Documents shed light on start of disastrous 38 Studios deal

The company ran out of money and went bankrupt less than two years later.

Among the top concerns raised in the report was that 38 Studios’ initial success would depend on one game.

The news came one day after a court released tens of thousands of pages of documents in a lawsuit brought by the state’s economic development agency against the former Red Sox pitcher and others who played a part in the 2010 deal. Schilling was not deposed, and neither was Senate President Teresa Paiva Weed.

Fox has since been sent to prison on an unrelated corruption charge.

“…38 Studios will have little wiggle room upon release – this is analogous to an all in had in poker”, the report stated.

In a subsequent email on the same email chain, Stolzman is asked by Corso to remove a provision from the term sheet that would have required 38 Studios’ shareholders to provide the EDC with personal guaranties for 38 Studios’ repayment of the loan.

The legislation was introduced in May 2010 and signed into law weeks later.

Now, we have the sworn testimony of more than 60 individuals involved in the 38 Studios deal including the last three Governors of Rhode Island, the two preceding Speakers of the House and many of Rhode Island’s most influential business leaders.

Among the documents released Thursday are depositions of former House Speaker Gordon Fox, who supported the deal, and his predecessor, William Murphy.

Key figures like former Red Sox pitcher Curt Schilling were never deposed. He toured the facility on October. 8, 2009, and met Schilling.

In reviewing the financials of 38 Studios, it is clear why most professional investors refused to invest in the company.

The Governor Don Carcieri served as the chairman of the EDC Board when the report was presented. He testified he did not know about the 2009 meetings with Fox and Murphy when he first met Schilling at a fundraiser at Schilling’s home in March 2010.

“Although I admit I am not an expert in venture capital or video gaming industries, I do believe I have experience in looking out for the taxpayers’ best interests. I thought I was the one that found, you know, 38 Studios as a possible – I had no idea there were other conversations that preceded that, none whatsoever”, Carcieri replied.

He has said he wanted the lawsuit and a state criminal investigation to play out.