It's been months since the Curt Schilling's quixotic pursuit to create an online role playing game ended with his video game company, 38 Studios, going belly up. 38 Studios didn't go bankrupt until after it had taken a $75 million dollar loan from the state of Rhode Island, though, and new court documents reveal that Schilling may have entered into that loan agreement in bad faith by concealing the true extent of 38 Studios' financial problems from the board that approved the loan.
In November, Rhode Island's economic development agency sued Schilling and others who were responsible for brokering the $75 million deal between the state and 38 Studios, alleging fraud, conspiracy, and racketeering. Last week, an attorney representing the economic development agency, Max Wistow, filed additional court documents which he claims show that Schilling knew that the money he was getting from Rhode Island wouldn't be enough to keep his company afloat, but decided to keep that information from the state and take the loan anyway. From the Associated Press:
The 269-page filing says the defendants' main argument—that the EDC board that approved a $75 million loan guarantee for 38 Studios in 2010 was aware the company wouldn't have sufficient funds to complete its video game project—is false and what it calls a "red herring." The filing says the board was, in fact, not informed about a financing shortfall and, as the initial lawsuit claims, was misled into approving the deal.
The EDC board is required by state law to make sure a project has sufficient funding lined up. The filing says the defendants "seek to get out from under the crushing evidence of their concealment of 38 Studios' deficient finances" by claiming that the legal requirement for adequate funding "can be satisfied by a hope and a prayer that 38 Studios would find more money somewhere." The defendants knew or should have known — but did not tell the board — that 38 Studios would run out of money, according to the suit.
So not only is Curt Schilling a completely incompetent businessman, he may also be a liar who willingly defrauded the state of Rhode Island. And his video game ended up looking stupid, too.