PROVIDENCE – A federal judge on Monday ordered R.I. Commerce Corp. to pay $50,000 to settle allegations it defrauded investors to fund the now-defunct video game company 38 Studios LLC.
U.S. District Judge John J. McConnell Jr. approved a settlement between Commerce, the state’s economic-development arm, and the U.S. Securities Exchange Commission. In exchange for not having to admit any wrongdoing, the state agency agreed not to mislead investors in the future, in accordance with the U.S. Securities Act, and to pay $50,000 to the SEC within two weeks.
Everyone needs science. Science needs everyone.
The Amgen Foundation is guided by the belief that all students should have the opportunity…
Learn More
The federal agency last year charged Commerce, Wells Fargo Securities and its lead banker, Peter M. Cannava, with fraud. The charges stemmed from 2010, when the state issued $75 million in municipal moral obligation bonds to fund 38 Studios. The company two years later filed for bankruptcy, leaving Rhode Island taxpayers on the hook to pay back the guarantee.
The SEC accused Commerce of not fully informing bond investors about the financing of the deal.
The 38 Studios deal is well-known in Rhode Island, where taxpayers continue to pay back the failed investment. It also has regional and national notoriety largely because the company was owned and run by Curt Schilling, the former Boston Red Sox pitcher.
The federal lawsuit against Wells Fargo and Cannava continues, according to court documents.
