Rhode Island reopens probe into loan to former Red Sox player's company

Reuters News
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Posted: Oct 27, 2015 12:14 PM

By John Larrabee

PROVIDENCE, R.I. (Reuters) - Rhode Island legislators are set on Tuesday to resume hearings on the state's $75 million loan guarantee to former Boston Red Sox pitcher Curt Schilling's now-bankrupt video game company as the state fights to recoup some of the lost money.

Schilling, who named his company 38 Studios in a reference to the number on his jersey, had approached Rhode Island in 2009, offering to relocate the company from Massachusetts and bring some 450 jobs to the state, which was then struggling with one of the highest unemployment rates in the country.

A state Superior Court judge in August unsealed some 38,000 pages of documents related to the state's lawsuit, which showed Schilling had wooed top Rhode Island officials at his home while seeking the loan guarantee from the state's quasi-independent Economic Development Corporation.

Schilling was a member of the Red Sox team that won the World Series in 2004, ending an 86-year-streak without a championship and earning acclaim for remaining on the mound despite an ankle injury so severe that blood could be seen trickling through his sock.

The unsealed documents showed that former House Speaker Gordon Fox, now imprisoned on unrelated corruption charges, was one of the first state leaders to take an interest in the loan proposal.

Critics at the time, including Lincoln Chafee, who went on to become the state's governor and last week dropped out of the 2016 race for the White House, had warned that loan guarantees for a video game company were a risky investment.

Rhode Island taxpayers were eventually left to foot the bill for some $100 million, including interest due to private investors that bought bonds linked to the loan guarantee after 38 Studios filed for bankruptcy.

Current House Speaker Nicholas Mattiello has said he would like to see Schilling subpoenaed, but because Schilling  lives in Massachusetts, it is uncertain whether he will appear before the committee.

Among those expected to testify in the hearings are former Governor Donald Carcieri and former House Finance Chairman Steven Constantino, who both championed the loan.

(Editing by Scott Malone and Mohammad Zargham)