Rhode Island House panel launching inquiry into 38 Studios

Government group says it has received thousands of pages of documents that will help inform debate over paying debt related to Curt Schilling's failed company.

A Rhode Island House panel is launching an inquiry into Curt Schilling's failed game company, 38 Studios, which has stuck the state with millions in debt.

Image credit: Steven Senne, AP

The Providence Journal reports today that the government group has received thousands of pages of documents this week as a result of a public information request. The committee is now ready to launch a hearing process that could help the state understand how best to tackle its debt.

"The perception out there is that we haven't been doing anything," House Oversight Committee chairman Michael J. Marcello said. "But the fact of the matter is we've gathered a ton of documents and we haven't had a hearing because we just got the documents."

The documents shed light on contractual records related to 38 Studios and others that applied to the Rhode Island Economic Development Corporation's Job Creation Guaranty Program. This is the group that granted 38 Studios the controversial $75 million loan in 2010 that brought the developer from Massachusetts to Rhode Island.

Marcello explained that the committee will focus on two issues concerning whether or not the state should pay the debt owed to bondholders now that 38 Studios has gone under. The first is finding out if the state's bond insurer will cover the debt--estimated at $113 million. The second is examining whether or not Rhode Island officials did their due diligence in making sure the financial standing of 38 Studios was periodically assessed.

Rhode Island lawmakers--and governor Lincoln Chafee himself--have explored the financial costs of defaulting on the loans. However, Chafee has said he wants to pay the bonds to fulfill a "moral obligation" to taxpayers.

Chafee's latest state budget proposal includes a $2.5 million payment made to lenders, followed by $12.5 million each of the following seven years. The budget must be approved by July 1.

Separately, Rhode Island is suing Schilling and other former 38 Studios executives. At the same time, the state is attempting to sell the defunct company's assets, which it acquired when the outfit went bankrupt last year.

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Discussion

18 comments
OldSchoolPlaya
OldSchoolPlaya

Really getting sick of hearing about this. Why hasn't the U.S. Government put the Wall Street executives who caused the crash of '08 over the fire the same way they're doing this guy? They stole billions...even trillions of dollars, and  got away scott free. Now they send this guy to the gallows over a 75 million dollar loan.We live in an a$$-backwards world, people.

Thanatos2k
Thanatos2k

Think of how much money is being wasted on all these inquiries and consultants.  I'll make it real simple for you Rhode Island:

1. You gave them a loan.

2. Their company failed before they paid it back.

3. They have no money.

4. You're not getting your money back.

ggregd
ggregd

How much of this uproar and publicity is because 38 Studios is a video game company and a perception that it was all for frivolous, unproductive nonsense.  All the states have loan guarantee and economic grant programs, and many of those recipients end up failing, especially small business.  Half of all small business startups fail within 5 years.  The federal government spent a couple orders of magnitude more on bailing out financial and auto companies.

blackothh
blackothh

the money is gone, what dont you understand?

dlCHIEF58
dlCHIEF58

And yet Chafee (RI governor) refuses to accept any of the blame for this whole debacle. This guy threw 38 Studios under the bus for his own political gain. He leaked the confidential financial information about 38 Studios problems that scared off potential investors they were approaching. He was against the loan that his predecessor approved and made lynching 38 Studios his goal from the start. 

Further proof of how shady Chafee is - he ran and was elected as an Independent, now he has changed to a full fledged Democrat. Had he declared that prior to election, chances are he would not have been elected based on the current political climate. 

I am not saying 38 Studios is completely blameless, but they definitely did not defraud the state. They made some bad business decisions without a doubt, the biggest was accepting the loan and relocating in the first place. 

Emerald_Scott
Emerald_Scott

Must these guys use the same pic over and over again? Just curious.

noirtenshin
noirtenshin

if the insurer covers the debt, shouldn't it get the rights and the company assets?

if their idea goes, the state will get a refund (from the insurer) and the rights + assets. State wins double?

BrutalPandaX2
BrutalPandaX2

sucks for this guy because the only bad thing he did was aim too high. If he spent his money on making smaller projects first, he wouldn't be blowing all the cash without knowing on what. He didn't have the experience to be competing against Activision / Blizzard, etc. like he wanted to.

Suaron_x
Suaron_x

You have to prosecute Shilling and hopefully you can convict him of something (even if it ultimately a couple of unpaid parking tickets or whatever).  The prosecution is not trying to recover money, it's to show there are consequences for squandering tax payer money.  Without the prosecution, it's like saying to the next guy "here come take our money...you need more? "

blackothh
blackothh

@dlCHIEF58 of the 100 studios that collapsed over the last year, i still struggle with the idea that this one is special. but thats the government for you.

blackothh
blackothh

@Emerald_Scott yea its actually pissing me off that they cant find a new picture for these articles.

ggregd
ggregd

@noirtenshin Yes. The insurance industry calls it subrogation.  If they pay out on a claim they get the right to make up the money through various means.  I'm not sure how the state ended up with the company's assets.  They weren't a debtor, they just guaranteed loans.

RoadStar1602
RoadStar1602

@Suaron_x If there were consequences for squandering taxpayer money, the entire federal government would be in prison right now.

blackothh
blackothh

@Suaron_x i like your idea, but i dont think it has much influence on the world of criminals and/or the world of stupid people. also, now they are going to waste tax dollars again dragging this court case on forever. wasting the court systems money and the state lawyers. win win win for everyone i guess.............