- Associated Press - Sunday, September 20, 2015

PROVIDENCE, R.I. (AP) - Court officials are poised this week to release tens of thousands of pages of previously secret documents in the lawsuit brought over the state’s $75 million deal with 38 Studios, the video game company started by former Red Sox pitcher Curt Schilling.

The lawsuit against Schilling, executives at 38 Studios, banks and others that aided the deal, seeks to recover the money taxpayers lost. The documents include 66 depositions, many of them lengthy. Former Gov. Don Carcieri, for example, was deposed for three days.

More than three years after the company ran out of money and collapsed, the documents could provide answers about what went on behind the scenes in the 2010 deal to lure the company to Rhode Island from Massachusetts.



The state’s Economic Development Corp. struck the deal with 38 Studios in 2010, not long after the General Assembly approved a $125 million loan guarantee program pushed through under then-Gov. Carcieri, a Republican, and former House Speaker Gordon Fox, a Democrat, who has since gone to prison on unrelated corruption charges. It was designed to provide capital for high-tech or “knowledge-economy” businesses. Several members of the General Assembly have said they never thought 60 percent of the money in the program they approved would go to one company.

Documents uncovered since have indicated state officials may have been in talks with Schilling’s company long before legislation was introduced, as far back as 2009.

Some lawmakers and good-government groups say they hope the documents, and depositions of Schilling and others, will provide a more specific timeline of when the deal started to percolate. They also want to know whether key players, including the governor and legislative leaders, knew before the loan guarantee program was approved that $75 million of it would be channeled to one company: 38 Studios.

“I’d be curious to know if there was a concerted effort among the leadership at the time to keep this from the rank and file,” said Democratic Rep. Michael Marcello. “If the records reveal that there was, I think that raises some very serious questions about the institutional workings in the General Assembly and the concentration of power in leadership.”

Sen. James Sheehan, a Democrat who chairs the Senate Committee on Government Oversight and asked the court to release the documents, said he also wants to know more about the roles of the institutional players, including Wells Fargo, the placement agent on the deal, and First Southwest, which was the financial adviser for the Economic Development Corp.



John Marion, of the public interest group Common Cause, said the information contained in the documents - such as possible conflicts of interest or players who exerted influence behind the scenes - could provide important information to ensure better practices moving forward.

“Where did our public officials fail us, and what sorts of changes might be necessary to prevent those types of failures going forward?” Marion said.

Sheehan echoed that.

“I’m really concerned about preventing this from ever happening again,” Sheehan said.



Schilling tweeted about the release last week, saying he was “anxious to see” how the public reacts “to actual things that happened.” He has repeatedly blamed former Gov. Lincoln Chafee for how he handled the company’s troubles. Chafee opposed the deal when he successfully ran for governor in 2010, then was in office when it collapsed. Schilling tweeted that he hopes the release “will hopefully expose” the Chafee administration.

Max Wistow, the lawyer brought on by Chafee to sue on behalf of the economic development agency, said the release will show the lawsuit against Schilling and others is justified.

“Our central claims are going to be substantiated,” Wistow said.

Chafee is now running for the Democratic nomination for president.



While dozens of lengthy depositions are set to be released, Marcello, an attorney, says he expects the lawyers in the case were likely focused on proving or disproving the allegations in the lawsuit, counts that include fraud, breach of fiduciary duty and racketeering and conspiracy, among others. That could mean they don’t address big questions about how decisions were made in the highest ranks of state government.

“It could be somewhat of a disappointment,” Marcello said.

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