Send News. Want a reply? Read this. More in the FAQ.   News Forum - All Forums - Mobile - PDA - RSS Headlines  RSS Headlines   Twitter  Twitter
Customize
User Settings
Styles:
LAN Parties
Upcoming one-time events:

Regularly scheduled events

Rhode Island Sues Schilling and Others over 38 Studios Deal

The R.I. Economic Development Corporation filed suit in R.I. Superior Court today against some of those involved in the deal that loaned 38 Studios $75 million in taxpayer money, reports WPRI (thanks VG247). This document offers the full complaint, and this video lays it out further. Here's a portion explaining that part of the problem was the developer not explaining clearly enough they were borrowing this money because they needed money, and another issue is an alleged conflict of interest:

The complaint says 38 Studios officials failed to disclose that the company was "undercapitalized by many millions of dollars" and therefore "was likely to run out of money in 2012." It also warns that EDC board members who approved the deal could be liable themselves if the legal discovery process uncovers evidence that they knew the risks and signed off on the $75 million loan guarantee anyway.

It quotes an email from an unnamed EDC loan analyst who told his bosses: "I don't think I can support a $75 million loan guarantee to any single company in this industry," referring to video games.

The EDC never ordered an independent assessment of whether 38 Studios would be able to finish the game after the board voted to approve the deal on July 26, 2010, even though board members were told the agency would do so, the complaint alleges.

It says Wells Fargo earned nearly $500,000 "in hidden commission from 38 Studios" that were not disclosed to the EDC board at the same time the bank was also supposed to be looking out for the agency's interests.

View
16. Re: Rhode Island Sues Schilling and Others over 38 Studios Deal Nov 2, 2012, 08:48 Creston
 
.net_Drifter wrote on Nov 1, 2012, 20:47:
They didn't realize they were borrowing money because they needed money . . .
I find that hard to believe. If you didn't need money, why would you be borrowing it? Especially $75 million?

Now if they were asking for a spare quarter in case the vending machine down the hall ate theirs, I could see them not thinking they needed the money, but to ask someone for $75 million, but not because you need it?

There's a difference between borrowing money because you don't think you can finish the game otherwise, and may have to close the studio, but you're fully capable of creating enough revenue to be able to pay it back, and borrowing money just to plug another hole with. 38 Studios did the latter (and it was a never-ending spiral with them. Those tax credits they were so desperately chasing were going to be sold for cash, just to plug yet another hole.)

It's like using one credit card to pay off another. It's a never-ending spiral.

Of course, had the RI EDC actually bothered to do five minutes worth of research, they'd have known 38 studios was basically a giant, money-swallowing bottomless pit.

Creston
 
Avatar 15604
 
Previous Post Next Post Reply Quote Edit Delete Report
 
    Date Subject Author
  1. Nov 1, 20:15 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal ldonyo
  2. Nov 1, 20:16 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal ASeven
  3. Nov 1, 20:47 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal .Drifter
  4. Nov 1, 21:38  Re: Rhode Island Sues Schilling and Others over 38 Studios Deal Flatline
  7. Nov 1, 22:12   Re: Rhode Island Sues Schilling and Others over 38 Studios Deal .Drifter
  5. Nov 1, 21:38  Re: Rhode Island Sues Schilling and Others over 38 Studios Deal Prez
>> 16. Nov 2, 08:48  Re: Rhode Island Sues Schilling and Others over 38 Studios Deal Creston
  6. Nov 1, 21:39 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal Panickd
  8. Nov 1, 22:18 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal NewMaxx
  9. Nov 1, 22:48 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal Cutter
  10. Nov 1, 23:12  Re: Rhode Island Sues Schilling and Others over 38 Studios Deal NewMaxx
  11. Nov 2, 02:20 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal Jivaro
  12. Nov 2, 03:12 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal dj LiTh
  13. Nov 2, 07:55 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal ^Drag0n^
  14. Nov 2, 08:20 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal strong placebo
  15. Nov 2, 08:44 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal Creston
  17. Nov 2, 09:01 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal wtf_man
  23. Nov 2, 20:14  Re: Rhode Island Sues Schilling and Others over 38 Studios Deal xXBatmanXx
  18. Nov 2, 09:14 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal Verno
  20. Nov 2, 10:57  Re: Rhode Island Sues Schilling and Others over 38 Studios Deal Creston
  21. Nov 2, 13:23   Re: Out of the Blue Rigs
  19. Nov 2, 09:21 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal strong placebo
  22. Nov 2, 20:12 Re: Rhode Island Sues Schilling and Others over 38 Studios Deal xXBatmanXx


footer

.. .. ..

Blue's News logo