Curt Schilling sued by Rhode Island over 38 Studios loan guarantee
PROVIDENCE, R.I. -- The state of Rhode Island's economic development agency on Thursday sued former Red Sox pitcher Curt Schilling and some of its own former officials in connection with a $75 million loan guarantee to his failed video game company.
The suit was filed in Rhode Island Superior Court four months after 38 Studios filed for bankruptcy after a spectacular collapse. The board of the Economic Development Corp. in 2010 lured 38 Studios to Providence from Massachusetts with the loan guarantee.
In addition to Schilling, who founded the company, the suit names former EDC Executive Director Keith Stokes; Michael Saul, a former top official with the EDC who worked closely on the deal; and two law firms that also worked with the agency.
Gov. Lincoln Chafee said the EDC board authorized the legal action in an attempt to recoup some of the state's money.
"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 in a video statement. "The Board's legal action was taken to rectify a grave injustice put upon the people of Rhode Island."
Chafee said in the message he would not comment further and that the complaint is "only the beginning."
EDC spokeswoman Judy Chong said the agency has no comment. Messages were left for Schilling and Stokes.
With 38 Studios' collapse into bankruptcy, Rhode Island is now likely on the hook for more than $100 million, when interest is factored in on the bonds the state issued on the company's behalf.
The EDC in June hired an outside firm to determine whether there is any third-party liability in connection with the loan guarantee. The board was briefed in private last month by attorney Max Wistow on possible litigation.
One of the law firms named in the suit, Adler Pollock & Sheehan, which had served as general counsel to the EDC, said in a statement the suit reflects a "misappreciation" of its role and said the firm will "vigorously defend itself."