The U.S. Securities and Exchange Commission is digging into the $75 million loan that lured Curt Schilling's 38 Studios from Boston to Rhode Island.
It's come to light that the SEC is in the midst of its own investigation into the $75 million in loan guarantees that the Rhode Island Economic Development Corporation offered to 38 Studios, the developer of Kingdoms of Amalur: Reckoning, in order to convince the studio to relocate to the state. The SEC investigation actually began last fall, according to a WPRI report, but hasn't been reported until now.
The EDC confirmed that legal firm Cohen & Gresser LLP "were retained based on their expertise in relation to an inquiry from the SEC" over a five-month stretch last year. Cohen & Gresser was paid $102,615 for its efforts.
It's not known what exactly the SEC is investigating, although Rhode Island has previously claimed that 38 Studios executives withheld information about the true state of its financial affairs and "actively masked" the fact that it was grossly under-capitalized, effectively hornswoggling the state out of a pile of cash. The inquiry was not disclosed in documents published in April related to a 38 Studios bond because "Treasury was not aware of the SEC investigation," according to spokeswoman Joy Fox, but State Senator Dawson Hodgson said he wasn't surprised to learn about it.
"There are so many contours to how this deal was constructed I wouldn't know where to start," Hodgson said. "It seems clear there was a lot of self-service as to how this deal was put together, and that is usually the starting point."