusses 'star-struck legislators'
The sun has set on 38 Studios, but there's still a lot of people eager to analyze and dissect the company's rise and sharp decline. As a whole, it's been looked at and analyzed extensively from the gaming side, but the other factors that went into the studio's enormous state loan and subsequent burnout are examined more closely in a new video. This isn't about whether or not Project Copernicus would have been any good; this is about simple business and political pressures that doomed the project from the start. Curt Schilling started 38 Studios at the end of his baseball career, but it was a well-known fact that his attempts to court venture capitalists were unsuccessful. The video goes into depth regarding the political climate that encouraged Rhode Island legislators to sign the historic and ill-advised loan, as well as the factors leading to the company's ultimate demise. If you're interested in a broader view now that the smoke has cleared, take a look at the full video past the cut.
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.
Rhode Island EDC sues Curt Schilling and more over 38 Studios loan
Back in May, Project Copernicus developer 38 Studios became embroiled in the controversy of the year when the studio officially shut down and fired all 379 of its employees. The story quickly turned political as the studio had been granted a loan of $75m US by the state of Rhode Island and it became known that the tax-paying public could be hit for an estimated $150.7m US due to the studio's closure. The story of mishandled taxpayer money has played a big part in the politics of Rhode Island. Today that story developed further as the Rhode Island Economic Development Corporation (EDC), which granted the original loan and may therefore be responsible for the public debt, filed a lawsuit against the people who created the deal. The defendants named in the case include 38 Studios founder Curt Schilling, CEO Jennifer McLean, former EDC executive director Keith Stokes, Wells Fargo Securities and even Barclays Capital. Rhode Island Governor Lincoln Chafee released a public statement about the lawsuit on YouTube.
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.
38 Studios auctions recoup $830k of $150.7M owed
Earlier this week, 38 Studios' former headquarters in Providence, Rhode Island played host to a public auction that brought in approximately $650,000 through over 1,000 bidders. If you combine this number with last week's auction at the studio's Big Huge Games division, the total recouped through auctions came to $830,000. This is unfortunately only a fraction of the estimated $150.7 million owed in bankruptcy filings, but the best part hasn't been put up on the block yet. The Kingdoms of Amalur intellectual property is said to be "sold in a negotiated transaction over the next three to six months," according to Joystiq. The total from that sale doesn't expect to cover the entire amount owed, which leaves the remainder up to the Rhode Island taxpayers.
Curt Schilling might pay back debt by selling baseball memorabilia
Curt Schilling is most recently famous for failing spectacularly at using loans from Rhode Island and investors to create a Kingdoms of Amalur MMO. As the founder of the now-bankrupt 38 studios and someone who personally guaranteed some $12 million worth of loans related to the studio, Schilling's lucky that he was famous for other stuff before stepping into game development. For example, Schilling was one of the best pitchers in American League baseball in 2004 and played for the Boston Red Sox, the only team in MLB history to win a seven-game series after losing the first three games. A bloody sock that he wore during that series is listed (along with World War II-era memorabilia, one of Lou Gehrig's baseball caps, his home, and a stake in a private equity firm) in a collateral filing.
Rhode Island can't auction off 38 Studios' Xbox dev kits, says Microsoft
Microsoft is requesting Rhode Island return the Xbox developer kits the state is attempting to sell at auction to recoup losses from the defaulted multi-million dollar loan to shuttered 38 Studios. In the listing of items up for bid October 23, the firm hired to facilitate the auction lists "Gaming consoles: Xbox 360 XDK consoles." Only problem is those belong to Microsoft."Xbox 360 Development Kits (XDK) are the property of Microsoft and are only licensed to authorized studios and may not be assigned or sold to any third party without the written consent of Microsoft," the company told Joystiq in a prepared statement. "We will be contacting the appropriate parties involved in the auction of 38 Studios' assets to remove the XDK units from the auction listing and to secure the return of the consoles to Microsoft."SJ Corio Company, a commercial-industrial auction and liquidation company, will hold auctions in Maryland and Rhode Island on October 16 and 23, respectively. Lot listings and photo galleries of items will be posted soon, according to a company representative. Part of the long list of items up for auction are computers, audio and video equipment, consoles and peripherals, pool table, ping pong table, GE side by side stainless steel refrigerators and a video game library.
