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Former relocated 38 Studios employees stuck with second mortgages - report
Former relocated 38 Studios employees stuck with second mortgages - report
May 28, 2012 | By Mike Rose

May 28, 2012 | By Mike Rose
More: Console/PC, Business/Marketing

A number of former 38 Studios employees may be stuck with second mortgages after discovering that the company hadn't sold their previous homes as previously promised, according to media reports.

The Rhode Island-based Kingdoms of Amalur: Reckoning house was forced to lay off its entire staff last week, after the studio struggled with financial issues and state debts.

Several sources directly impacted by this latest problem have now told Polygon that they were under the impression that 38 Studios had sold their previous homes as part of the company's Rhode Island relocation program.

However, they found out this week that this was not the case. One former employee said that they were contacted by their bank this week, asking why the mortgage on their Massachusetts home wasn't being paid.

The relocation program was in place to aid employees in moving from Massachusetts to Rhode Island when the company relocated its headquarters, according to the report. A 38 Studios official said that the company is currently looking to find a resolution for the problem.

Rhode Island state officials said that they had no independent knowledge of the mortgage issue.

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Mike Kasprzak
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Wow. A likely candidate for worst game company shutdown yet.

Damir Slogar
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Just a candidate. We both know who should be the winner.

Glenn Sturgeon
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I agree this is incredibly harsh, specialy since (at least some of) the exemployees haven't been paid since some time in april.

Joe McGinn
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Seems incredibly harsh ... but also a little hard to believe, going to wait for the full story.

I mean, how can it happen that someone sells your home for you and you don't know about it? There would be paperwork, money changing hands, etc, yes?

Also a REALLY unusual relocation perk for a company to just take over your mortgage and sell your house for you. Not uncommon for them to cover your losses - the expense of selling , or even losses of having to sell at a low point in the housing market - but just taking over your mortgage?

Dave Smith
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does any other studio do this?

Kim Pallister
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@Dave: yes, I've heard of some companies doing this, but it's a pretty rare thing. Usually for a high level employee with a particularly hard-to-get skill set, etc. If they did this in more than 1,2 cases, it's probably another indicator that they were too loose with their money.

@Joe: agreed. As the owner of the home, you'd expect some paperwork be signed showing you no longer owned it, and that you'd be paid for the equity you had in the home. suspicious sounding.

Fredrik Liliegren
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So who is the winner?

Aaron Casillas
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F... this is beyond harsh and I thought I had it bad.

Kim Pittman
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So not only did they not get paid, lose their health insurance without notice after the time had expired for them to pick up Cobra, but also houses they thought they had sold and were no longer in debt for they are suddenly late on their payments?

This is just the worst week ever for those guys.

I would be trying to figure out who I could sue.

Benjamin Quintero
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i smell a class action, and rightfully so. this is pretty messed up and gets worse every time I stop to read an update.

please let there be some good news eventually. someone buy up the staff and start a new studio or something.

Ian Uniacke
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You can't get blood out of a stone.

Benjamin Quintero
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Ian, I know that I've heard of extreme cases where some level of responsibility follows the company founders. For example if they magically start up a new studio and had "personal" funds to keep the doors open then many times that suit will follow them into the new company. The former employees would have to prove some kind of malicious intent or blatant negligence.

This does seem like a pretty extreme case, so if I were any of the executives at this studio I would be cautious in starting new ventures anytime soon.

Shea Rutsatz
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This is unreal. Dare I ask... what more could possibly go wrong?

Jeffrey Crenshaw
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We're supposed to have safety nets for the poor-off, not nooses. :/

Ron Dippold
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The paycheck problems were unfortunate but understandable (given the bad business plan).

This is into Evil territory, or at least criminal negligence.

Sean Scarfo
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Wow. Seriously this is messed up. This makes EA, Blizzard, and other game companies look like Angels in comparison.

Tom Killen
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It's even more shocking that they weren't kept informed about the situation and only found out from the bank.

Joe kennedy
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ROFL,...they were barely a game studio now they're a real estate firm? Isn't there a saying "if it sounds too good etc, etc"???? I think too many developers gave these celebrities too much confidence. This is sooooo bad on soooo many levels.

Ramin Shokrizade
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When they first contacted me in June to hire me as a virtual economist I was pretty excited. Now, watching this horror story, I am pretty happy that they never followed through. It really sounds like they needed an economist, or at least some really good lawyers.

Eric McVinney
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Out of curiosity, why didn't they follow through?

Matthew Williams
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one of my number one rules working in this industry is going to have to be "never buy a house"

Mark Morrison
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This whole deal is really sad and doesn't bode well for the game space IMO. We have begun to see emails coming into Unity Technologies from ex-staff for access to dev. tools and support. I am happy to say that we can provide support for new start up teams to make good out of bad here. Find me on LinkedIn or the other various channels, and I will help support any ex-38ers interested in Unity. Good luck to all affected and best of luck!

Jeffrey Baird
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@Matthew: No doubt! Many are already resigned to not having a happy marriage, now we can't feel comfortable with a mortgage? But at least games are fun, wheee!

As for the company selling your house, never even heard of such a thing. CURT what is going on buddy?!