38 Studios Bankrupt; FBI Investigating

[Jun 07, 2012, 2:15 pm ET] - Share - Viewing Comments

38 Studios has declared bankruptcy, a company spokesman tells The Providence Journal, and the paper also reports that the Rhode Island State Police inform them that state and federal authorities have launched an investigation into the videogame company founded by former major league pitcher Curt Schilling (thanks Nomaar). They don't have details on the nature of the inquiries, saying simply that Rhode Island State Police superintendent Col. Steven G. O'Donnell says that his agency, the FBI, the U.S. Attorney's office, and the Rhode Island attorney general "are working together to investigate activities that have recently come to light at 38 Studios." In 2010 38 Studios secured a now-infamous $75 million in loan guarantees from Rhode Island to relocate to the ocean state, and trouble repaying that loan preceded the layoff of their staff last month. Here's the statement from the company about its bankruptcy:

"This action comes after several weeks when the company has reviewed, considered and received the recommendations and advice with respect to potential avenues for relief that are currently available. After ongoing negotiations with the State of Rhode Island and potential investors and other interested parties, the Company has been unable to find a solution to the current stalemate."

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46.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 9, 2012, 00:44

Bet

m00t wrote on Jun 8, 2012, 17:54: Just for full disclosure, I personally know 5 of the former employees of 38 who had been involved for over 2 years (well, 1 of them just under a year). There was more going on than just Chafee thinking this wasn't a business RI should be investing in, but that's obvious to anyone without blinders on. You don't magically miss a loan payment just because the Governor isn't thrilled with the deal. but...but...POLITICS!!!

45.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 8, 2012, 17:54

m00t

Just for full disclosure, I personally know 5 of the former employees of 38 who had been involved for over 2 years (well, 1 of them just under a year). There was more going on than just Chafee thinking this wasn't a business RI should be investing in, but that's obvious to anyone without blinders on. You don't magically miss a loan payment just because the Governor isn't thrilled with the deal.

44.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 8, 2012, 14:13

Verno

The company was courting investors who fled after Chafee publicly - and with intent to cause investors to flee - made scathing comments about the company.

All of that stuff takes time for due diligence, assuming it would have happened at all. People typically don't make that sort of investment overnight. These guys were having problems making current payroll, their problems stretch back before this debacle really began in earnest.

But, I'm not wasting more time on this. Clearly people will believe what they want regardless of facts.

I don't think that's fair at all. Since when would people around here not be willing to consider a Rhode Island scandal to be the fault of a politician? Come now, that's just silly. Many people would jump right to blaming the politician automatically but there's another side of it to consider.

I think most people are perfectly willing to say that the governor's decision caused the shutdown of the company but it seems like people are just pointing out that the company wasn't exactly healthy in the first place so maybe it turned out to be the right decision (even if it was for the wrong reasons as you claim).

All of that aside, I feel for the employes out of work as it really doesn't matter to the other principles involved anyway. Regardless if you blame the governor or management/Curt Shilling their livelihood won't be affected so its the little people who lose as always.

This comment was edited on Jun 8, 2012, 14:18.




Playing: Super Mario 3D Land, Tales of Graces F, Fire Emblem 3DS Watching: Hannibal, Community, Life

43.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 8, 2012, 13:50

Agent.X7

Verno wrote on Jun 8, 2012, 09:19:
Agent.X7 wrote on Jun 8, 2012, 01:26:
Oh good, you've got your little research hat on.

Err, why would doing research be considered a bad thing? Most people would rather someone researched their opinion as opposed to just forming it based on political bias. I haven't seen anyone really lay out a case where this company would have been rainbows and sunshine if the big bad governor had left them alone either, they were obviously in dire financial straits even before this whole mess got started.

Doing research isn't bad. Not that looking up who was RI governor when was really research. I know it was two different governors, I've stated that many times before.

The company was courting investors who fled after Chafee publicly - and with intent to cause investors to flee - made scathing comments about the company.

But, I'm not wasting more time on this. Clearly people will believe what they want regardless of facts. They can call me a fanboy all they like. I've stated before that 38 made some stupid decisions, but Chafee made it clear he was gunning for them from the start. Mission accomplished. I hope RI tax payers have fun paying for this mess, since they voted this idiot into office. (No, he didn't create the mess, but he made sure the taxpayers were going to foot the bill.)




Seven Star Gaming - Sayre, PA

42.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 8, 2012, 09:19

Verno

Agent.X7 wrote on Jun 8, 2012, 01:26:
Oh good, you've got your little research hat on.

Err, why would doing research be considered a bad thing? Most people would rather someone researched their opinion as opposed to just forming it based on political bias. I haven't seen anyone really lay out a case where this company would have been rainbows and sunshine if the big bad governor had left them alone either, they were obviously in dire financial straits even before this whole mess got started.




Playing: Super Mario 3D Land, Tales of Graces F, Fire Emblem 3DS Watching: Hannibal, Community, Life

41.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 8, 2012, 07:18

avianflu

Ack, Agent, you really dont have the story quite right but that's fine. It is worth noting that the RI govt staffer who actually pushed the details of the deal along is also gone from govt. So there's no one to pin blame on except the current gov, who had nothing whatsoever to do with the deal. The only "good" thing out of this is that RI'ers will never forget Carcieri for creating a mountain of debt that taxpayers have to pay. Chafee may be a blue-blooded airhead, but Carcieri has proven repeatedly that he is bigoted and genuinely moronic.

40.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 8, 2012, 04:38

LightAssassin

Maybe the Feds are involved in regards to the previous property that was meant to be sold in another state which some employees just got payment demands for. I figure that it is across state property crimes? Would that not involve the FBI? Such things can include suspect accounting practices also, so maybe... I wonder if the IRS will chime in. This is all from my limited knowledge of american law and accounting enforcement agencies

39.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 8, 2012, 02:04

m00t

So? It was a bad deal, and the default definitely demonstrates that. Government shouldn't invest in game studios, particularly ones that have no history and naive management. They're simply too volatile. It's patently obvious they wouldn't have made the money back and extending them another loan would just be putting good money after bad. Seriously, banking on your first shipping title selling 3 million units just to keep the lights on? Good fucking luck. I'll agree with the last part, doubly so if they've got a trunk.

38.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 8, 2012, 01:26

Agent.X7

m00t wrote on Jun 7, 2012, 20:37:
Agent, quick note:

A) Person who was Governor when loan was made: http://en.wikipedia.org/wiki/Donald_Carcieri

B) Person who is Governor now: http://en.wikipedia.org/wiki/Lincoln_Chafee

Note how these are two different people.

Oh good, you've got your little research hat on. Now go look up how Chafee was against the deal before he was governor. Now go look up how he swore to bring the deal down even before he was governor. Now look up how he brought the deal down, fucking RI taxpayers in the process all the while smiling at the cameras and telling everyone how he was the good guy and 38 was the bad guy.

Now go look up crooked politicians. I'll give you a hint: It's most of them.




Seven Star Gaming - Sayre, PA

37.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 7, 2012, 22:33

Dades

NKD wrote on Jun 7, 2012, 21:45: Yeah I see a lot of people calling out Chafee when he's on record as being against this loan even before he was Governor. They're using that as the line of reasoning. As if he got elected to office, set out to dismantle this loan just to bone 38 Studios while twirling his villain mustache and counting his political capital. I was reading on here that these guys were having problem making payroll, let alone meeting other obligations and that was before the governor even got involved. They burned through a shitload of money and their main product was a failure. Employing 375 people, buying another studio and working on an MMO simultaneously will do that. They went big, they failed big. There's a reason most successful startups in this industry go small and grow incrementally.

36.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 7, 2012, 21:45

NKD

m00t wrote on Jun 7, 2012, 20:37:
Agent, quick note:

A) Person who was Governor when loan was made: http://en.wikipedia.org/wiki/Donald_Carcieri

B) Person who is Governor now: http://en.wikipedia.org/wiki/Lincoln_Chafee

Note how these are two different people.

Yeah I see a lot of people calling out Chafee when he's on record as being against this loan even before he was Governor.




If you don't like where gaming is heading, stop giving your money to the people who are taking it in that direction.

35.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 7, 2012, 20:37

m00t

Agent, quick note: A) Person who was Governor when loan was made: http://en.wikipedia.org/wiki/Donald_Carcieri B) Person who is Governor now: http://en.wikipedia.org/wiki/Lincoln_Chafee Note how these are two different people.

34.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 7, 2012, 19:57

Prez

Is every failed loan over $75m investigated by the FBI as a matter of course?

The Fed gets involved in virtually every case where there is an alleged misappropriation of public funds. I live in a small town outside of Memphis - population 7000 - and the Feds got involved in a case where the Mayor of our little town allegedly used public funds inappropriately. All it takes is someone with some clout to make an accusation.




Prez on Soundclick http://www.soundclick.com/bands/pagemusic.cfm?bandID=604888

33.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 7, 2012, 19:34

[VG]Reagle

Hookers and blow




[VG]Reagle Beagle

32.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 7, 2012, 19:28

Longswd

Hookers and blow, hookers and blow, gotta get me some more hookers and blow.




I don't always drink carbonated Mexican rat piss, but when I do, I prefer Dos Equis.

31.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 7, 2012, 18:53

Agent.X7

Teddy wrote on Jun 7, 2012, 18:30:
Agent.X7 wrote on Jun 7, 2012, 18:11:
There was no federal money involved. There was no taxpayer money involved until the genius governor caused the company to default on it's bank loan, which was co-signed by the state. This is the governor doing damage control, trying to make himself look good by having an investigation.

Gotta love fanboys passing the buck. Of course the solvency issues of 38 studios had -nothing- at all to do with them defaulting on the bank loan. It's that one person SAID something about their solvency issues. That must have been the problem.

They spent more money than they made on their first project, by a LONG shot, AND they were trying to fund development of an MMO when they had neither the experience, nor a recognized IP, nor the company reputation to back it up.

THEY caused their company to default by spending money stupidly and expecting huge sales on a title no one cared about, released in the same window as the kingpin of the genre. That they couldn't dupe any more 'investors' into handing them money so that they could burn it is no one's fault but their own.

Gotta love people who only read headlines and have no clue what they are talking about.




Seven Star Gaming - Sayre, PA

30.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 7, 2012, 18:52

Kajetan

Teddy wrote on Jun 7, 2012, 18:30: THEY caused their company to default by spending money stupidly and expecting huge sales on a title no one cared about, released in the same window as the kingpin of the genre. To be precise ... they sold the SP game project for 35 mio. to EA, all revenue from KoA went to EA, nothing went to 38 Studios. They wasted this money on their MMO project, still years away from releasing it. They made some very bad management and investment descisions. And yes, it's ALL THEIR fault.

29.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 7, 2012, 18:51

Dev

jdreyer wrote on Jun 7, 2012, 14:43: theyarecomingforyou wrote on Jun 7, 2012, 14:39: They accepted a $75m loan and were unable to pay it back. At the bare minimum it needs investigating, as fraud is a serious possibility. Is every failed loan over $75m investigated by the FBI as a matter of course? If the Governor calls, yeah. IMHO, thats all it is, the gov trying to look good for the press and saying "they are investigating! So there!"

28.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 7, 2012, 18:47

RailWizard

Who?

27.

Re: 38 Studios Bankrupt; FBI Investigating

Jun 7, 2012, 18:45

Hump

They stonewalled state officials when questions started coming up about the late payments etc. This is politicians calling favors to the State Police and AG's office to break 38 studio's balls. Ive lived here my whole life. This is how the state political system works. Much like a Mafia family




---------------------------------------------------------------------- "Both the “left” and the “right” pretend they have the answer, but they are mere flippers on the same thalidomide baby, and the truth is that neither side has a clue." - Jim Goad

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