Schilling calls 38 Studios suit '100 percent baseless'

Former Red Sox pitcher and Reckoning studio founder Curt Schilling says lawsuit from Rhode Island "wholly without merit."

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Former Red Sox pitcher Curt Schilling has spoken out against the suit he faces from the state of Rhode Island regarding his failed game company, 38 Studios.

Image credit: Steven Senne, AP.

Speaking with The New York Times, Schilling called the state's legal action against him "wholly without merit and 100 percent baseless." Last month, he asked a state judge to toss the lawsuit out altogether.

As a result of 38 Studios' bankruptcy, the Ocean State is faced with an estimated $100 million in debt.

Rhode Island's legal representation was not immediately available to comment.

In November, Rhode Island's Economic Development Corporation sued Schilling and other architects of the controversial $75 million loan that brought 38 Studios to Rhode Island in 2010.

The state continues to argue that the defendants knew or should have known, but failed to inform the EDC Board, that 38 Studios was destined to fail based on 38 Studios' own financial projections.

In total, the complaint includes 17 counts of alleged wrongdoing against 38 Studios. These include counts of fraud, unjust enrichment, civil conspiracy, breach of implied covenant of good faith and fair dealing, negligence, legal malpractice, negligent misrepresentation, fraudulent misrepresentations and omissions, and breach of fiduciary duty.

Schilling will not face federal charges in the 38 Studios case.

Discussion

83 comments
SythisTaru
SythisTaru

World of Warcraft is roughly the size of Rhode Island.

ggregd
ggregd

All software development is funded by debt, it has to be because there is no revenue until development is over.  No developer has enough money in the bank to fund all their development, certainly not a new compnay that hasn't released it's first title.  As soon as they got wind of the possibility of failure Rhode Island panicked and threw 38 Studios under the bus.  They went public saying the studio was heading for bankruptcy and nothing could save it, they even said the studio was so mismangaed nothing could save it and they hinted that they were not going to fulfill their obligations on the loan guarantees.  This effectively killed any possibility of any further investment and guaranteed failure.  Rhode Island shot itself in the foot, or there's more to their actions than we can see now.  It's common knowledge that Rhode Island is one of the more corrupt government entities on the planet.   

 Of course this is not to say 38 Studios was free of blame, they spent money like it grew on trees. Regardless, the trial should be interesting.  I hope they don't come to some private settlement, I want to see all the skeletons.

Scarshi
Scarshi

I liked Amalur, only problem with it was the camera when surrounded by targets. It was just a case of being released at the worst time with minimal advertising.

Either way, I still have and enjoy this game from them.

StarSfrife
StarSfrife

This is ridiculous; it's a video game. Literally any amount of analysis of 38 Studios before their bankruptcy would have revealed they had too much debt. This isn't an issue of fraud; it's just pure and utter negligence by the state of Rhode Island. They clearly didn't think this loan through at all, and now the governor is blowing up the issue to protect his own office. This is just a huge problem; not just in Rhode Island but in the US government overall. I don't understand why so many people are content to let the government continually make such poor financial choices. We the people elected them, and we the people are going to be responsible for the leftover debt after bankruptcy. 

nanorazor
nanorazor

People at Rhode Island must be smoking some serious stuff. "counts of fraud, unjust enrichment, civil conspiracy, breach of implied covenant of good faith and fair dealing, negligence, legal malpractice, negligent misrepresentation, fraudulent misrepresentations and omissions, and breach of fiduciary duty" ???? It's just a game... A fantasy game...

xeoneex66
xeoneex66

Ah just bomb RI no one knows it even exists o_O i didn't even know it was part of the US.

parrot_of_adun
parrot_of_adun

It's funny... The state actually thought the loan was a good idea in the first place, then is willing to spend millions to recoup millions that no one has to give them. I think RI needs a new state Government altogether. 

Zloth2
Zloth2

That's pretty much standard practice.  That's also the ONLY thing you'll hear them say until the hearing while the prosecution will be shouting "evidence" to any microphone they can find.

jmrusso11
jmrusso11

Very underrated game. I thought it was the Best Game of 2012. It's too bad there will not be a sequel.

THizzle7XU
THizzle7XU

The state government should not have been funding a "private" business in the first place. They get  what they get. Stop with the tax payer handouts.

decoy1978
decoy1978

The game wasn't bad, but they needed it to sell more. Unfortunately, isn't this the reason you get Loan Consultants and Loan Managers. I'm sure someone with a degree in business could have told RI that it was a risky venture AND they still loaned the money.

You don't just show up to the bank, ask for money, and they give it to you without filing a crap ton of paperwork and an even more extensive financial background check. I'm sorry, but this is on the State. RI had red flags and still handed out the money; its a business risk that failed... move on and be wiser.

HonorOfGod
HonorOfGod

OMG... I CAN SEE MY COMMENT! :D its been so long T.T

HonorOfGod
HonorOfGod

Testing testing.. can anyone see me?

Generic_Dude
Generic_Dude

Your Honor, I hold that the 2004 World Series victory renders this case completely without merit, and I ask that you throw it out.

adwerk
adwerk

People adviced against the loan (in part due to no one else bidding in), but they still went ahead. A guy noted they had to release a sucessful game every second year to stay afloat.

I would compare their business strategy to traversing sahara, hoping to find water and food on the way...

Relying on KoA to be a smash hit (or the gov to bail more money when they asked again) was an insane risk

They build a house of cards and got shocked when they saw it fall.

atopp399
atopp399

Not sure what the state hopes to gain.  The company is bankrupt.  Even if they win they will not get any money.

DarkE0n
DarkE0n

Man, it's like Curt Schilling only wakes up to bad news these days.

ZetA_LatA
ZetA_LatA

Not the biggest legal buff, but that's a lot of money and to simply throw out a case where so much was lost sounds like asking for too much. Don't think RI made a smart move in approving the loan but Schilling shouldn't just get a slap on the wrist. 

ItchyIsVegeta
ItchyIsVegeta

Step 1:  Get Tax Dollars  
Step 2:  Make a great game  
Step 3:  ????????   
Step 4:  Profit....... wait a minute????

TrueGB
TrueGB

It will likely boil down to a loan that can't be repaid, whatever it is banks do in such situations. Poor guy. All he had to do was release Amalur first and save the MMO for later. He would still be in business.

tim1935
tim1935

I'm confused by this whole debacle.  Since when do States use tax dollars and become venture capitalists?

eric_neo3
eric_neo3

@nanorazorTo get loans you have to provide non forged/fudged financial reports and you are required by law to inform the ones from which you took the loan at the first sign that you might not be able to pay it back so that they can recover the majority of the loan. They illegally hid this fact while continuing to spend millions of the loan which could have been recovered.

Falru
Falru

@xeoneex66 Your comment is like the epitome of "I'm an ignorant American."

williebazerka
williebazerka

@jmrusso11 I thought it was a really good game that would only get better with a sequel.So much potential.

StarSfrife
StarSfrife

@decoy1978 Exactly. Anyone could have seen that a brand new IP, from a new, unknown studio like 38, wasn't going to sell 5 or 6 million copies; especially a fantasy RPG. 

ggregd
ggregd

@atopp399 They want an excuse not to pay their loan guarantees.

---Cipher---
---Cipher---

Probably not, but they'll spend millions more to be sure they can recieve all nothing...

deathblow3
deathblow3

@ZetA_LatA curt is not involved in the lawsuit at all. so he want get anything at all. (slaps that is). this is what happens when a company eyes are bigger than their mouths. their plain would never work which means they knew nothing about the market R.I. or 38 studios. hey should have meant smaller and cheaper.

dlCHIEF58
dlCHIEF58

@ZetA_LatA 

He hardly got a slap on the wrist, he lost everything himself in this business venture and recently had to resort to selling off memorabilia for cash (including the "bloody sock"). 

dlCHIEF58
dlCHIEF58

@TrueGB 

Umm, that was exactly what was done. The MMO was never released though it probably would have been out by now had the company not gone under. KOA:R was to introduce the lore of the MMO as well as raise some stop gap cash. But things got screwy - EA never sent any payments for the game because is supposedly didn't meet the sales goals and the RI governor leaked 38 Studios confidential financial situation (for his own political gain) which scared off any potential investors, thus dooming the company. 

But there were some other things that screwed them, like incorporating in another state (Delaware I believe) that prevented RI from assisting them further. Probably not Curt's decision but someone else in an executive position. This is all probably more the case of inexperience instead of criminal negligence and fraud. 

Icy_the_penguin
Icy_the_penguin

@tim1935 Since they saw that video games were a billion dollar industry and thought that it would bring hundreds of jobs to the state. Of course they didn't realize that it is a niche industry with a high-rate of first time failure.

xeoneex66
xeoneex66

@Falru @xeoneex66 I was being funny... It was a JOKE.

Had to know someone was gonna comment on it haha

StarSfrife
StarSfrife

@williebazerka @jmrusso11 There would have been a sequel had the governor of Rhode Island not taken the issue to the press. EA was about to save 38 Studios and fund another game until investors got scared off by accusations of bankruptcy. 

Stiler
Stiler

@dlCHIEF58 @TrueGB Actually no, the MMO is what made 38 studios sink. 

They were developing the MMO before they even moved to RI and took the loan.

Then they acquired Big Huge Games in 2009 and had them take an rpg they were working on and make it into Kingdoms of Amalur. 

During this entire time 38 studios was still pumping cash into its MMO aside from having to pay for the acquisition of BHG and development of Kingdoms of Amalur. 

The mmo was eating all of their money up and even though Kingdoms of Amalur was success (it sold VERY well for a new IP)they were already in the RED because of all the money they were pouring into the MMO, which was already way behind schedule in development. 

They made a stupid choice to start their studio with an MMO. MMO's are notorious for being one of the most EXPENSIVE types of games to make as well as to maintain (because unlike regular games, you still have to keep people working on it after release, CS, artists, programmers, testers, etc) it costs a lot more upkeep then any other games. Then you have the current market shift of mmo games, going toward a free to play style vs subscription, which is even more risky. 

38 studios would have been far far better off to have simply started with Kingdoms of Amalur (which iwas a good game, just a bit too easy) and garnered a fanbase from it before deciding to take on an MMO. They would have made a profit from KOA, been able to secure investments based on it and might not have even had to take the loan from RI.  

 Don't get me wrong, the new Governor of RI screwed them as well (he used the studio as a political stepping stone and tried to place all blame on them and the previous governor, but all he did was hurt them getting more investors and helped make sure they failed), he ended up costing RI taxpayers all that moeny because he wanted to make himself look like a "good" buy, but in the end he  screwed 38 studios publically and made investors scared to invest in them because of it, thus making sure they got no help and went under. He helped no one buy himself by doing this.

joke_man
joke_man

@OldKye @tim1935 

Actually, all the time.  Examples: Sports stadiums; non-profits; charter schools; and the list could literally go on. 

leimonides
leimonides

I'd like to thank you for typing all of this: gives a good picture of the situation, which I wasn't quite fully knowledgeable of.