Debate continues on 38 Studios two years after failure
NBC 10 News broke the story two years ago Wednesday that 38 Studios was in financial trouble, and the debate over whether to pay off the debt for the failed company continues to this day.
The demise of the video game company came quickly, less than 18 months after $75 million in bonds were sold to bring the company to Rhode Island from Massachusetts.
Curt Schilling had apparently succeeded in everything he'd attempted, especially baseball, where he helped the Red Sox win the World Series in 2004.
Schilling approached then-Rhode Island Gov. Don Carcieri about expanding his video game company into Rhode Island and creating 450 local jobs. The governor pushed for the deal. Within months, the General Assembly passed a bill, and the Economic Development Corp. had sold $75 million dollars of bonds.
Schilling's company moved to Providence in April 2011.
38 Studios released "Kingdoms of Amalur: Reckoning" -- its only title -- in February 2012 to moderate success. But the company ran out of money before it finished building the multiplayer game code-named "Copernicus."
The first notice of trouble came from a conversation with Gov. Lincoln Chafee in May 2012.
"We're always going to work hard to keep Rhode Island businesses solvent. That's what we're doing with 38 Studios," Chafee said at the time.
Employees at the company never received another paycheck and before the end of the month, the building was shuttered.
Chafee has sued former officials at the EDC (since renamed the Commerce Corp.), including director Keith Stokes and deputy director Michael Saul. Stokes has since landed a job with the Mayforth lobbying group. Saul is working for a financial services company, according to its website.
The suit also names Schilling, who only Wednesday sold his house and has reported he is battling an undisclosed cancer.
Carcieri and former House Speaker Gordon Fox are not named in the suit, but the House Oversight Committee has expressed interest in hearing from them as it has begun digging into the process that rushed the loan program through the General Assembly.
Legislators now are debating whether to pay back the bonds. One expert said they should, to keep the state's favorable bond rating, which makes borrowing cheaper.
"If we're going to turn things around and end our economic malaise, we'll need more investment-oriented spending and markets don't forget. We will be a stereotype of what not to do. We cannot afford this," said Leonard Lardaro, a professor of economics at the University of Rhode Island.
38 Studios was a big issue in the governor's race four years ago, and the payment of those bonds is a big issue in this year's election.
The lawsuit and the House Oversight Committee may finally get answers as to whether anybody intentionally deceived lawmakers or the public.
The state police are also investigating.