State sues Schilling, 13 others on 38 Studios

PROVIDENCE – The state and R.I. Economic Development Corporation are suing 38 Studios LLC founder Curt Schilling and 13 other institutions or individuals connected with the failed $75 million loan guarantee to the video company for allegedly misleading state officials about the deal’s risks. More

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State sues Schilling, 13 others on 38 Studios

Posted 11/5/12

PROVIDENCE – The state and R.I. Economic Development Corporation are suing 38 Studios LLC founder Curt Schilling and 13 other institutions or individuals connected with the failed $75 million loan guarantee to the video company for allegedly misleading state officials about the deal’s risks.

Those named in the suit, filed in R.I. Superior Court Nov. 1, include former EDC Executive Director Keith W. Stokes and Deputy Director J. Michael Saul, who shepherded the loan guarantee through the quasi-state agency in 2010. It also names former 38 Studios executives, lawyers who advised the state in the deal and financial institutions that brokered it.

The suit asks the court to make the defendants liable for what is now the state’s responsibility to pay back 38 Studios’ bondholders.

“38 Studios failed because of risks that had not been disclosed to the EDC board, but were or should have been known by all of these advisers, and by 38 Studios, and defendants … ” the suit alleges.

In a Nov. 1 statement, Gov. Lincoln D. Chafee said the EDC board of directors voted unanimously to take legal action to recover any possible public dollars exposed to the 38 Studios debacle.

“My message to Rhode Islanders is this: I know that you work hard for your paychecks, and for your tax dollars to be squandered is unacceptable,” Chafee said. •

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