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Society

Schilling’s 38 Studios Escapes Prosecution

SCITUATE, R.I. — An investigation into former Boston Red Sox pitcher Curt Schilling’s failed video game company, 38 Studios, has resulted in no criminal charges, authorities announced July 29.

The years-long investigation found “no provable criminal violations” of state law, according to a report released by the state police and the state Attorney General’s office.

Attorney General Peter Kilmartin and state police Col. Steven G. O’Donnell said there was not enough evidence and probable cause to bring charges.

“At the end of the day, justice is getting the right result under the law, which is not necessarily the popular result,” Kilmartin said. “Bad politics, bad public policy, bad business decisions simply do not always rise to the level of criminal conduct.”

O’Donnell said there were many ways the 38 Studios deal was problematic, starting with the way lawmakers pushed through the legislation used to finance the deal, which he said was not transparent. He also said those involved in the deal didn’t do their due diligence, partly because of the state’s poor economy and Schilling’s celebrity status. But he said those factors were not enough to bring charges.

The former ballplayer’s company relocated to Rhode Island from Massachusetts in 2010 in exchange for a $75 million state loan guarantee. The company went bankrupt less than two years later, leaving taxpayers on the hook.

Schilling reacted on Twitter, telling WPRI-TV he was “disgusted” that authorities investigating the failed deal with his video game company were sent on a “witch hunt” and telling WPRO-AM that company executives “didn’t do anything wrong but fail at business.”

Schilling, who also played for the Baltimore Orioles, the Houston Astros, the Philadelphia Phillies and the Arizona Diamondbacks before ending his career with Boston in 2007, has said 38 Studios fully disclosed its financial condition to the state.

Democratic Gov. Gina Raimondo has no plans to call for an additional investigation and continues to support all efforts to recover as much taxpayer money as possible, a spokeswoman said.

An attorney representing two former 38 Studios executives, board member Thomas Zaccagnino and chief financial officer Richard Wester, said they fully cooperated with the police investigation.

“We are not surprised that the state police found no wrongdoing on behalf of my clients … after what we understood to be a fairly thorough investigation,” attorney Michael Connolly said.

Two civil actions are pending. One, a lawsuit brought in state court by the state’s economic development agency, names Schilling and several others involved in the deal. That case has netted nearly $17 million in settlements.

In March, the Securities and Exchange Commission filed in federal court a civil complaint that accuses the economic development agency and a bank of defrauding investors.

The criminal probe has been going on since 2012 and involved two grand juries, interviews of nearly 150 people and tens of thousands of documents.

Kilmartin said prosecutors ultimately determined they did not have enough evidence to ask a Grand Jury for an indictment.

The U.S. Attorney’s office and the FBI in 2012 ended a Federal investigation into the deal after determining there were no violations of federal criminal laws, including bank fraud.

Still, Kilmartin said the investigation was not closed and if more evidence is brought forward in the civil lawsuit investigators will consider it.

Kilmartin and O’Donnell said their findings are not expected to have any bearing on the state economic development agency’s lawsuit in the matter, which is scheduled to go to trial in the fall.

Max Wistow, who represents the state agency, noted that there is a higher threshold to find probable cause in criminal cases.

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By MICHELLE R. SMITH. AP writers Matt O’Brien and Jennifer McDermott contributed to this report from Providence

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