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.
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 dmcgowan@golocalprov.com.
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- Lawmakers Feel Duped by Schilling’s 38 Studios Deal
- Schilling has Invested ‘Majority of Money I’ve Earned in My Life’ in 38 Studios
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Comments:
pearl fanch
9:10am on Thursday, June 07, 2012
Of course it's been in the works for a long time.
These back door deals and payoff set ups, don't happen over night you know.
Is the AG on vacation? Is he aware of ANY of this?
Shalala Shamba
1:59pm on Thursday, June 07, 2012
Hey Pearl, you didn’t think anything of this on Monday. Welcome to the tin foil hat club. I hope I helped to change your mind. The other “rest of the story” is the real history.
Follow the money back to the original story Dan wrote on Monday (Providence Investors Gave Schilling 7-Figure Loan in 2009). The weekend interview with Michael Sweeney of Duffy and Sweeney should be enlightening to “forensic auditors” looking to clean up the dead bodies of this Rhode Island massacre. These tax credits go round and round, don’t they? The Stone House hotel project in Little Compton buys tax credits from the Round Pond Management Corporation, whose President was Tom Zaccagnino.
This new story points ever so obscurely to a likely relationship between Michael Corso (tax credit guru), Zaccagnino’s tax credits (something Schilling didn’t know he wanted or needed back then), and slick investment vehicles between Wellesley Advisors, Haymarket Capital, and Sweeney et al., probably underwritten at Bank Rhode Island? Funny that Schilling is now asking for those tax credits…. ‘When in Rhode Island ….’
These were probably some of the partners in the first investment in 38 Studios in 2009, a 7-figure “bridge loan” bridging the gap between Curt Schilling’s then empty pockets in May 2009 through to July 2010, when the EDC expanded the loan program specifically earmarking 75 mill to Schilling’s company - presumably without knowing they were doing that.
OR … is that assumption true? Heads have rolled at EDC so perhaps they should have known. Providence banker-lawyer-business relationships are very touchy-feely.
Schilling bought Maryland company Big Huge Games in 2009. They say he’s smart, but not on the level of these guys. What other trouble might these tricksters have gotten the green Schilling involved in with their tax credit pranks and lawyer shenanigans? He was obviously in over his head. He had no idea he was being sucked into a big black hole known as Rhode Island politics.
Jack Cottone
3:22pm on Thursday, June 07, 2012
This is super reporting. Kudos to Dan McGowan for digging up the March 2010 meeting between Corso (Sakonnet Capital Partners), Representative Fox (House Speaker), Stokes (RIEDC), Zaccagnino (Wellesley Advisors, Haymarket Capital) and Schilling (38 Studios)! Wouldn’t they call this a conspiracy, seeing as Zaccagnino later became director of 38 Studios, AND… Corso twirls tax credits like a cheerleader twirls a baton, AND … Two months later the Jobs Guaranty program at RIEDC was expanded to 125M without knowing 75M was going to one company?
Can Sweeney now repeat under oath that Corso was unrelated to the 2009 bridge loan provided to Schilling by “38 Bridge Partners” – a supposed unrelated group of investors? How about Zaccagnino? Anyone notice yet that Wellesley Advisors, Haymarket Capital, and 38 Studios are all based in Maynard, Mass? Too bad none of these smaht RI lawyers checked to see where 38 Studios was incorporated. … Simple task for a real law firm without a Mickey Mouse sign outside. What did Dela-ware? You smaht guys have been caught in your unda-ware! No tax credits for you!
JC
Jack Cottone
9:56pm on Tuesday, June 12, 2012
Who was on the 38 Studios board of directors? It’s gone, but here’s a “cache” of the board of directors with a description of each of them. Interesting on there is Douglas MaCrae. This jackass retired but then became buddies with Schilling over their love of adolescent video games.
http://blogs.law.harvard.edu/lamont/2012/05/18/38-studios-board-of-directors/
If you look at the unsecured creditors in the bankruptcy, you will see a patent assignment on 6/1/09. The patent was previously owned by Doug MaCrae and Thomsas Westberg.
http://bks9.books.google.as/patents/US7814511
Wonder how much 38 Studios paid for this? It’s a huge patent. Someone is getting this and it’s probably JP Morgan Bank. People don’t own patents, at least people like Doug MaCrae. They use them as collateral to gamble. These people have money addictions. Put them in a little cell and give them a calculator for, say, 20 years.