38 Studios Stonewalled State Auditors - ABC6 - Providence, RI and New Bedford, MA News, Weather

38 Studios Stonewalled State Auditors

by Mark Curtis

mcurtis@ABC6.com

     There is new information on the downfall of Curt Schilling's 38 Studios.
     It turns out the state was trying to investigate the company's finances before 38 Studios collapsed, but auditors hit a brick wall.

     It turns out Curt Schilling and his company 38 Studios may have been stonewalling Rhode Island auditors as the company was about to go under. According to new documents obtained by the Associated Press, State Auditors from the EDC had requested access to 38 Studios records in May, but were denied. In a radio interview two weeks ago Shilling suggested Governor Chafee torpedoed any chance that 38 Studios could be saved by saying publicly the company might fail:

     Curt Schilling, 38 Studios founder said, "It was based upon keeping the company... he used the word solvent. That word was (a red flag). It was an enormous problem for us, but the employees had no idea and payday was the next day."

    ABC-6 Reporter Mark Curtis said, "But that comment from Schilling has now been contradicted by other documents from the company indicating  38 Studios Board of Directors was already considering bankruptcy long before Governor Chafee ever spoke publicly."

    The state has hired a law firm to try to find any assets it can, so Rhode Island taxpayers don't get stuck with a 75 million dollar tab for the failed company the state backed. The new documents seem to back up what the Governor told us last month.

     Gov. Lincoln Chafee, (I) Rhode Island, "There's been this unfortunate trust issue, between the state and 38 Studios."

     Chafee was opposed to the loan deal two years ago when he ran Governor, but insists he fully supported the venture once in office, because Rhode Island's investment meant 38 Studios needed to succeed.

     The revelations about the state audit effort came after the Associated Press issued a public information request for documents, including emails.