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Subpoenas sent out to loan providers in 38 Studios downfall aftermath
Subpoenas sent out to loan providers in 38 Studios downfall aftermath
June 14, 2012 | By Mike Rose

June 14, 2012 | By Mike Rose
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More: Console/PC, Business/Marketing



The situation surrounding the financial downfall of 38 Studios continued to worsen this week, as state and federal law enforcement agencies sent subpoenas to the various parties involved.

The Kingdoms of Amalur publisher declared bankruptcy earlier this month, after failing to secure financing from the state of Rhode Island or outside investors to continue its operations.

The Rhode Island Economic Development Corp. and the Bank Rhode Island have now both received subpoenas, with orders to testify about the lead-up to 38 Studios filing for bankruptcy.

The former handled the $75 million loan guarantee that Rhode Island gave to 38 Studios, while Bank RI gave loans to two companies controlled by Michael Corso, a Providence tax credit broker who used state tax credits he agreed to buy from 38 Studios as collateral, reports Boston.com. 38 Studios never actually received these credits.

In particular, the state is attempting to find the truth behind why 38 Studios struggled to pay its staff, and why some employees were left with second mortgages.

The Boston Globe also reports that Rhode Island-based Citizens Bank filed a lawsuit against 38 Studios founder and chairman Curt Schilling last week, seeking to recover $2.4 million in loans it provided to the company. It's suing Morgan Stanley Smith Barney, too, where the bank believes Schilling has financial accounts.

This news following moves earlier this month from the Rhode Island state police, state attorney general's office, FBI, and U.S. attorney's office, who launched a joint criminal investigation into goings-on at 38 Studios prior to its collapse.


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Comments


Michael Rooney
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"In particular, the state is attempting to find the truth behind why 38 Studios struggled to pay its staff, and why some employees were left with second mortgages."

It's good that this very specifically will become public record. I think it's important for people to know why these two specific things (and the health insurance being canceled) happened without employees being notified. The lack of transparency to stakeholders (employees) through the whole mess is the thing that worries me the most.

I'm sure it boils down to that they started lying and once they started the lie just kept growing, but I think it's important everything is brought to light.


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