It appears as if a legal witch hunt has begun in Rhode Island over the $75 million loan provided by the state to the now bankrupt 38 Studios. The public agency responsible for approving the loan, the Economic Development Corporation, filed charges of fraud, misrepresentation and breach of fiduciary duty against several defendants -- including founder Curt Schilling. The lawsuit was filed early Thursday morning, a day before the two year anniversary of the loan's inception.
Governor Lincoln Chaffee had the following to say in an online video message to accompany the lawsuit:
"My message to Rhode Islanders is this. I know you work hard for your paychecks, and for your tax dollars to be squandered is unacceptable. The board's legal action was taken to rectify a grave injustice put upon the people of Rhode Island."
Other than Schilling, the defendants include 38 Studios CEO Jennifer Maclean, chief financial officer Richard Wester, board member Thomas Zaccagnino, along with former EDC executives Keith Stokes and J. Michael Saul. Two lawyers who helped the state during the loan's confirmation were also included in the lawsuit.
The lawsuit appears to be Rhode Island's only option left to recuperate a portion of the loan, beyond the auction of the Amalur property itself which is currently going on behind closed doors. Whether the lawsuit will prove its worth in a court of law is another matter all together, though the EDC is hoping for a jury case.
In response to the allegations, one of the lawyer defendants' firms responded with this statement:
"[This suit] demonstrates a fundamental misunderstanding of the role of EDC, its board of directors, and its prior legal counsel, Adler Pollock & Sheehan.
The firm has never provided, was never asked to provide, nor would it ever provide business or credit advice or analysis to the EDC. This suit clearly reflects a misappreciation of the role of legal counsel, and Adler Pollock & Sheehan will vigorously defend itself against this claim."
A federal investigation into similar claims was dropped with no charges. Watch Governor Chaffee's entire statement to the people of Rhode Island below.