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38 Studios safe from federal criminal charges

38 Studios safe from federal criminal charges

October 1, 2012 | By Eric Caoili

Federal authorities will not pursue criminal charges against Kingdoms of Amalur publisher 38 Studios over its handling of millions in loans before the company collapsed earlier this year.

Rhode Island's U.S. Attorney's office began conducting a review in June to see if 38 Studios' management had broken any federal laws, such as bank fraud, hoping to find out if the studio provided false information when seeking loans to keep the company afloat.

When 38 Studios missed the deadline for a loan payment to Rhode Island in May, the cash-strapped publisher was forced to lay off its entire staff of nearly 300 employees, declare bankruptcy, and close before it could complete the MMORPG project the team had worked on for several years, "Copernicus."

The company's bankruptcy filings revealed that 38 Studios owes $150.7 million for loans from banks and the state, while its subsidiary Big Huge Games owes over $121 million. Rhode Island's losses could total to over $100 million as a result of 38 Studio's collapse, including its $75 million loan to the publisher plus interest.

While a spokesperson for the U.S. Attorney told the Associated Press that no further federal action is planned against 38 Studios, Rhode Island's State Police is still investigating to see if 38 Studios broke any state laws.

The government-owned Rhode Island Economic Development, which oversaw the loan arrangement that helped convince 38 Studios to move to the state from Massachusetts, has also hired a law firm to look into whether anyone can be held financially liable for the deal.

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