RI Commerce Corporation reaches $25.6 million settlement in 38 Studios lawsuit

August 23, 2016 10:18 am

By: News Staff

news@abc6.com

The Rhode Island Commerce Corporation reached a $25.6 million settlement with Wells Fargo Securities, LLC & Barclays Capital Inc. in the 38 Studios lawsuit Tuesday morning.

The settlement was filed in Rhode Island Superior Court Tuesday and is dependent upon court approval.

If the Court approves the settlement, the Corporation will have obtained settlements adding up to more than $42 million in the constant 38 Studios litigation, and taxpayers will still owe more than $30 million to bondholders.

"The agreement wasn’t lauded by everybody as being wonderful. But, it was the end to a very, very contentious litigation, the cost of which would have been compounded if the matter had gone to a jury trial," said court mediator and retired Superior Court Justice Francis J. Darigan, Jr. "It’s a solid number and I think that the achievement agreed by the parties to date has been a very good recovery for the people of the state of Rhode Island."

Gabriel Boehmer a spokesman for Wells Fargo released the following statement on the settlement, "We are pleased to have reached an agreement in this case. We are not admitting liability, nor did we do anything improper. It is simply in our shareholders’ best interest to minimize the risk that accompanies lengthy litigation."

Barlclays declined ABC 6 News request for comment.

The Commerce Corporation previously settled claims against Antonio Afonso, Jr. and Moses Afonso Ryan Ltd. for $4.37 million in June 2014 and Adler, Pollock & Sheehan P.C., Robert I. Stoltzman, J. Michael Saul, and Keith W. Stokes for $12.5 million in August 2015.

The Corporation is still involved with the litigation against other defendants who are not included in this or prior settlements including Curt Schilling and First Southwest.

Patti Doyle a spokesperson for First Southwest issued this statement: "Today’s settlement doesn’t change the position of First Southwest. We are preparing for trial this Fall."

That litigation will go forward in order to further reduce the taxpayers’ potential exposure on the remaining moral obligation. Darigan says he is optimistic that a settlement for the remaining defendants will be reached before the case goes to trial.

"I think it would not be in anybody’s best interest to go to trial. The state could come back with nothing or they could come back with a far higher number," said Darigan.

Governor Gina Raimondo reacted to the settlement Tuesday morning via email by saying, “38 Studios was a bad deal for Rhode Island and I was against it from the start.It’s our job to be as aggressive as we can in recovering as much taxpayer money as possible, and today’s settlement is another huge step toward that goal.”

In her statement, Raimondo continues to say that “this settlement and the two previous total over $42 million, and we are committed to keep going. Rhode Islanders understandably feel hurt by this deal–and I do too–but I want everyone to know that we are demanding accountability, getting money back, and moving the state forward.”