Curt Schilling agrees to 38 Studios settlement
Just two months ago, former Red Sox pitcher Curt Schilling called the Rhode Island investigation into the $75 million financing for his failed video game company a “fake ass witch hunt.” But on Monday, Schilling agreed to participate in a $2.5 million settlement over the controversial deal, state officials there announced.
Schilling and three other principals in the 38 Studios project, along with insurer Starr Indemnity and Liability Co., have agreed to settle their part of a lawsuit brought by Rhode Island authorities after the video game company went bankrupt.
The settlement was announced Monday by the Rhode Island Commerce Corp. and still needs court approval. The money from the settlement will be paid by 38 Studios’ insurer, Starr.
Schilling did not respond to a request for comment on Monday. In court documents, Schilling and the other principals denied any wrongdoing.
The former pitcher did take to Twitter and defended himself against those who accused him of ripping off Rhode Island taxpayers.
“Never stole a dime, never used a dollar of that money for myself,” Schilling wrote. “Salaries, development, buildout.”
The commerce corporation has sued several entities, including investment banks, over the deal, which cost taxpayers millions of dollars. After long investigation, Rhode Island authorities concluded this summer that while state officials made a bad deal, there was no crime committed. At the time, Schilling took to social media to ridicule the investigation as a waste of money.
Schilling launched his video game marketing and development company in Maynard and was attempting to build a complex multiplayer game in the style of “World of Warcraft.” In 2010, with unemployment in Rhode Island high, state officials, under then-Governor Don Carcieri, agreed to issue the $75 million in bonds as part of a package to lure 38 Studios. Schilling’s company received about $50 million in payments in the first year, and the rest of the money was set aside for reserves and to pay banking and other fees.
In May 2012, 38 Studios defaulted on its $1.1 million interest payment, according to investigators. By the following month, it had shut its doors and declared bankruptcy.
So far, the state has obtained settlements totaling approximately $45 million for its lawsuits over 38 Studios.
Along with Schilling, three other former 38 Studios executives, Thomas Zaccagnino, Richard Wester, and Jennifer MacLean, also participated in the settlement.
Rhode Island state officials said in court documents that a settlement was appropriate now if the state hoped to collect any money from the company and executives. Starr has already paid out $7.5 million of its $10 million policy to defend 38 Studios, and a trial would likely deplete that fund. Schilling and the other defendants have claimed under oath that their assets amount to less than $2.5 million, according to court documents.
“This is a highly unusual case in which it makes no economic sense whatsoever for the parties to proceed to trial rather than proceed with the proposed settlement,” according to court documents filed by both sides.
Still, for some the settlement fell short.
“This financial settlement only underscores that there’s been no political accountability,” said Monique Chartier, a spokeswoman for the Rhode Island Center for Freedom & Prosperity, a conservative policy group. Rhode Island officials have refused to release documents of their investigation into this case and these settlements ensure that the case won’t go to trial, where potentially more information could come out, she said.
“The voters don’t know any more than they did years ago,” Chartier said.