Yesterday afternoon lawmakers in the Rhode Island House began examining hundreds of documents in an attempt to piece together a timeline on the $75 million loan guarantee awarded to Curt Schilling's 38 Studios. The committee began by looking at emails from the former Rhode Island Economic Development Corporation Executive Director Keith Stokes.
Stokes said in emails that the General Assembly would not have created the loan guarantee program without knowing Curt Schilling was interested in moving his video game company to Rhode Island in 2010.
"Without the tangible prospect of a company like this coming to Rhode Island, the opportunity to create the program would likely not have materialized," former EDC Executive Director Keith Stokes wrote in a July 2010 email to Rhode Island Foundation President Neil Steinberg.
This statement contradicts what leaders in the Rhode Island House were saying about the loan guarantee before; they said that they knew of Schilling's interest in moving to the state, but that the purpose of the $125 million Job Creation Guaranty Program was to offer support to multiple businesses. The goal was, they said, to stimulate the economy and create jobs.
Other documents showed that EDC officials moved quickly to lock down an agreement with Schilling’s company - even before the loan program was approved by the General Assembly.
Lawmakers were given a folder full of documents yesterday that began with a March 2010 email from former EDC Deputy Director Michael Saul to tax lawyer Michael Corso, Stokes, and others involved in the deal. That email detailed what information the state required from 38 Studios in order to offer a loan guarantee. Emails show that, in the months following the March 2010 email, the discussion turned to other matters related to the deal like the state budget, potential risks of the deal, and one former EDC employee’s opposition to it.
The documents end with an economic impact study suggesting that 38 Studios would create 450 new jobs by the end of 2012. This same study also claimed that the average employee working at 38 Studios would earn $67,500 annually and projected that the state would receive $6.9 million in income taxes from those employees by 2020.
Interestingly enough, rank-and-file lawmakers claim that they had no idea that a deal to give 38 Studios a $75 million loan was in the works when they voted for the loan guarantee program. House Speaker Gordon Fox has said he knew about the 38 Studios deal, but left the details up to the EDC.
The committee is expected to continue examining the deal over the next year and figuring out when the whole thing went off the rails...
38 Studios filed for bankruptcy in June of 2012, less than two years after receiving the massive loan from the EDC. The state has since seized what assets it could from the company and filed a lawsuit against Schilling and other company officers. Currently the state is making payments on the loan, though some lawmakers suggested earlier in the year that they should default on it...
More details when we have them.