R.I. Supreme Court rules 38 Studios grand jury materials to remain sealed

PROVIDENCE – The R.I. Supreme Court ruled that grand jury materials in the 38 Studios investigation should remain sealed in a decision issued on Wednesday.

Justice Francis X. Flaherty noted that “for many people in this state, particularly those who are currently holding public office, the 38 Studios situation and the company’s bankruptcy, occurring as it did just as the entire economy was clawing its way out of the Great Recession, still stings,” but found nonetheless that the materials should remain sealed.

38 Studios, which was run by Curt Schilling, was granted a $75 million bond by the predecessor of R.I. Commerce Corp. The company eventually went bankrupt and had not paid back the value of the bonds.

The Office of the Attorney General argued against the unsealing of documents from the grand jury.

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Gov. Gina M. Raimondo submitted a petition seeking the release of the documents in February 2017. Her office appealed a Superior Court decision that found that the governor’s request failed to meet factors in favor of the release of materials and blocked the unsealing of the documents.

The decision Wednesday returns the case to Superior Court, affirming its original denial.

Grand jury materials are typically kept secret and only released in extraordinary circumstances. Raimondo argued that the 38 studios situation was one of those extraordinary scenarios.

The grand jury investigation spanned 18 months, from 2012 to 2015 and did not result in any criminal charges. The 38 Studios bankruptcy resulted in taxpayers burdened with $88 million in costs. Civil lawsuits have since clawed back $61 million from various stakeholders.

The court said that it came to its decision due to the fact that not enough time has passed to justify a disclosure; it argued that it should be denied on the basis that no historians, journalists, or historical or educational institutions were seeking the records in the case; and found that the disclosure sought by the governor wasn’t limited enough. It also noted that the unsealing of grand jury materials has typically been done in cases of “intense national historical interest.”

The court also acknowledged that the attorney general’s argument that the statute of limitations for potential conduct related to 38 Studios had not yet expired – and that witnesses who testified on advice and precedence that their testimony would remain secret are still living and would be subjected to undue attention.

Following the announcement of the decision, the American Civil Liberties Union of Rhode Island expressed disappointment with the court’s ruling.

“This case raised difficult, novel, and extremely important legal issues, but we are disappointed in its outcome. While we appreciate the court’s thorough analysis of those issues, we continue to believe that the overriding public interest in transparency regarding this exceptional episode in the state’s history warranted disclosure of the grand jury records,” said Steven Brown, executive director of the ACLU of Rhode Island. “Lessons that could be learned from the 38 Studios disaster by reviewing those records will, unfortunately, now be lost to the passage of time.”