Too Many Employees May Have Sunk 38 Studios

by Mark Curtis

mcurtis@abc6.com

     Documents released from the Rhode Island Economic Development Corporation on 38 studios, as well as an unflattering Boston Magazine article, are painting an even grimmer picture of the deal. To get Rhode Island's 75 million dollar loan, 38 Studios had to hire a specific number of new employees, whether they were needed or not.

     Ken Block, Moderate Party Founder and former candidate for governor said, “They had to create those jobs to receive the financing they got. And according to the Boston Magazine article, they were joking about Vice Presidents of Donuts, because they put people into jobs, but they didn't have anything for them to do, so it was draining resources.”

     Business owner Ken Black says tying the EDC loan, to a specific number of jobs created, was a fatal flaw that doomed Curt Schillings now bankrupt video game company,

     ABC-6 Political reporter Mark Curtis said, “The latest numbers being released on 38 Studios are prompting more outrage here on Smith Hill. Some lawmakers say it's time for the EDC to go.”

     State Rep. Doreen Costa (R) North Kingstown said, “Well first of all I think the EDC should be abolished.”

     State Representative Doreen Costa says the EDC wasted 75 million dollars on 38 Studios, when it could have made loans to lots of small businesses. Costa said, “There's so many small and local businesses that went there who just asked for 250 thousand dollars to open up another branch of their store, or to add on and have more employees go into their business and they were denied, they were flatly denied.”

     Because of this bankruptcy Rhode Island may never get its investment back.