A Rhode Island economic development official discussed private financing for 38 Studios a day after the state's $75 million loan guarantee was approved for Curt Schilling's now-defunct video game company, emails released by the state Wednesday show.
Michael Saul, a former deputy director at the state's Economic Development Corp., wrote to a Bank of America executive about possible funding for 38 Studios. In an email from July 2010, Saul writes that another bank was considering $25 million in financing for 38 Studios.
The company owned by Schilling, the former Red Sox pitcher, filed for bankruptcy last year, making the state responsible for some $90 million in outstanding debt.
The emails are significant because they show Saul, as a representative from the EDC, was attempting to secure additional private financing for the company even after the state's investment was approved. The question of whether Saul and other EDC officials withheld information about 38 Studios' financial stability is pivotal to a lawsuit filed by the EDC over the deal.
The quasi-public EDC is suing Schilling, Saul, former EDC Executive Director Keith Stokes and others involved in the deal, alleging they withheld information about 38 Studios' finances from and provided false information to the board. The suit says they failed to disclose that the company by its own projections didn't have enough funding to succeed.
All the defendants have asked that the suit be dismissed. Messages left for Stokes and Saul were not immediately returned Wednesday.
The House Oversight Committee met Wednesday to review emails and other documents from the EDC about the process that led to the state's investment. Committee Chairman Michael Marcello said the objective is to give the public information about the 38 Studios debacle and potentially help the state to avoid similar problems in the future.
Lawmakers approved the $125 million loan guarantee program in 2010 but many have said they didn't know that 38 Studios would end up benefiting from it. Yet documents released Wednesday show efforts to help 38 Studios were behind the proposed loan guarantee program.
According to the minutes from an EDC executive session in June 2010, an EDC attorney briefed the board on the loan guarantee program legislation, which was then pending in the General Assembly. According to the minutes, the attorney said "the legislature is aware of the Schilling matter and has done some due diligence in its consideration of this program."
In a letter to Neil Steinberg, president of the Rhode Island Foundation, Stokes wrote that 38 Studios was a "catalyst for the $125 million Job Creation Guaranty Program. Without the tangible prospect of a company like this coming to Rhode Island, the opportunity to create the program would likely not have materialized."
House Speaker Gordon Fox has said that while he was aware Schilling was interested in bringing his company to Rhode Island, it was up to the EDC to decide if the company deserved state incentives. On Wednesday his spokesman Larry Berman said it was the EDC and not top lawmakers who pushed to help the company.
Fox "knew they were asking for $75 million but he didn't know whether they were going to get $75 million," Berman said. "He left that up to the EDC."
Associated Press writer Erika Niedowski contributed to this report.