About two years ago, 38 Studios—the gaming company founded by former Red Sox ace Curt Schilling—declared bankruptcy. That came less than two years after the state of Rhode Island offered Schilling a $75 million financing deal to move from Massachusetts to the Ocean State. When 38 Studios went under shortly after putting its first game on the market, it left the state on the hook to make those bond repayments.
Up here in Boston, that was more or less it. Rhode Island had screwed up, and who’d have thunk it, not all pitchers make great businessmen. Some of the politically-inclined also took the opportunity to jab at Schilling, a vocal conservative, for accepting government assistance.
But in Rhode Island, this thing hasn’t gone away. The state still has that debt sitting around collecting interest, and the state’s Economic Development Corporation’s lawsuit against Schilling and other defendants remains in deposition. And over the past two weeks in particular, Schilling’s company has been back in the news quite a bit.
Recent State House hearings have served as the canvas for the steady stream of updates, with Rhode Island’s House Oversight Committee spending part of the last two weeks listening to arguments about whether the state should repay the 38 Studios debt.
The state’s deal with Schilling was funded with moral obligation bonds, which are non-binding. But some economists—including one hired by Governor Lincoln Chafee, whose proposed budget includes funds to repay the debt—say defaulting on the debt would have a negative effect on the state’s bond ratings and the overall business climate anyway. (Not all economists are so certain, the Providence Journal reports.) Meanwhile, Republican gubernatorial candidates Ken Block and Allan Fung have said they oppose repayment, and that they’re skeptical of those economic reports. Fung, for example, called the state-funded report “alarmist,’’ according to the Associated Press.
But the repayment debate is just the backdrop.
An investigation by Providence station WPRI spurred the state to look into possible illegal lobbying violations in relation to the company. Though the state had no record of registered lobbyists representing 38 Studios, which the state requires lobbyists to do, WPRI uncovered a document showing that an associate of former House Speaker Gordon Fox would be paid to mingle with state officials. “That doesn’t get any closer to lobbying than the word lobbyist,’’ Secretary of State Ralph Mollis told the station. State police have since joined Mollis’s investigation.
Fox left his post as speaker earlier this year after both his office and home were raided by authorities for still unknown reasons that many have speculated have to do with Schilling’s company. Yesterday, during a hearing for the ongoing lawsuit, Fox’s lawyer said he believes more than 100 grand jury subpoenas have been issued as part of a broad federal and state investigation that includes a closer look at the 38 Studios deal.
And if that’s not all enough, state police are also looking into veiled threats sent to two legislators investigating the deal.
So there’s a lot going on. And while up here the book may have seemed more or less closed—bloody-socked World Series hero starts a video game company, it fails, and Rhode Island has to pick up the slack, The End—down I-95 the story is far from over.