SEC Investigates 38 Studios Loan
The U.S. Securities and Exchange Commission is digging into the $75 million loan that lured Curt Schilling's 38 Studios from Boston to Rhode Island.
It's come to light that the SEC is in the midst of its own investigation into the $75 million in loan guarantees that the Rhode Island Economic Development Corporation offered to 38 Studios, the developer of Kingdoms of Amalur: Reckoning, in order to convince the studio to relocate to the state. The SEC investigation actually began last fall, according to a WPRI report, but hasn't been reported until now.
The EDC confirmed that legal firm Cohen & Gresser LLP "were retained based on their expertise in relation to an inquiry from the SEC" over a five-month stretch last year. Cohen & Gresser was paid $102,615 for its efforts.
It's not known what exactly the SEC is investigating, although Rhode Island has previously claimed that 38 Studios executives withheld information about the true state of its financial affairs and "actively masked" the fact that it was grossly under-capitalized, effectively hornswoggling the state out of a pile of cash. The inquiry was not disclosed in documents published in April related to a 38 Studios bond because "Treasury was not aware of the SEC investigation," according to spokeswoman Joy Fox, but State Senator Dawson Hodgson said he wasn't surprised to learn about it.
"There are so many contours to how this deal was constructed I wouldn't know where to start," Hodgson said. "It seems clear there was a lot of self-service as to how this deal was put together, and that is usually the starting point."
I'm thinking of how this SEC investigation will deal with all the lawsuits and financial issues the loan caused. If the SEC says that the loan Rhode Island did was illegal/fraudulent, that would be a huge blow to the Rhode Island government.
I do wonder what areas the SEC are investigating though, since this seemed to be a secret investigation.
I was wondering when this would come up. The state of Rhode Island was at least partially responsible for the outcome of that whole affair. As I recall, they hadn't even given the company the full lending amount before demanding it back very shortly after the game actually released. But, further investigation should prove fruitful. In the end though, I don't see how RI gets it's money back and the studio is completely dead and gone, there aren't even ashes at this point. No positive is going to result from this.
WPRI is not a good new source to be used, not only is it not biased, it writes very misleading crap it calls news stories often, plus there is also the rumor that it was being paid, by Chaffee and his cronies, to write propaganda to discredit curt shilling and 38studios over a grudge Chaffee has with Curt. Some say Curt refused to pay Chaffee's demand for a kickback, ofcourse another unprovable rumor. If a real journalist had researched anything into the whole drama thing they would find that quoting WPRI a rookie error in judgement, see the total amount of money 38 studios was given was about 23million, chaffee and the lawyers pocketed the rest and are claiming the people still have to pay it back. it was all a scam on the part of RI, and lets not forget that idiots elect bigger idiots to lead them, so gratz on RI on being extremely stupid for get the wool pulled over your eyes, again. Chafstick went to a lot of trouble and hassle to try to blame the previous governor, no surprise he failed that too, he prolly would have tried to use him too. Oh and Andy C. I hope your journalistic skillz get better that just re-writing an already written story that could almost be plagiarism.