38 Studios' Financial Woes Deepen, Rhode Island Economic Director Resigns

Just when I thought 38 Studios' financial problems couldn't get much worse comes two reports from WPRI claiming that the company couldn't pay its employees and bounced a check to the EDC and that Rhode Island economic development director Keith Stokes has resigned due to the growing amount of public criticism over the $75 million loan he was instrumental in giving to the video game studio. A sampling from both reports:
Curt Schilling's taxpayer-backed video game company was unable to make payroll this week, Judy Chong, a spokeswoman for the R.I. Economic Development Corporation, confirmed Thursday in response to an inquiry from WPRI.com.

Separately, Governor Chafee's office said 38 Studios hand-delivered a check around 5 p.m. for the overdue $1.125 million payment to the EDC, which set off this week's crisis. But shortly thereafter Rick Wester, its chief financial officer, told the EDC there were insufficient funds to cover the check, so the agency returned it.

38 Studios defaulted May 1 by failing to make the payment to the EDC, which is supposed to be paid annually under the terms of its 2010 loan deal. Chafee's office said the EDC is still willing to accept the overdue $1.125 million payment if 38 Studios can find a way to come up with the money.


Rhode Island Economic Development Director Keith Stokes has resigned amid a swarm of public criticism over the quasi-public agency's $75 million loan guarantee to 38 Studios, Curt Schilling's video-game company.

Former Gov. Donald Carcieri hired Stokes, who was then executive director of the Newport County Chamber of Commerce, to run the EDC in January 2010 after Carcieri's initial pick, Ioanna Morfessis, abruptly reversed her decision to take the job.

During his campaign for governor, Chafee strongly criticized Carcieri and Stokes for approving a $75 million taxpayer-guaranteed loan from the EDC to 38 Studios. After taking office, Chafee deliberated at length before opting to retain Stokes at the agency.

Keith Stokes offered his resignation Wednesday as executive director of the Economic Development Corp., Gov. Lincoln Chafee said.