PROVIDENCE, R.I. (AP) — The former head of the Rhode Island economic development agency that backed a $75 million investment in former Boston Red Sox pitcher Curt Schilling’s now-defunct video game company claims the lawsuit over its collapse is politically motivated and sends a “chilling message” to public officials.
An attorney for Keith Stokes asked a Rhode Island judge last week to toss the suit brought by the Economic Development Corp. against him and other former officials there. The suit alleges they misled the board into approving the loan guarantee for 38 Studios, withholding information that the company needed millions more in funding to complete a video game in Providence.
But the court filing says the EDC board knew the risks associated with the loan guarantee — including the funding shortfall — and that the agency was “equally responsible” for proceeding.
Stokes resigned as EDC’s executive director last May as 38 Studios was imploding. The company filed for bankruptcy a few weeks later, leaving the state on the hook for some $100 million including interest. Stokes has not commented publicly on the suit.
The filing says Stokes was acting in his capacity as the agency head to promote economic development and create jobs. Hundreds of people eventually worked at 38 Studios’ headquarters downtown after it relocated from Massachusetts. It also notes a resolution the EDC board approved in 2010 estimated the cost of the game’s production to be “in excess of $125 million.” 38 Studios was to get only about $50 million from the $75 million bond sale, with the rest being kept in reserve.
The suit “sends a chilling message to all public employees and officials who carry out their duties in a professional manner — when the political winds change, the government will turn around and sue them to make a political statement,” Stokes’ attorney wrote.
The filing claims the suit cannot be about recouping damages from Stokes because he “doesn’t have the deep pockets or insurers like other parties involved in the case.”
The EDC suit doesn’t specify a dollar amount but wants Stokes, Schilling and others to repay the bonds and seeks triple damages.
The deal was orchestrated under former Gov. Don Carcieri. His successor, Lincoln Chafee, opposed it on the campaign trail, calling it far too risky. Schilling claims Chafee had it out for the company and didn’t do enough to try to save it — a charge the governor disputes.
Stokes’ attorney, David Martland, declined to comment on the filing this week. A spokeswoman for Chafee couldn’t immediately be reached.
A lawyer for Schilling has also asked that the lawsuit be thrown out, calling claims that he and fellow 38 Studios executives misled the agency “implausible.” His filing said he and others named as defendants repeatedly disclosed the company’s financial needs to EDC officials, and that the EDC’s own lawsuit concedes as much.
