By Svea Herbst-Bayliss
BOSTON, Nov 1 (Reuters) - Rhode Island is suing former Red
Sox pitcher Curt Schilling and the former head of the state's
economic development agency over a $75 million loan guarantee
the agency made to the baseball player's failed video game
company 38 Studios.
The suit was filed in Superior Court on Thursday and listed
Schilling, who named the company after his former jersey number,
Keith Stokes, the former head of the state's Economic
Development Corporation (EDC), several banks and law firms as
defendants in the case.
EDC, a quasi-state agency, made the loan in 2010 to lure
Schilling who was promising to bring 450 jobs to the
economically depressed state from neighboring Massachusetts. The
deal was brokered by Donald Carcieri, the state's governor until
January, 2011.
38 Studios filed for bankruptcy in June leaving the state's
taxpayers responsible for repaying roughly $100 million, with
interest included, to private investors who had bought the bonds
the state issued on behalf of the company.
The suit charges that some of the defendants committed
larceny and permitted the video game company to rely on
financial assumptions that were based on "known false
assumptions".
Governor Lincoln Chafee, who authorized the suit, issued a
video statement saying taxpayers should not be asked to pay for
this. "My message to Rhode Islanders is this: I know that you
work hard for your paychecks, and for your tax dollars to be
squandered is unacceptable," Chafee said, adding that the suit
was being filed to "rectify a grave injustice put upon the
people of Rhode Island".
From the beginning, the loan guarantee was highly
controversial. Massachusetts failed to give the former Red Sox
star, who had helped the hometown team win its first World
Series championship in 86 years in 2004, the same loan
guarantees.
The case is State of Rhode Island Providence, SC v. Wells
Fargo Securities, LLC; Barclays Capital, Plc; First :
Southwest Company; Starr Indemnity and Liability Company; :
Curt Schilling; Thomas Zaccagnino; Richard Wester; Jennifer
Maclean; Robert I. Stolzman; Adler Pollock & Sheehan, P.C.;
Moses Afonso Ryan ltd.; Antonio Afonso, Jr.; Keith
Stokes; and J. Michael Saul, Superior Court.
Follow us on Twitter @ReutersLegal | Like us on Facebook