38 Studios: Police Investigate Individuals Connected With Loan Guarantee

38 Studios: Police Investigate Individuals Connected With Loan Guarantee

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Rhode Island House Speaker Nicholas Mattiello isn't a target of the investigation, but he has been talking to state police.

According to Rhode Island House Speaker Nicholas Mattiello, the Rhode Island State Police have become involved in the 38 Studios loan guarantee debacle. Speaker Mattiello says the police are interested in "certain individuals," but declines to name names, as the inquiry has to do with an ongoing investigation. Speaker Mattiello was majority leader when the general assembly voted to authorize a $75 million loan guarantee program that ended up giving Curt Schilling's 38 Studios a huge cash injection. The collapse of 38 Studios in 2012 shortly after release of its only title, Kingdoms of Amalur: Reckoning, left Rhode Island in the hole to the tune of $100 million, including interest on the loan.

Speaker Mattiello's conversation with the state police - a 10 minute phone call - covered the basics of the passage of the loan guarantee program, and he confirms that, to his knowledge, other legislators have also been contacted by the state police concerning this investigation. Speaker Mattiello has said several times in the past that, at the time the guarantee was being discussed, he had no idea that the entire $75 million was earmarked for 38 Studios.

The loan guarantee was discussed for less than a week, and passed on a 66-1 vote. Former Governor Don Carcieri signed it the same day. The entirety of the loan guarantee was immediately used to lure 38 Studios to Rhode Island from Massachusetts, to Rhode Island's eventual detriment.

38 Studios' IP raised just $320,000 at auction, with its Copernicus described as 'junk' by Governor Lincoln Chaffee. Though the state has discussed defaulting on its loan guarantee, it has been estimated that doing so would put Rhode Island's bond rating at less than investment grade, and leave the state on the hook for anything between $36 million to $361 million dollars, though that estimate has been disputed.

Though former House Speaker Gordon Fox, in charge at the time the loan guarantee was being discussed, is being investigated by state and federal authorities, a law enforcement spokesman has said that this investigation is state level only, and separate from the state-federal case.

"This request [made of Speaker Mattiello] was intended to ensure that any legislator, who has relevant information regarding the 2010 vote on the 'Job Creation Guarantee Program,' provides that information to investigators," says state police Supt. Steven G. O'Donnell. "It is important to recognize that the goal of this request is to ensure that anyone with information, who has not been previously contacted, has the opportunity to present it. No member of the legislature is suspected of wrongdoing simply because of their vote."

Sources: Providence Journal, WRPI 12

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I'll be the first to say government should loan money out to companies for certain projects and to encourage growth but not for game development. Its an incredibly risky venture by its very nature and I feel anyone who invests in a gaming company should be pleasantly surprised if they break even. This was a foolish move by the legislature of Rode Island, was it criminal? eh I dunno but I honestly think it may of been done by a bunch of old guys who thought video games were some great cash dispensing sure thing venture and not the risky business they are.

It would have been a lot less risky of a venue if 38 didn't decide to up and try to make an MMO at a time when the market is oversaturated with bad MMO's. KOA-2 would have been a perfectly reasonable IP to work on that would have actually gotten the support of EA, and wouldn't have resulted in the closing of the company and the loss of $100M for Rhode Island. Those in legislation who voted for this aren't to blame (and they aren't being blamed) because at the time it was a good idea. Rhode Island is more in need of job creation than any other state in the nation - and had this worked, it would have greatly helped RI's dire financial situation.

I never bought KOA, but it looked alright. They probably should've thought about that investment allot more carefully in the first place, since it involved game development.

synobal:
I'll be the first to say government should loan money out to companies for certain projects and to encourage growth but not for game development. Its an incredibly risky venture by its very nature and I feel anyone who invests in a gaming company should be pleasantly surprised if they break even. This was a foolish move by the legislature of Rode Island, was it criminal? eh I dunno but I honestly think it may of been done by a bunch of old guys who thought video games were some great cash dispensing sure thing venture and not the risky business they are.

I agree, except it seems so stupid that it *must* be criminal, to me.

It doesn't help that I don't understand why any government would want to pay a company to move to their local area... especially a game company, they're known for being transient things.

VondeVon:

synobal:
I'll be the first to say government should loan money out to companies for certain projects and to encourage growth but not for game development. Its an incredibly risky venture by its very nature and I feel anyone who invests in a gaming company should be pleasantly surprised if they break even. This was a foolish move by the legislature of Rode Island, was it criminal? eh I dunno but I honestly think it may of been done by a bunch of old guys who thought video games were some great cash dispensing sure thing venture and not the risky business they are.

I agree, except it seems so stupid that it *must* be criminal, to me.

It doesn't help that I don't understand why any government would want to pay a company to move to their local area... especially a game company, they're known for being transient things.

It was a loan, and this sort of thing is pretty common, low interest loans, tax incentives etc are all things that companies tend to get for different reasons. Most the time its because a city or a state is trying to become a "hub" of a particular kind of industry sort of think "silicon valley" but sometimes its oil or biomedical research etc.

To be honest, I sometimes wonder whether Rhode Island thought it was luring a game company, or Curt Schilling. He'd only just retired from MLB with a superlative record; the glamour associated with his name alone may have turned some heads.

The whole thing honestly has been disgusting to me. 38 Studios should have never taken a loan from the state and Rhode Island should, especially, not have given one out to a GAME STUDIO of all things. I feel bad that the people's tax money was wasted on this whole thing. Peoples livelihood went into paying for this mess and now they will suffer more than they already did for a decision that, honestly, none of them would have agreed on. State and Federal affairs should not be congruent with the entertainment industry, outside of regulation of illegal and manipulative practices. I can't do much of anything for them, but I feel for the people of Rhode Island.

synobal:
I'll be the first to say government should loan money out to companies for certain projects and to encourage growth but not for game development. Its an incredibly risky venture by its very nature and I feel anyone who invests in a gaming company should be pleasantly surprised if they break even. This was a foolish move by the legislature of Rode Island, was it criminal? eh I dunno but I honestly think it may of been done by a bunch of old guys who thought video games were some great cash dispensing sure thing venture and not the risky business they are.

To be fair, gaming is a freaking huge industry, that despite the claims of piracy and not being enough money to go around, has only been growing and is predicted to grow more. It sort of makes sense to try and establish locals in hopes you will start a trend of game development. At least, until corporations stop paying taxes entirely.

On the other hand....

Karloff:
To be honest, I sometimes wonder whether Rhode Island thought it was luring a game company, or Curt Schilling. He'd only just retired from MLB with a superlative record; the glamour associated with his name alone may have turned some heads.

Even if they wanted to be involved in the gaming industry, I'd be absolutely shocked if Schilling had nothing to do with the decision.

Zachary Amaranth:

synobal:
I'll be the first to say government should loan money out to companies for certain projects and to encourage growth but not for game development. Its an incredibly risky venture by its very nature and I feel anyone who invests in a gaming company should be pleasantly surprised if they break even. This was a foolish move by the legislature of Rode Island, was it criminal? eh I dunno but I honestly think it may of been done by a bunch of old guys who thought video games were some great cash dispensing sure thing venture and not the risky business they are.

To be fair, gaming is a freaking huge industry, that despite the claims of piracy and not being enough money to go around, has only been growing and is predicted to grow more. It sort of makes sense to try and establish locals in hopes you will start a trend of game development. At least, until corporations stop paying taxes entirely.

ya but game development is such a risky endeavor, using public funds for it just seems like a bad idea.

synobal:

ya but game development is such a risky endeavor, using public funds for it just seems like a bad idea.

What isn't a risky enveavour? Reward generally requires risk; there is rarely such a thing as a safe bet and never a sure one.

 

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