38 Studios Insiders Have Been Connected Since May 2009
Thursday, June 07, 2012
The lawyer at the center of the deal that brought Curt Schilling’s 38 Studios to Rhode Island had a business relationship with a top executive at the video game company a year before a piece of legislation that expanded the EDC’s Job Creation Guaranty Program was pushed rapidly through the General Assembly.
On May 29, 2009, Michael Corso, a top tax credit broker whose relationship with House Speaker Gordon Fox helped steer 38 Studios to the Ocean State, struck a deal to purchase credits handed out for the multi-million dollar Stone House hotel project in Little Compton from the Round Pond Management Corporation, whose President was Tom Zaccagnino.
By June of that year, Zaccagnino, who was also the co-managing director at the Wellesley Advisors Corporation in Maynard, MA, had become Vice Chairman and Lead Director of 38 Studios. A month later, Haymarket Capital, an LLC with the same address as the Wellesley Advisors Corporation, was involved with the seven-figure bridge loan a group of Rhode Island investors provided to 38 Studios.GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST
In March of 2010, Zaccagnino and Schilling met with Speaker Fox and former EDC director Keith Stokes in Corso’s downtown law office. By May, the General Assembly had expanded the EDC’s loan guarantee fund from $50 million to $125 million, the exact amount the EDC awarded to 38 Studios later that summer.
Rank-and-file lawmakers have said they were never informed that one company would receive the entire $75 million.
The rest is history. 38 Studios released its first game, “Kingdom of Amalur: Reckoning,” earlier this year and sold over 1.2 million copies. But as it burned through millions of dollars each month working on a second project, the company was unable to make a $1.125 million payment due to the EDC in March and attempted to pass a bad check to clear the debt.
Ultimately, every employee at 38 Studios was laid off and the company appears to have collapsed. While Schilling has blamed Governor Chafee for scaring away potential investors who could have saved the company, the Governor has maintained that taxpayers deserve to know the details about a company that could leave them on the hook for nearly $100 million if it dissolves.
Meanwhile, questions remain as to what made the state rush to essentially co-sign a $75 million loan for a pre-revenue company. Governor Chafee has encouraged every EDC board member who voted for the 38 Studios deal to resign. Stokes also resigned.
On the legislative side, the Speaker’s relationship with Corso has also come into question. The Providence Journal reported last week that Fox’s partner’s hair salon (which he owns a small percentage of) pays rent to Corso.
Corso has also helped Fox raise campaign funds, including hold a private fundraiser for the Speaker at the Peerless Lofts in March of 2007. After GoLocalProv inquired as to who covered the expenses that evening, Fox’s spokesman Larry Berman said Fox plans to review his campaign finance reports.
“Speaker Fox has been extremely busy entering the final two weeks of the session, but he will soon be checking the campaign records from five years ago,” Berman said. “If corrections are necessary to the report, he will make them.”
Dan McGowan can be reached at [email protected].
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