September 3, 2013

Schilling's ex-company faces more questioning

The Associated Press

PROVIDENCE, R.I. - The federal bankruptcy trustee in the 38 Studios case wants to explore opening a second legal front in the bid to recoup losses from the failed $75 million state investment in former Red Sox pitcher Curt Schilling's defunct video game company.

The state Economic Development Corp. last week voted to allow the trustee to use up to $150,000 in assets recovered from the company to investigate potential claims against its former officers and directors and other parties, Thomas Carlotto, an attorney for the agency, said. He said it could be a "fruitful and beneficial" course of action.

"There is the potential that he can bring in additional monies," Carlotto said.

The EDC already is suing Schilling, other company executives and some of its own former officials over the $75 million loan guarantee the EDC board approved in 2010 to lure 38 Studios from Maynard, Mass., to Providence.

The company filed for bankruptcy last year. The state is now on the hook for about $90 million related to the deal, which was financed with bonds.

To move ahead, Carlotto said, the trustee also needs the approval of The Bank of New York Mellon, the bond trustee, and the bond insurer.

Sarah Heaton Concannon, one of Schilling's attorneys, declined to comment on potential claims by the trustee. She called the EDC's claims "entirely baseless."

The EDC cleared a major hurdle last week when Superior Court Judge Michael Silverstein ruled against most of the defendants' arguments to dismiss all or parts of the lawsuit.

The suit names 14 individuals or firms -- including Schilling, former EDC Executive Director Keith Stokes and former EDC Deputy Director Michael Saul - and alleges fraud, misrepresentation and breach of fiduciary duty, among other things.


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