Curt Schilling sued by Rhode Island agency over $75 million loan guarantee

November 1, 2012

Rhode Island is seeking to collect on its wasted investment in Curt Schilling’s 38 Studios. (Steven Senne / AP)

Curt Schilling may have declared bankruptcy for his failed video game company months ago, but the state of Rhode Island will not let the former Boston Red Sox pitcher off the hook that easy.

Rhode Island’s economic development agency on Thursday sued Schilling and several of its former members in relation to the $75 million loan guarantee provided to Schilling’s 38 Studios.

Schilling laid off the entire 38 Studios staff in May after the company was late on a $1.1 million loan payment to the EDC. Two weeks later, the company filed for Chapter 7 bankruptcy, leaving behind more than 1,000 unpaid creditors.

The Economic Development Corp. used the massive loan to lure Schilling’s company to its capital in Providence with the promise of hundreds of jobs and millions of dollars in tax revenue. But after the company abruptly and totally collapsed last spring, the state was left with a massive loss of its investment that could add up to more than $100 million, according to an Associated Press report.

“My message to Rhode Islanders is this: I know that you work hard for your paychecks, and for your tax dollars to be squandered is unacceptable,” Gov. Lincoln Chafee said in a video statement. “The Board’s legal action was taken to rectify a grave injustice put upon the people of Rhode Island.”

According to the suit, the EDC board members who approved the 38 Studios loan in 2010 were not experts in “law, lending, video gaming or economic development,” and “were or should have been” aware of the risks that were not disclosed by the company. The suit also claims that 38 Studios misled the board about the feasibility of completing the video game codenamed Copernicus — an endeavor the company projected would require $75 million to complete.

“I put everything in my name in this company,” Schiling told WEEI in a June radio interview (via Boston.com), adding that he was not searching for sympathy. “I believed in it. I believed in what we built. I never took a penny in salary. I never took a penny for anything.”

Earlier this month, the Boston Globe reported that among the collateral Schilling listed in his Chapter 7 filing was the bloody sock he wore during the 2004 World Series, a baseball cap said to have been worn by Lou Gehrig and a collection of World War II memorabilia.

Schilling’s Twitter page lists as his bio: “Was part of the coolest company with the coolest people making the coolest game on the planet.”

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Cindy Boren | November 1, 2012