- REUTERS/David McNew
Former Boston Red Sox star pitcher Curt Schilling and a group of his business partners are settling a lawsuit with the state of Rhode Island.
The settlement, if approved by a judge, requires Schilling and three others to pay a combined $2.5 million to the Rhode Island Commerce Corporation.
That may sound like a lot, but it’s a far cry from the $75 million loan that was given to Schilling’s game studio, 38 Studios.
When the loan was given in 2010, Schilling moved 38 Studios’ offices to Rhode Island – and with it, a few hundred employees and their families – with the agreement that 38 Studios would both grow the local economy and repay the loan.
38 Studios folded in 2012, less than two years later, and never released the game it was making (a massive, years-long online game, codenamed “Project Copernicus”).
In an unbelievable twist, Rhode Island taxpayers were left holding the bag – as Rhode Island’s WPRI reported in May, the Rhode Island Commerce Corporation issued the $75 million loan without properly vetting 38 Studios’ finances. The reason given: “Because Rhode Island would be paying us back.”
Since the bondholders – companies like Transamerica and the USAA – reportedly knew the state of Rhode Island wouldn’t default on its loans, and the bonds were guaranteed by the state, they went ahead with the loan agreement even though 38 Studios’ financial statements contained several potential red flags.
A number of lawsuits transpired as a result of the loan deal and the closure of 38 Studios. The $2.5 million settlement in this case specifically applies to a lawsuit between the Rhode Island Commerce Corporation and Curt Schilling (plus his business partners); if settled, it effectively ends Schilling’s legal involvement with the 38 Studios loan.