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Tue June 26, 2012
Wistow hired to try to cut losses from 38 Studios; Chafee offers new details
Lawyer Max Wistow, a partner in the Providence firm of Wistow & Barylick, was hired by the state today to try to reduce the roughly $100 million liability faced by taxpayers due to the meltdown of 38 Studios.
After being introduced by Governor Chafee during a Statehouse news conference, Wistow said he couldn’t offer specifics on his approach since he’d just started on the job as a special counsel for the state Economic Development Corporation.
Wistow summed up his charge as looking at “who did what and when.” He declined direct comment when asked if his subjects would include the EDC board members who voted for the $75 million state loan guarantee for 38 Studios.
“All I can say at this point is, we intend to gather the facts as best we can and to the extent those facts indicate there’s a possible claim against anyone that can be brought, we intend to recommend those actions be brought.”
Wistow has a lengthy legal history in Rhode Island, including the settlement he helped reach on behalf of victims of the 2003 Station nightclub disaster. He says he expects to make a recommendation after completing his research to the EDC.
Jonathan N. Savage, legal counsel for the EDC, says it’s possible the effort to recoup money for taxpayers might come up empty. Wistow will receive a contingency fee of 16.67 percent of what he is able to recover.
On a related note, Savage says a meeting with the bankruptcy trustee for 38 Studios is slated for tomorrow. “We do have a strategy,” he says. ”We will share it with the bankruptcy trustee tomorrow. I would hope we’ll have some movement on that within the next week or 10 days or two weeks” to recoup some assets related to 38 Studios.
Chafee rebutted criticism, aired by 38 Studios’ founder, Curt Schilling, during an interview last Friday on Boston’s WEEI that Chafee didn’t follow through on a vow to help the company as governor. ”I did not interfere with any of the further issuance of checks to 38 Studios,” from the state loan guarantee, Chafee said. ”That’s the commitment.”
But Chafee also said he didn’t have contact with 38 Studios between the fall of 2011 and a meeting on April 13, 2012. The governor says the video game company’s problems became clear to him and House Speaker Gordon Fox during that meeting.
“There was no specific request at that time,” Chafee says. ”But it was obvious when we got out onto the street; we looked at each other and said, ‘The company’s in trouble.’ “
Schilling has said 38 Studios was close to landing an investor, contingent on the receipt of state tax credit, before it failed. Chafee says the company never offerered “solid” proof that an investor was waiting in the wings:
“If we had any sense in our discusisons that there was an investor, we would have been very aggresive at helping in any way possible.”
The governor says he doesn’t recall 38 Studios’ desire for state entertainment tax credits coming up during the meeting on April 13.