RI reaches tentative deal with law firm in 38 Studios case

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A law firm sued by Rhode Island's economic development agency over the state's failed $75 million deal with former Boston Red Sox pitcher Curt Schilling's video game company has agreed to settle for $4.4 million.

If approved by a judge, it would be the first settlement in the lawsuit, which also names Schilling and other executives of his company, 38 Studios, two former agency employees, investment banks and others.

The settlement agreement between the agency formerly known as the Economic Development Corp. and lawyer Antonio Afonso and his firm Moses Afonso Ryan was filed Friday with Superior Court Judge Michael Silverstein. Court spokesman Craig Berke said the judge will have a hearing on it July 7.

The law firm says in the filing that the firm continues to deny any liability but wants to put the matter behind it, as well as avoid the risk of a larger judgment at trial. The state agency's lawyer said the agency's worried there could be little left in the firm's insurance policy if the case goes to trial.

38 Studios moved to the state from Massachusetts in 2010 with the promise of a $75 million loan guarantee. It declared bankruptcy in 2012, leaving the state on the hook for as much as $100 million.

The agency filed the lawsuit in November 2012, alleging fraud and other acts misled the state into approving the loan guarantee. Moses Afonso worked on the bond sale.

The lawsuit does not ask for a specific dollar amount but for the defendants to repay the bonds. The suit seeks triple damages.