Emails: Private funds eyed for Schilling's RI firmBy DAVID KLEPPER , Associated Press
Aug. 7, 2013 11:05 PM ET
PROVIDENCE, R.I. (AP) — A state economic development official discussed private financing for former Boston Red Sox pitcher Curt Schilling's now-defunct video game company a day after the state's $75 million loan guarantee was approved for it, emails released Wednesday show.
Michael Saul, a former deputy director at the state's Economic Development Corp., wrote to a Bank of America executive about possible funding for the company, 38 Studios. In an email from July 2010, Saul writes that another bank was considering $25 million in financing for it.
The company filed for bankruptcy last year, making the state responsible for $90 million in outstanding debt.
The emails released by the state are significant because they show Saul, as a representative from the EDC, was engaged in discussions about private financing for the company even after the state's investment was approved. The question of whether Saul and other EDC officials withheld information about 38 Studios' financial stability is pivotal to a lawsuit filed by the EDC over the deal.
"I'm confused as to why they were looking for a bank," said Rep. Michael Marcello, D-Scituate, who chairs the House Oversight Committee now reviewing documents related to the state's investment.
The quasi-public EDC is suing Schilling, Saul, former EDC Executive Director Keith Stokes and others involved in the deal, alleging they withheld information about 38 Studios' finances from the board and gave it false information. The suit says they failed to disclose that the company by its own projections didn't have enough funding to succeed.
All the defendants have asked that the suit be dismissed. Stokes declined to comment Wednesday, citing the lawsuit. A message left for Saul wasn't immediately returned.
The House Oversight Committee met Wednesday to review emails and other documents from the EDC about the process that led to the state's investment. Marcello said the objective is to give the public information about the 38 Studios debacle and potentially help the state to avoid similar problems in the future.
Lawmakers approved the $125 million loan guarantee program in 2010, but many have said they didn't know that 38 Studios would end up benefiting from it. Yet documents released Wednesday show efforts to help 38 Studios were behind the proposed loan guarantee program.
According to the minutes from an EDC executive session in June 2010, an EDC attorney briefed the board on the loan guarantee program legislation, which was then pending in the General Assembly. According to the minutes, the attorney said "the legislature is aware of the Schilling matter and has done some due diligence in its consideration of this program."
In a letter to Neil Steinberg, president of the Rhode Island Foundation, Stokes wrote that 38 Studios was a "catalyst for the $125 million Job Creation Guaranty Program. Without the tangible prospect of a company like this coming to Rhode Island, the opportunity to create the program would likely not have materialized."
House Speaker Gordon Fox, a Democrat, has said that while he was aware Schilling was interested in bringing his company to Rhode Island, it was up to the EDC to decide if the company deserved state incentives. On Wednesday his spokesman Larry Berman said it was the EDC, not top lawmakers, who pushed to help the company.
Fox "knew they were asking for $75 million but he didn't know whether they were going to get $75 million," Berman said. "He left that up to the EDC."
Associated Press writer Erika Niedowski contributed to this report.