38 Studios Lawyers: Curt Schilling Hid Nothing From RI

May 22, 2013

Lawyers for the defunct 38 Studios video game company were back in court Wednesday, asking a judge to dismiss a lawsuit brought against them by the Rhode Island Economic Development Corporation. The suit alleges that executives of the defunct Curt Schilling enterprise deliberately misled state officials about the financial viability of the company to gain a $75 million state-backed loan.

Video game company 38 Studios went bankrupt after receiving a $75-million loan from the state.
Credit RIPR

Lawyers for 38 Studios, their lawyers and financial advisors, all of whom are being sued by the EDC, said Curt Schilling hid nothing from corporation executives about the cost of moving the gaming company to Rhode Island and getting the first games on the market.

Attorney Gerald Petros was one of three attorneys who argued for dismissal of the case. “The court should dismiss these claims because EDC cannot bring a claim based on nondisclosure of information that was known to its executive director and its CEO and deputy director,” said Petros. “Corporations know what their employees know.”

Attorney Max Wistow, arguing for the EDC, countered that 38 Studios officials knew the $75 million loan would be insufficient to keep the company in the black.

“Everybody with the exception of the board knew that was false. Our own people knew that was false,” said Wistow. “Saul knew it was false. Stokes knew it was false. Everybody knew it was false.”

Saul and Stokes refer to J. Michael Saul and Keith Stokes, two former EDC executives who were key to securing the loan for 38 Studios and who are now named in the state’s lawsuit alleging fraud.

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