Four-Year Investigation Into Kingdoms of Amalur Dev Results in No Criminal Charges
38 Studios was issued a $75 million loan prior to collapsing.
Rhode Island State Police and the state's attorney general announced today that no criminal charges will be filed as part of the four-plus-year investigation into the 38 Studios deal.
During a press conference on Friday afternoon, State Police Colonel Steven O'Donnell described an indictment as a "life-altering event that should never be taken lightly or for granted" and suggested one shouldn't be filed simply because something is a bad deal.
"It is our collective duty and responsibility to uncover the facts and let the facts take us where they will take us," he said. "In order to prosecute any individual for a violation of any Rhode Island criminal statute, we have to establish probable cause that laws were broken. In this particular matter … we have found no probable cause to establish that a crime was committed. It is the investigative opinion of the Rhode Island State Police and the Department of the Attorney General that a bad deal does not always equate to an indictment."
This was echoed later by Attorney General Peter Kilmartin, who also said he and those working on this process "share the frustrations of all Rhode Islanders when it comes to the entire 38 Studios episode."
38 Studios famously went out of business in 2012 after receiving a $75 million loan to move to Rhode Island. This loan was backed by Rhode Island taxpayers, and there have been allegations that investors were defrauded.
The federal government previously concluded an investigation that determined the 38 Studios deal hadn't violated any federal statutes. Rhode Island's investigation continued, but as Kilmartin explained today, "The quantity and quality of the investigation of any criminal activities fell short of what would be necessary to prove any allegation beyond a reasonable doubt. And, as such, the rules of professional conduct prevented even offering a criminal charge for the grand jury to consider."
Kilmartin said he believes most Rhode Island citizens have faith in the investigation, but acknowledged that some skeptics will loudly doubt the findings. He did note that some people interviewed during the process were "less than candid" but declined to identify who they were.
Kilmartin was a state representative when the 38 Studios came up for a vote, and he was among those who voted in favor of it. When it then fell on him to conduct this investigation as the new attorney general, there were questions raised if he should recuse himself. This subject came up today, and O'Donnell stepped in to say he had "full faith and confidence" in Kilmartin and his prosecutors.
"To make an allegation that the prosecutors wouldn't look at the facts would be ludicrous," he said.
O'Donnell also brought up the fact that, when the investigation began, there were questions of where the $75 million ended up. "At the end of the day what you see in that report is where it went," he said. "That's what I thought the public needed to know. … We had to prove that money went there. That $75 million is accounted for [in terms of] where it went; if it should have gone there or it shouldn't have gone there is certainly not a violation of the law."
Civil suits, as well as fraud claims filed by the SEC earlier this year, are still pending (and are completely independent of this investigation). The attorney general could consider findings from those cases and facts that may still be uncovered, but the state's ongoing investigation is inactive for now.
When the prospect of bringing 38 Studios to Rhode Island was first pitched, the RI Economic Development Corporation's board of directors was told it would result in 450 "direct" jobs being brought to the state within three years. It would also result in more than 1,000 more indirect jobs. It voted in favor of issuing $75 million bonds to help the company relocate to Rhode Island.
The 38 Studios collapse began when owner (and former baseball player) Curt Schilling was unable to keep up on debt payments to the state of Rhode Island for the aforementioned loan. (An estimated $89 million in principal and interest were owed due to the default on the loan.) After that, the government assumed ownership of the company and shut it down. The government then filed a lawsuit against Schilling and other architects of the state's loan to the studio.
At an auction in December 2013, 38 Studios properties Rise of Nations and Rise of Legends were purchased, but Kingdoms of Amalur and the MMO Copernicus were not picked up. Subsidiary Big Huge Games, which was closed amid the 38 Studios bankruptcy, was resurrected by co-founder Brian Reynolds.
In September 2015, the Rhode Island Superior Court released thousands of documents and deposition transcription excerpts pertaining to the loan agreement.
This story has been updated with additional details and quotes.
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