State of Rhode Island Finally Gets Around to Suing 38 Studios

And the indignities for 38 Studios just keep on coming.

Despite the recent cleansing of all 38 Studios owned property via auction, the state of Rhode Island is apparently not quite done wringing whatever cash it can out of the failed studio. Today, Rhode Island governor Lincoln Chafee released a statement (via the above YouTube video) declaring that the state would be filing a lawsuit against 38 in an attempt to recoup as much of the $75 million loaned to the studio as it can.

The lawsuit specifically names 38 brass like Curt Schilling, Jennifer MacLean, Richard Wester, and Thomas Zaccagnino, as well as former Rhode Island Economic Development Corporation head Keith Stokes, financiers Wells Fargo Securities, Barclays Capital, and more.

The complaint (which can be read in full here) alleges that Stokes, along with the rest of the EDC board, never bothered to properly investigate 38 Studios' actual ability to finish its Project Copernicus MMO, which it had been tasked to do. Additionally, the suit claims that 38 Studios heads directly misrepresented numerous risks inherent to the deal, as well as more than $500,000 in hidden commissions being earned by Wells Fargo.

According to the suit, "Wells Fargo secured its hidden commissions by concealing these facts from the EDC Board, notwithstanding that the undisclosed information showed that the loan was not in the interests of the EDC and probably would never be paid back."

This lawsuit was perhaps inevitable. Chafee has been beating the drum of financial recovery ever since this debacle began, and the money recovered from the liquidation of 38's assets, as well as any eventual money from the sale of the developer's Amalur IP, wouldn't be nearly enough to cover the money lost by the state in the deal. The auctions themselves netted just about $830,000, and the Amalur IP was recently valued at about $20 million. That's a long way to go.

We'll update this story if any responses from the defendants in the suit become available.

75?

Wow $75. Seems a bit ott

Wonder how much Schilling even has left now.

The auctions themselves netted just about $830,000, and the Amalur IP was .

Huh?

How much was the Amalur IP? Otherwise, really shitty for these guys. It's kind of painful to know how this studio and their projects went to shit so quickly.

@Goggen240 said:

The auctions themselves netted just about $830,000, and the Amalur IP was .

Huh?

Also confused on this point.

Man, the nightmare for all involved with this seems never ending.

@Pyroph said:

Wonder how much Schilling even has left now.

I remember listening to an interview he did with ESPN after everything went bad back in May. He pretty much said that he was almost completely tapped out in terms of his savings from his baseball career.

Fuck Chafee. Vote Gallup.

Amalur is worth 20 million? How? I can shit out more interesting worlds than that.

@Goggen240 said:

The auctions themselves netted just about $830,000, and the Amalur IP was .

Huh?

Also confused on this point.

I don't particularly like either side. 38 Studios clearly fucked up and mismanaged their company. They left a ton of employees out to dry. But how many times can you kick a dead horse?

Is there anyone even left to sue? Isn't the company just one guy now or something?

That video seems like it was filmed in 1995.

I thought necrophilia was illegal? because chafee has been humping the corpse of 38 for awhile now and this.... goes to a disturbing level for this analogy.

On a different note, is this on YouTube as a warning to other developers or because they've already auctioned off 38s phones?

... yes I know why it's on youtube

@AlisterCat said:

That video seems like it was filmed in 1995.

That is because it is still 1995 in Rhode Island.

The state will clearly lose this case; everything Rich Gallup does is legit, he is after all too legit to quit.

38 done fucked up.

Damn so I guess this must be a big political thing for such a small state

Well that sucks for them. Amalur could have been pretty damn great, it was just lacking in a lot of areas. I think it's unfair to see the studio go down so spectacularly for only one failure. I guess that's what happens in a world where video games are this expensive to produce.

can you hear the beating of the drums?

this sum fukked shit

@Hailinel said:

@rye256

@Goggen240 said:

The auctions themselves netted just about $830,000, and the Amalur IP was .

Huh?

Also confused on this point.

I think Alex the whole bottle.

How is it confusing? The auctioning off of 38 Studio's stuff got the State of Rhode Island $830,000. At least that's what it seems like it says to me.

75 million dollars.

<>

Giggity Giggity Goo.

@JasonR86 said:

I don't particularly like either side. 38 Studios clearly fucked up and mismanaged their company. They left a ton of employees out to dry. But how many times can you kick a dead horse?

Nintendo's been doing it for years. Yes, im looking at you, Mario.

Im kidding, i actually like mario games.

More on topic, this doesn't surprise me. When there is money involved people get vicious.

I find it absolutely hilarious that GOVERNMENT is suing BUSINESS for being irresponsible with money; I can hardly wait for the day we can sue government for all the embarrassing wastes of taxpayer money they manage on a consistent ongoing never ending basis.

Oh boy.

@Hailinel said:

@rye256

@Goggen240 said:

The auctions themselves netted just about $830,000, and the Amalur IP was .

Huh?

Also confused on this point.

I think Alex the whole bottle.

How is it confusing? The auctioning off of 38 Studio's stuff got the State of Rhode Island $830,000. At least that's what it seems like it says to me.

@believer258: It was confusing because the sentence was not finished. It is edited now and currently says:

"The auctions themselves netted just about $830,000, and the Amalur IP was recently valued at about $20 million."

I was confused because when I posted the sentence ended "Amalur IP was ." which seemed incomplete.

@DougQuaid said:

@Pyroph said:

Wonder how much Schilling even has left now.

I remember listening to an interview he did with ESPN after everything went bad back in May. He pretty much said that he was almost completely tapped out in terms of his savings from his baseball career.

I wouldnt believe that for a second. No one would use their own fortune on something like this, even Schilling isnt that stupid.

If they actually wanted to 'protect their taxpayers money' they shouldn't have done everything in their power to take the company apart and thus ensure there was absolutely no opportunity of seeing revenue. It's one thing to throw good money after bad, it's another thing to cost the state 75 million dollars so you can look like a big shot.

@Ramone said:

38 done fucked up.

From what I understand, everyone done fucked up, and now is trying to wash their hands of any guilt. Whether 38 could have finished and delivered a profitable MMO or not, the interference of government seemed to have had a significant influence.

Talk about kicking them while they're down, how is the skeleton crew of a dead studio supposed to get that kind of cheddar?

How did they get to 75 million?!

Maybe I'm misunderstanding the issue, but it sounds like the government is suing 38 studios because it's investment didn't pan out. In other words, had 38 Studios been a success there would have been no lawsuit.

So fundamentally, this lawsuit is saying: If I make a bad investment in a company without doing my own due diligence, I can just sue the company I invested in and absolve myself of any blame for making a bad decision.

I wish it were that easy for the rest of us.

I'll admit it was tough reading this story with all the sad headshaking I had to do.

I guess in a couple years we should expect to see the headline "New Governor of Rhode Island <insert name> adds former Rhode Island Governor Lincoln Chafee to 38 Studios Lawsuit" ;-)

shieet

Well this pretty much ensures that from now on no company whether it be a game development studio or anything for that matter will want Rhode Island as an investor. The more this Governor chases this lawsuit the more he is shooting Rhode Island in the foot.

So basically they would have gotten a much higher percentage of their money back if they had just given them a few million more and let them develop for one more year and put it out...GOT IT.

Even though I do not agree with either side, this seems a bit dirty. I feel like both sides of the part (political and 38) made mistakes equal to one another and Rhode Island needs to atone for it's sins just as much as 38 did.

Anyone else get the feeling that Rhode Island would've been better off if they just gave Schilling the money?

As shitty as this situation is it will be fascinating to watch it play out. I can't really make an informed judgement on the issue because I don't know what the terms of the loan were, and it is clear that fault lies on both sides, but it seems like Chafee is turning this into a partisan political affair. Seems like 38 has been on his shit list since day one.

@Brodehouse said:

If they actually wanted to 'protect their taxpayers money' they shouldn't have done everything in their power to take the company apart and thus ensure there was absolutely no opportunity of seeing revenue. It's one thing to throw good money after bad, it's another thing to cost the state 75 million dollars so you can look like a big shot.

exactly!

@Grilledcheez: I remember the last news I read about reckoning was that it didn't sell enough to break even. So who knows if the mmo is even close to being finished or if it'll even be profitable to run when it goes live since it'll have to thrive through reckoning's hype and fiction. Shit sucks, hopefully Rich is fine now.

As a guy who used to live in Rhode Island, I'm not entirely sure that this isn't some ploy to look good for whatever reason. I'm not exactly sure if I'm on a side if any.

All I know is that there is a reason I left that god-forsaken state and got as far away from all of the people there as I possibly could (which granted is probably not far away enough). For now though, I don't have to worry that in 15 years my kids school won't just be a graveyard of dead extracurricular activities and a selection of candidates that are literally walking the fine line between complete idiot or corrupt asshole.

@Grilledcheez said:

So basically they would have gotten a much higher percentage of their money back if they had just given them a few million more and let them develop for one more year and put it out...GOT IT.

In RI's defense, I bet this is what the investors behind Duke Nukem Forever were telling themselves.

I, by nature, want to defend the underdog... but i don't see any other developers borrowing money from government in such enormous quantities.