clock menu more-arrow no yes mobile

Filed under:

No criminal charges in 38 Studios case, say Rhode Island officials

Concludes a four-year investigation into collapse of Amalur developer

Owen S. Good is a longtime veteran of video games writing, well known for his coverage of sports and racing games.

Rhode Island authorities closed a four-year investigation into the collapse of 38 Studios with a decision not to bring criminal charges, saying that a bad business deal does not necessarily make it a crime.

Rhode Island's attorney general and the superintendent of the State Police there announced the decision yesterday, noting that the Rhode Island taxpayers, who guaranteed $89 million of 38 Studios' debt, would not be happy with it.

"A bad deal doesn't always equate to an indictment," Steven G. O'Donnell, the Rhode Island State Police superintendent, said at a news conference, as reported by The Boston Globe.

federal case alleging bank fraud in the deal still is pending. Two individuals have settled charges brought against them; the case is proceeding against a third person, Wells Fargo, and the Rhode Island Economic Development Corporation.

38 Studios was to have been the second act for the former baseball player Curt Schilling, who moved his venture from Massachusetts to Rhode Island in 2010 under a loan and incentives package, totaling $75 million, that was crafted by the Rhode Island Economic Development Corporation.

But 38 Studios went bust in 2012, leaving Rhode Islanders on the hook for its bad debt. Various probes into the deal have revealed that even the size of the state loan package would not be enough to keep 38 Studios solvent while it made an MMO based on the Kingdoms of Amalur continuity. The game it did launch in 2012, Kingdoms of Amalur: Reckoning, was successful but faced wildly unreasonable assumptions about its sales potential.

O'Donnell said that State Police investigators, who interviewed more than 140 people, found that Rhode Island officials failed to do enough due diligence in analyzing the deal and 38's prospects for success with it. Schilling's celebrity, as a star pitcher for the Boston Red Sox in their championship years of 2004 and 2007, likely affected that lack of review, O'Donnell said.

Schilling himself went through personal bankruptcy after 38 Studios went bust and was sued by the state of Rhode Island in November 2012. Though he appeared not to be a target of the criminal investigation, Schilling still had strong words about its outcome.

The 38 Studios venture ended up a miserable experience for all involved, especially the 400 employees who lost their jobs and the taxpayers who had to back a bad deal. Rhode Island lawmakers were faced with the choice of picking up 38 Studios' loan payments or seeing its credit rating suffer. At one point, they debated willfully defaulting on its debt obligations, but the state has continued to make its payments. To date, the state has recouped about $17 million through financial settlements of the lawsuits brought against those responsible for the deal.

The next level of puzzles.

Take a break from your day by playing a puzzle or two! We’ve got SpellTower, Typeshift, crosswords, and more.