The Rhode Island Commerce Corporation (former alias, EDC) contends in it’s civil lawsuit that Mr. Schilling purposely defrauded the state by taking its money even though he knew that it wasn’t enough and that 38 Studios was “destined to fail.”
The truth is, that Curt Schilling told the EDC right from the beginning that, “the project cost will exceed $125,000,000.” as evidenced in an email from Michael Saul, Managing Director of Financial Programs at the EDC only days (after) Governor Donald Carcieri signed the $125 million Loan Guarantee Program into law. (See email dated June 14, 2010 below).
As the files further show, right from the beginning 38 Studio’s communicated to the EDC that they needed at least $75,000,000 net and only received $49,000,000 net. This was no secret as everyone involved with the EDC, including Governor Don Carcieri, knew through the emails back and forth that it wasn’t enough and that 38 Studios would be destined to fail.
In reality, it was Gov. Don Carcieri, as Chairman of the Board of the EDC which performed the final fraud, when in the minutes of the meeting of July 26, 2010, at the ratification of the EDC contract with 38 Studios, Carl Wadensten asked “where the money would come from it if turns out the company needs more, to which Governor Carcieri explained that the company could get more investors if nothing else.” This was constructive fraud, because Carcieri well knew that ALL of the assets of the company were being tied up by the provisions of the EDC contract. And furthermore, when it became clear that the company needed more money some months later, it requested in writing to the EDC that some of the assets be freed up by the EDC to make that happen, which was ignored and never answered by the EDC.
It was the EDC which deceived everyone and which purposely defrauded the State by loaning money it knew wasn’t going to be enough and by failing to heed the early warning signals that came its way. Instead, it deliberately chose to deceive the public and other governmental agencies on its collision path of deception.
In the end the EDC’s predatory lending caused Mr. Schilling to try and make due with what was being offered rather than face the alternative, as any business owner with the millions that he had invested would have done to keep going.
Maybe the wrong defendants are being sued by the wrong plaintiff. Maybe the State of Rhode Island should have sued The Rhode Island Economic Development Corporation (EDC) as a RICO organization.
How can the EDC charge Mr. Schilling with what it is guilty of? This is the question no one wants to ask… or answer.
* June 11: Carcieri signs into law Assembly-approved bill authorizing EDC to guarantee up to $125 million in economic development bonds. (Program established)
* June 14: EDC directors vote preliminary approval of a $75-million loan guarantee for38 Studios. (Despite admissions in June 14, 2010 email)