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[Phediuk]

http://www.gamespot.com/articles/fraud-claims-filed-in-38-studios-case/1100-6435435

The case isn't over.

Almost four years after it went belly-up, 38 Studios--the Kingdoms of Amalur: Reckoning developer founded by former Red Sox pitcher Curt Schilling--is back in the news. The Securities & Exchange Commission announced today in a news release that it has charged Wells Fargo and the state group formerly known as the Rhode Island Economic Development Corporation for defrauding investors with regards to the controversial $75 million loan that brought 38 Studios from Massachusetts to Rhode Island back in 2010.

The $75 million bonds were initially approved and given to 38 Studios with the promise that the company would relocate to Rhode Island create jobs in the state. It did that, but 38 Studios still failed, leaving taxpayers on the hook.

Here is a summation of the SEC's complaint that was filed in Providence federal district court (written by the SEC):

*The RIEDC loaned $50 million in bond proceeds to 38 Studios. Remaining proceeds were used to pay related bond offering expenses and establish a reserve fund and a capitalized interest fund.

*The loan and, in turn, bond investors would be repaid from revenues generated by video games that 38 Studios planned to develop.

*The bond offering document produced by the RIEDC and Wells Fargo failed to disclose to investors that 38 Studios had conveyed it needed at least $75 million in funding to produce a particular video game.

*Therefore, investors weren't fully informed when deciding to purchase the bonds that 38 Studios faced a funding shortfall even with the loan proceeds and could not develop the video game without additional sources of financing.

*When 38 Studios was later unable to obtain additional financing, the video game didn’t materialize and the company defaulted on the loan.

SEC enforcement director Andrew Ceresney said in a statement that the RIEDC and bond underwriters at Wells Fargo failed to provide a clear assessment of the risk involved with the $75 million bond.

"Municipal issuers and underwriters must provide investors with a clear-eyed view of the risks involved in an economic development project being financed through bond offerings," he explained. "We allege that the RIEDC and Wells Fargo knew that 38 Studios needed an additional $25 million to fund the project yet failed to pass that material information along to bond investors, who were denied a complete financial picture."

Additionally, the SEC charged Wells Fargo's lead banker, Peter M. Cannava, and two RIEDC executives, Keith Stokes and James Michael Saul, with "aiding and abetting the fraud."

"Stokes and Saul agreed to settle the charges without admitting or denying the allegations and must each pay a $25,000 penalty," the SEC said. "They are prohibited from participating in any future municipal securities offerings. The SEC's litigation continues against Cannava, Wells Fargo, and RIEDC."

Another segment of the SEC's complaint specifically claims that Wells Fargo and Cannava specifically misled investors in the following ways (again; descriptions written by the SEC):

*Wells Fargo disclosed its bond offering compensation as a share of the placement agent fee plus a $50,000 payment from 38 Studios. No other fees or compensation to Wells Fargo were disclosed, and the bond placement agreement stated that no other money was anticipated.

*Investors weren't informed that Wells Fargo had a side deal with 38 Studios that enabled the firm to receive nearly double the amount of compensation disclosed in offering documents.

*This additional compensation, totaling $400,000 and paid from bond proceeds, created a conflict of interest that Wells Fargo should have disclosed to bond investors.

*Cannava was responsible for Wells Fargo's failure to disclose its additional fees.

For more on this case, you can read the full SEC news release here. ( https://www.sec.gov/news/pressrelease/2016-37.html )

The 38 Studios collapse began when Schilling was unable to keep up on debt payments to the state of Rhode Island for the aforementioned $75 million dollar loan to the developer. After that, the government assumed ownership of the company and shut it down. The government then filed a lawsuit against Schilling and other architects of the state's loan to the studio.

At an auction in December 2013, 38 Studios properties Rise of Nations and Rise of Legends were purchased, but Kingdoms of Amalur and the MMO Copernicus were not picked up. Subsidiary Big Huge Games, which was closed amid the 38 Studios bankruptcy, was resurrected by co-founder Brian Reynolds.

In September 2015, the Rhode Island Superior Court released thousands of documents and deposition transcription excerpts pertaining to the loan agreement.

Curt Schilling just can't catch a break.

 

[rrc1594]

Fuck Curt Schilling. I'm say that ever chance I get

 

[foxtrot3d]

This case refuses to die. Jaysus.

 

[no1dead]

When will this end get over this already.

 

[Jiggaloboy]

Fuck Curt Schilling. I'm say that ever chance I get

Hell yeah.

 

[Ultima_5]

I vaguely remember this from 1up yours. Is this the same thing or am I losing it

 

[Ghazi]

Didn't Kingdoms of Amalur turn out to be a pretty good game? Regardless of Curt Schilling, it's a shame that they went under.


I also initially confused them with 22 Cans at first.

 

[Stallion Dan]

He knew this was coming, it was fate.

 

[Creaking]

 

[Gattsu25]

I vaguely remember this from 1up yours. Is this the same thing or am I losing it

Same thing.

It was a shame how this all turned out.

Someone correct me if I'm wrong but isn't/wasn't Curt a huge "fiscally responsible" conservative that ended up squandering millions of taxpayer dollars on a failed entertainment venture?

 

[LurkerPrime]

Didn't Kingdoms of Amalur turn out to be a pretty good game? Regardless of Curt Schilling, it's a shame that they went under.


I also initially confused them with 28 Cans at first.

Kingdoms of Amalur: Reckoning was from a studio they absorbed, converting their game to the Amalur IP, essentially as marketing. 38 Studios' MMO (the main project) was its own, entirely separate beast.

 

[Bleeether]

Kingdoms of Amalur was a really fun game.

 

[Rats Off To Ya]

Reckoning had so much potential. Would have loved to see a sequel.

 

[FriedConsole]

This case refuses to die. Jaysus.

People don't like to forget about $75 million dollars.

Governments shouldn't fund videogames.

 

[RexNovis]

MAn there is so much undeserved hate for Curt Schilling. The man is only guilty of thinking he had the skill set to run a business without any formal training to speak of. Had they had an actual educated professional helping him lead the company I have no doubt they would have done well for themselves. Curt just got sweeped up by the idea of making his own awesome games. Something I think most of us gaming enthusiasts could relate to on one level or another. He just didnt have the business know how to pull it off. I legitimately feel bad for the man as he was by all accounts remarkably genuine in his love and passion for games and I can't help but think in some alternate timeline his studio could have gone onto do some truly great things.

 

[Xeteh]

Didn't Kingdoms of Amalur turn out to be a pretty good game? Regardless of Curt Schilling, it's a shame that they went under.


I also initially confused them with 22 Cans at first.

It did alright but they were so far in the hole already that it needed to do insane numbers.

 

[jwk94]

Kingdoms of Amalur: Reckoning was from a studio they absorbed, converting their game to the Amalur IP, essentially as marketing. 38 Studios' MMO (the main project) was its own, entirely separate beast.

The MMO, Project Copernicus was supposed to be set sometime years after Reckoning and the rumored Reckoning sequel. Man, recknoning had some damn good ideas but it was far too easy.

 

[Mesoian]

Didn't Kingdoms of Amalur turn out to be a pretty good game? Regardless of Curt Schilling, it's a shame that they went under.


I also initially confused them with 22 Cans at first.

It was okay. A little dry, a little dull. But not bad by any means.

The problem was that their next game was going to be an MMO in the same universe.

That and no one bought KOA:R

 

[HP_Wuvcraft]

Man, I guess those tweets from his wife about dirty Jews were right.

 

[RuneWalsh]

The hate for Curt Schilling is completely deserved. He defrauded tax payers and his own employees.

Read up about the people working for him that also got screwed. Finding out your health insurance has been canceled when your pregnant wife goes in for a check-up. The employees on the hook for unpaid relocation costs that 38 Studios claimed they had paid.

Curt Schilling got off easy.

 

[unknownstranger]

MAn there is so much undeserved hate for Curt Schilling. The man is only guilty of thinking he had the skill set to run a business without any formal training to speak of. Had they had an actual educated professional helping him lead the company I have no doubt they would have done well for themselves. Curt just got sweeped up by the idea of making his own awesome games. Something I think most of us gaming enthusiasts could relate to on one level or another. He just didnt have the business know how to pull it off. I legitimately feel bad for the man as he was by all accounts remarkably genuine in his love and passion for games and I can't help but think in some alternate timeline his studio could have gone onto do some truly great things.

Besides this and Baseball things, people bash on him because of his awful political views.

Edit: http://deadspin.com/and-now-curt-schilling-with-some-cool-thoughts-about-m-1726385341

 

[captain_skyhawk]

This story just gets worse and worse. For those people taking a dump on Curt like he's the first and only person to do this to people are dead wrong. Shit like this happens everyday, you just don't hear about it.

 

[Memorabilia]

Hell yeah.

Lol Love this .gif

New #FuckCurtSchilling meme?

Edit: Also, this...

The hate for Curt Schilling is completely deserved. He defrauded tax payers and his own employees.

Read up about the people working for him that also got screwed. Finding out your health insurance has been canceled when your pregnant wife goes in for a check-up. The employees on the hook for unpaid relocation costs that 38 Studios claimed they had paid.

Curt Schilling got off easy.

To be fair, I think at least some of the hate directed at Curt is because of his deplorable political leanings. Take that as you will. However, to those in the know a far bigger part of the hate which is objectively justified is due to the fact that he essentially became the poster child for business done wrong by engaging in unethical, fraudulent behavior. Yes, videogaming is now big business. But to many, its still a hobby that many people passionately love. To see it devolve into Wall Street style shenanigans justifiably pisses a lot of people off.

 

[Anime lover 69]

Same thing.

It was a shame how this all turned out.

Someone correct me if I'm wrong but isn't/wasn't Curt a huge "fiscally responsible" conservative that ended up squandering millions of taxpayer dollars on a failed entertainment venture?

The game was succesful I'm pretty sure just not the insane hit curt thought it would be.

 

[tmarg]

People don't like to forget about $75 million dollars.

Governments shouldn't fund videogames.

This has nothing to do with whether or not governments should fund videogames. Governments provide incentives for all kinds of industry, and there is no reason why videogames shouldn't get a piece of that.

If governments are going to fund videogames though, they should do so through competent game developers and publishers, not baseball players who are cozy with high ranking government officials. And that money certainly shouldn't be distributed in a fraudulent manner.

MAn there is so much undeserved hate for Curt Schilling. The man is only guilty of thinking he had the skill set to run a business without any formal training to speak of. Had they had an actual educated professional helping him lead the company I have no doubt they would have done well for themselves. Curt just got sweeped up by the idea of making his own awesome games. Something I think most of us gaming enthusiasts could relate to on one level or another. He just didnt have the business know how to pull it off. I legitimately feel bad for the man as he was by all accounts remarkably genuine in his love and passion for games and I can't help but think in some alternate timeline his studio could have gone onto do some truly great things.

He was a diehard celebrity republican who had given important endorsements when the tea party rose to power in 2010, and he was rewarded by having money that should have gone to experienced and competent industry figures to help them expand game development in the state diverted to him, despite the fact that he had no industry experience or relevant qualifications. It's textbook crony capitalism, and people have every reason to hate him for it.

 

[Rockin' Ranger]

Besides this and Baseball things, people bash on him because of his awful political views.

Keith Law being suspended from Twitter by ESPN for correcting Curt on evolution probably didn't help his image either.

 

[DocSeuss]

NEVER

EVER

DEVELOP

AN MMO

UNLESS YOU ALREADY HAVE BILLIONS IN R&D

 

[Herbs]

MAn there is so much undeserved hate for Curt Schilling. The man is only guilty of thinking he had the skill set to run a business without any formal training to speak of. Had they had an actual educated professional helping him lead the company I have no doubt they would have done well for themselves. Curt just got sweeped up by the idea of making his own awesome games. Something I think most of us gaming enthusiasts could relate to on one level or another. He just didnt have the business know how to pull it off. I legitimately feel bad for the man as he was by all accounts remarkably genuine in his love and passion for games and I can't help but think in some alternate timeline his studio could have gone onto do some truly great things.

Nah, he's a hypocritical piece of shit.

http://deadspin.com/5910878/curt-schilling-wants-a-government-bailout

 

[Rats Off To Ya]

It was okay. A little dry, a little dull. But not bad by any means.

The problem was that their next game was going to be an MMO in the same universe.

That and no one bought KOA:R

I seem to recall that Reckoning actually did okay. The problem was that they were basically counting on Reckoning to fund the development of a WoW-caliber MMO.

 

[FriedConsole]

This has nothing to do with whether or not governments should fund videogames. Governments provide incentives for all kinds of industry, and there is no reason why videogames shouldn't get a piece of that.

If governments are going to fund videogames though, they should do so through competent game developers and publishers, not baseball players who are cozy with high ranking government officials. And that money certainly shouldn't be distributed in a fraudulent manner.

If they can't get funding without government help it is not a good idea for the government to use public money. I am for ending corporate welfare and giving rich people more money they can waste.

 

[McDougles]

Curt Schilling was on the defense about these coming days months ago. He also blamed Lincoln Chaffee, former Democratic nominee, for a "scorched Earth campaign."

Why couldn't he be like Cal Ripken Jr.?

 

[0coolclimate0]

So no remaster/remake anytime soon?

 

[RexNovis]

The hate for Curt Schilling is completely deserved. He defrauded tax payers and his own employees.

Read up about the people working for him that also got screwed. Finding out your health insurance has been canceled when your pregnant wife goes in for a check-up. The employees on the hook for unpaid relocation costs that 38 Studios claimed they had paid.

Curt Schilling got off easy.

Besides this and Baseball things, people bash on him because of his awful political views.

Edit: http://deadspin.com/and-now-curt-schilling-with-some-cool-thoughts-about-m-1726385341

This has nothing to do with whether or not governments should fund videogames. Governments provide incentives for all kinds of industry, and there is no reason why videogames shouldn't get a piece of that.

If governments are going to fund videogames though, they should do so through competent game developers and publishers, not baseball players who are cozy with high ranking government officials. And that money certainly shouldn't be distributed in a fraudulent manner.



He was a diehard celebrity republican who had given important endorsements when the tea party rose to power in 2010, and he was rewarded by having money that should have gone to experienced and competent industry figures to help them expand game development in the state diverted to him, despite the fact that he had no industry experience or relevant qualifications. It's textbook crony capitalism, and people have every reason to hate him for it.

Nah, he's a hypocritical piece of shit.

http://deadspin.com/5910878/curt-schilling-wants-a-government-bailout

There's no question he handled the studio poorly and made bad decisions when it came to the business of creating a game but he seemed genuinely passionate about the prospect of creating great games. His biggest mistake was immediately aiming for the MMO market instead of building up the studio's brand with less cost intensive genres of game development. I'm not saying hes a good guy I'm saying his inexperience is to blame here and its obvious that he had every intention of growing his studio and delivering fantastic products he just didnt have the know how to do follow through on it. I personally try not to judge people for their political views so his endorsements and political statements while disagreeable dont really poison him as a person in my eye. Maybe I just dont know the details at play here but I remember reading at the time about how he had invested nearly every cent he had in the creation of the studio and how he had sought out these great talents to make fantastic games because he wanted to play them and I remember thinking that was an admirable albeit doomed endeavor. I suppose its also colored by the fact that I really enjoyed KOA: Reckoning and share similar tastes in games and literature to the man.

I guess what I'm trying to say is that, it seems to me that his hubris in thinking he could run a studio with no training or experience is more to blame here than anything else. Things could have been really different had he taken on a partner to help manage the studio. Whether or not the capital investments he gained were under dubious means I have no idea and that could be the case but I'm simply talking about how things played out and it just seems to me that the guy has been ruined and people keep smearing his face in the mud for having the gall to try doing something he was passionate about.

 

[mStudios]

Yankees fans mad as hell

Viva Red Sox

 

[Memorabilia]

If they can't get funding without government help it is not a good idea for the government to use public money. I am for ending corporate welfare and giving rich people more money they can waste.

Haven't you heard? "Socialism" is evil. Unless it's "Socialism for the rich", in which case it's part of God's plan and totally OK.

 

[ShinMaruku]

This is karma because wasn't this the guy who wanted no social safety net until it benefitted him? I loved Amulur but the MMO it was tied to was just bad.

 

[McDougles]

I personally try not to judge people for their political views so his endorsements and political statements while disagreeable dont really poison him as a person in my eye.

Dear fucking lord. Are you serious?

THIS is your defense against those who hate Schilling because of his bigoted, xenophobic ways? "He's just tried very hard to make a video game, you guys. That supersedes all."

Grow up.

 

[RexNovis]

Dear fucking lord. Are you serious?

THIS is your defense against those who hate Schilling because of his bigoted, xenophobic ways? "He's just tried very hard to make a video game, you guys. That supersedes all."

Grow up.

What? Reread my statement. I never said that. I said it wasnt a factor for me personally. Simmer down.

 

[StrategyFan]

Didn't Kingdoms of Amalur turn out to be a pretty good game? Regardless of Curt Schilling, it's a shame that they went under.

with the YSA difficulty mod, it's relatively excellent.
it's flawed (like every RPG), but it fills a niche without much competition

i haven't played anything else that's a decent action combat game as well as a decent open-world adventure pseudo-RPG

there are some good single player games that are in a similar genre (witcher, elder scrolls, etc.), but they're different instead of better

maybe there's a MMO game that is actually a better game than it

 

[SeanTSC]

The hate for Curt Schilling is completely deserved. He defrauded tax payers and his own employees.

Read up about the people working for him that also got screwed. Finding out your health insurance has been canceled when your pregnant wife goes in for a check-up. The employees on the hook for unpaid relocation costs that 38 Studios claimed they had paid.

Curt Schilling got off easy.

He was also a total pompous ass too. He used to post a lot on the Fires of Heaven message board and was a real dick about stuff. He'd also fluff up stuff about KoA: Reckoning that was total bullshit, like saying that their testers took 200 hours to speed run it. Then when I said that I 100%'d the game in about 75 hours while playing it normally he proceeded to make some snide typical no-life type remarks.

Absolutely no sympathy for the guy after how I saw him personally behave.

 

[Oblivion]

MAn there is so much undeserved hate for Curt Schilling. The man is only guilty of thinking he had the skill set to run a business without any formal training to speak of. Had they had an actual educated professional helping him lead the company I have no doubt they would have done well for themselves. Curt just got sweeped up by the idea of making his own awesome games. Something I think most of us gaming enthusiasts could relate to on one level or another. He just didnt have the business know how to pull it off. I legitimately feel bad for the man as he was by all accounts remarkably genuine in his love and passion for games and I can't help but think in some alternate timeline his studio could have gone onto do some truly great things.

He's a massively hypocritical tool:

http://www.readingisforsnobs.com/2013/04/curt-schillng-just-as-much-of-teabagger.html
http://www.readingisforsnobs.com/2012/06/bootstrapping-tea-bagger-style.html

It really is not that complicated, I just don’t understand HOW people don’t grasp the concept of “Free Market”, and why left alone, it WORKS!

If a conservative is down-and-out, he thinks about how to better his situation. A liberal wonders who is going to take care of him.

Though I don't know if he's a hypocrite or just really, really dumb:

Schilling also defending himself against charges of hypocrisy from some commentators who say Schilling's outspoken criticism of government handouts and programs goes against his acceptance of hefty state funding to support his game studio. "I’m not sure where my stance and opinion in that we need a smaller government—I’m not sure how that correlates to this," he said. "The program was there for local businesses to use. ... That money was literally coming out of the budget into our company, going right back into the local economy."

 

[JBwB]

So judging by all your replies apparently Curt is an asshole?

I didn't know that he founded the studio that developed Kingdoms of Amalur...
It was genuinely a fun game :/

 

[jfoul]

I couldn't imagine going through mouth cancer and these legal problems at the same time.

 

[Oblivion]

Wait, the guy actually has mouth cancer? I thought that was just Deadspin's way of describing his political opinions.

 

[StrategyFan]

So judging by all your replies apparently Curt is an asshole?

I didn't know that he founded the studio that developed Kingdoms of Amalur...
It was genuinely a fun game :/

big huge games was founded to make strategy games long before this amalur stuff.

they got bought by THQ and were making a RPG, and then THQ went bankrupt and managed to sell the developer to curt who wanted to turn that RPG into an amalur game

 

[RuneWalsh]

He was also a total pompous ass too. He used to post a lot on the Fires of Heaven message board and was a real dick about stuff. He'd also fluff up stuff about KoA: Reckoning that was total bullshit, like saying that their testers took 200 hours to speed run it. Then when I said that I 100%'d the game in about 75 hours while playing it normally he proceeded to make some snide typical no-life type remarks.

Absolutely no sympathy for the guy after how I saw him personally behave.

Yes, I was a longtime lurker of the FoH boards and I remember it the same way. He spent so much time blowing smoke up people's asses with ridiculous bullshit.

It was quite amusing to watch him disappear after the stuff hit the fan.

 

[HP_Wuvcraft]

NEVER

EVER

DEVELOP

AN MMO

UNLESS YOU ALREADY HAVE BILLIONS IN R&D

Then why are so many MMOs up on Steam Greenlight and Kickstarter?

This story just gets worse and worse. For those people taking a dump on Curt like he's the first and only person to do this to people are dead wrong. Shit like this happens everyday, you just don't hear about it.

So?

How does this justify Schilling's shitty, shitty business practices and ethics?

 

[FlyinJ]

So judging by all your replies apparently Curt is an asshole?

I didn't know that he founded the studio that developed Kingdoms of Amalur...
It was genuinely a fun game :/

Amalur was made by Big Huge Games, the guys who made Rise of Nations.

Schilling just bought them and rebranded their game.

 

[unknownstranger]

Wait, the guy actually has mouth cancer? I thought that was just Deadspin's way of describing his political opinions.

Chewing Tabacco while playing Baseball. Was extremely common in Baseball but it's slowly gotten weeded out.

 

[Ozium]

Curt should be charged with fraud for his bloody sock