RI gov: Not his fault Schilling company collapsed

BY foxsports • July 11, 2012

Rhode Island Gov. Lincoln Chafee said Wednesday that financial reviews and court testimony will show he is not responsible for the collapse of former Red Sox pitcher Curt Schilling's video game company.

Chafee, an independent, said he remains committed to recouping the state's investment in 38 Studios, saying he wants ''to get every taxpayer dollar back that we possibly can.''

The company, which received a $75 million loan guarantee from the state, laid off its staff in May and filed for Chapter 7 bankruptcy protection last month.

Schilling has said Chafee's comments about the company's solvency frightened off potential investors and that the governor and state economic development officials failed to help the company stay afloat.

Chafee disputed Schilling's assertion, saying testimony in the bankruptcy proceedings and audits of 38 Studios will show the company's own financial troubles led to its collapse.

''In the end, I'll be vindicated,'' Chafee told news reporters after attending an unrelated event.

Messages were left Wednesday with a spokeswoman for Schilling. He has said Chafee's comments about keeping 38 Studios ''solvent'' were ''devastating'' to 38 Studios as it tried to raise private capital.

William Thomas, 38 Studios' president and chief operating officer, told a U.S. Bankruptcy Court trustee on Tuesday that the state's refusal to grant $5 million in tax credit advances in May prompted potential investors to back away.

The company was lured to Rhode Island from Massachusetts in 2010 after the Rhode Island Economic Development Corp. board approved the loan guarantee.

Chafee, who was a vocal critic of the incentive before he took office in 2011, said that once he became governor he toured the company's offices and tried to monitor its progress as best he could.

''There weren't a whole lot of positives or negatives coming from 38 Studios,'' he said.

In a post on Facebook last week, Schilling noted that the EDC saw 38 Studios' financial statements every month - which EDC spokeswoman Judy Chong confirmed.

He also contended that state officials were furnished with a copy of an independent audit ''that returned `NO WRONG DOING BY ANYONE AT 38.''' He said that two audits also had showed ''no irregularities'' on the part of 38 Studios.

But Chong said the EDC did not retain the services of an auditor in connection with 38 Studios until May. An audit by Braver PC dated May 14 found only that 38 Studios spent all of the $49.5 million it had received from the state. The audit specifically said it was not expressing an opinion on the ''accounting record or financial statements'' of Schilling's firm.


Associated Press Writer Erika Niedowski contributed to this report.

share story