EXCLUSIVE: U.S. Attorney Investigating Curt Schilling’s 38 Studios

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Thursday, June 07, 2012

Dan McGowan, GoLocal News Editor

The U.S. Attorney’s office has launched an investigation into Curt Schilling’s 38 Studios, GoLocal has learned.

While specific information about what authorities are looking into remains unclear, it is believed that the focus is on the business dealings surrounding the former Red Sox star’s cash-strapped video game company.

A spokesman for U.S. Attorney Peter Neronha said the office could neither confirm nor deny that an investigation is underway.

In 2010, the Rhode Island Economic Development Corporation (EDC) gave 38 Studios a $75 million loan guarantee to move to the state and create 450 jobs. Last month, the company collapsed after defaulting on a $1.125 million payment due to the EDC and was forced to lay off every single employee.

In order for Schilling’s company to receive the $75 million loan guarantee, the General Assembly quickly passed legislation that expanded the state’s Job Creation Guaranty Program from $50 million to $125 million.

The deal was said to be hatched after former Governor Don Carcieri attended a fundraiser at Schilling’s home. In the weeks that followed, Schilling and 38 Studios director Tom Zaccagnino met with House Speaker Gordon Fox and former EDC director Keith Stokes in the downtown law offices of Michael Corso, the state’s top tax credit broker and a close friend of Fox’s.

Zaccagnino and Corso had a previous relationship related to tax credits dating back to 2009, when Zaccanino’s company headed up a hotel project in Little Compton.

When 38 Studios began to struggle financially, Corso secured several loans from BankRI and pledged over $14 million in film tax credits as collateral even though the tax credits were never issued. Corso has since accused the state of reneging on the tax credits.

Since laying off all of his employees, Schilling has blamed Governor Chafee for scaring away potential investors that could have saved the company. Chafee has dismissed the former ace’s comments.

The state has also launched a forensic audit into the company dating back to its inception in 2006. Deloitte is conducting that audit.

Dan McGowan can be reached at [email protected].

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