State police release 38 Studios interviews, reveal contradictions
THE R.I. STATE POLICE release of documents from the 38 Studios investigation reveal contradictions in testimony from company founder Curt Schilling and former state House Finance Chairman Steven Costantino regarding if the General Assembly knew the main details of the loan guarantee given to the company to attract it to Rhode Island.
SCITUATE – The R.I. State Police on Thursday released documents from the closed criminal investigation into 38 Studios LLC, a video game company that received a $75 million taxpayer-backed loan before filing for bankruptcy in 2012.
The release marks the newest tranche of documents related to the failed investment that has been made available to the public. The documents include dozens of interviews with people who were involved in the deal, including state lawmakers who approved legislation allowing public money to go toward the deal.
The state police criminal investigation closed last summer with no criminal charges.
An initial review of the documents shows a rare glimpse into Curt Schilling’s point of view. Schilling, a famed former Boston Red Sox pitcher, founded and owned 38 Studios, and agreed to move the then-Massachusetts company to Rhode Island after receiving the state-backed loans in exchange for committing to create jobs here.
The R.I. General Assembly in 2010 was considering a $50 million revolving loan fund for small businesses, which was increased by $75 million and named the Jobs Creation Guarantee Act. The law was designed as an economic-development tool designed to reward businesses for creating jobs. Shortly thereafter, the R.I. Economic Development Corp., now known as R.I. Commerce Corp., approved a taxpayer-backed loan guarantee for 38 Studios totaling $75 million from that program.
Lawmakers who approved the expanded program have largely denied knowing the full $75 million would go toward 38 Studios. But Schilling apparently read the situation differently.
“He assumed everyone he spoke with regarding the financial needs of 38 Studios knew that the company needed the full $75 million. Schilling also believed that all Rhode Island law makers [sic] knew the addition of $75 million to the Jobs Creation Guarantee Act was for 38 Studios,” according to his formal statement made to state police on June 19, 2015.
Schilling cited several meetings that took place ahead of time at lobbyist Michael Corso’s Providence law office. Participants, he said, included former House Speaker Gordon D. Fox and former House Finance Chairman Steven Costantino. Fox is currently incarcerated for unrelated bribery charges, and was not interviewed as part of the state police criminal investigation. Likewise, Corso, who has come under heavy criticism for his involvement in the 38 Studios deal, was not interviewed.
Costantino, who must recently worked as the commissioner of the V.T. Department of Health Access, sponsored the jobs bill.
“I knew [38 Studios] was interested,” Costantino said in his own interview released with the documents. “I didn’t know they would get it, I knew they were interested, you know, but I also knew there was a whole bunch of other companies interested as well.”
Costantino might have been downplaying his involvement in the deal, however, if people believe Schilling. The Red Sox pitched characterized Costantino as “always trying to impress him.”
“After the bond loan was approved [Costantino] took [Schilling], his wife, Fox, Fox’s partner and several others out to dinner for a celebratory dinner at Venda,” according to Schilling’s statement.
Venda is a restaurant on Federal Hill in Providence owned by the Costantino family.
The 38 Studios saga is well-known in Rhode Island, where taxpayers lost upward of $88 million on the failed investment. That money is still being paid back to investors. Schilling’s involvement gives the story more widespread notoriety.
The state last month ended a years-long civil lawsuit related to 38 Studios. The suit was filed against state officials, company executives, underwriters and others involved in the failed investment. All defendants, including Schilling, settled with the state, and Rhode Island was able to recover about $61 million, or $49.7 million net of fees, of the money lost through the investment.
And the story isn’t likely to end here, as the public continues to comb through thousands of documents related to the case.