Arthur Christopher Schaper: Playing the 38 Studios Game at the State House

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The real news has hit the headlines, and the “you-know-what” has hit the airwaves: Former Speaker (now convicted felon) Gordon Fox not only had ties to the 38 Studios deal, but he was wheeling and dealing in backroom deals before Curt Shilling approached Rhode Island Republican Governor Don Carcieri about a loan.

WPRI reports:

Former House Speaker Gordon Fox ordered the head of the state’s economic-development agency to put together the deal that lured Curt Schilling’s 38 Studios to Rhode Island, state lawyers contend in a court filing newly unearthed by Target 12.

The lawyers say Fox held a private meeting with Schilling and Tom Zaccagnino — a top 38 Studios board member — prior to the oft-cited March 2010 fundraiser where Gov. Don Carcieri and Schilling started discussing the company’s potential move.

For the past five years, critics have firmly and primarily faulted Gov. Caricieri for Shilling’s busted company. Granted, he opened the door to discussions between the former Red Sox pitcher and state lawmakers, but with more details unraveling about the project, he backed away.

Three years ago, just after 38 Studios crashed, Carcieri broke his silence and spoke with WPRI’s Tim White about his part in the company’s inception and dysfunction:

I was a supporter. This was a lengthy process. We had a board, twelve people that were leaders in the community. I’ll take responsibility for it getting approved on my watch. There’s no doubt about that.

He then placed blame also with Schilling and his leadership, which the former baseball player did not deny.

When a company fails, it’s the leadership that’s responsible. Did it fail because it just needed some more money or did it fail because they didn’t know what they were doing.

Level One: Don’t float a government loan to any private entity, no matter how trustworthy or established.

Despite Carcieri’s own comments on the initial negotiations, the final tally has still held Carcieri with the consequences. As of today, that is no longer the case.

WPRI continues:

That fundraiser is usually identified as the beginning of Rhode Island’s involvement with 38 Studios. But in the court filing discovered by Target 12, the state’s lawyers make this disclosure: “Unbeknownst to Governor Carcieri, then-Speaker of the Rhode Island House of Representatives Gordon Fox had previously met with Defendants Schilling and Zaccagnino.”

Well. Well. Well.

Democrats in the State House have been running on invincible stars for years, but the 38 Studios debacle was just one enemy too much for Rhode Islanders to take. Boston Magazine reported on the personal consequences of Rhode Island’s grim “game over”:

The company’s death was grisly: Before going under, it defaulted on the $75 million guaranteed loan that the state of Rhode Island had used in 2010 to lure it to Providence. As the money ran out, the company encouraged its 379 employees to continue coming into work, even though it knew it could not pay them. Staffers realized they’d been stiffed only when they noticed the money missing from their bank accounts. A pregnant woman had to find out from her doctor that her healthcare benefits had been cut off.

Programmers and designers were getting stomped on without knowing it, and one lady was giving birth, not realizing until after delivery that she would have to pay up on her own. Awful. Just awful.

Besides these personal tragedies, including the wretched agony for Schilling and his family, plus personal contacts from former employees to this writer, what else is it about 38 Studios that registers so much attention and controversy?

The New York Times reported:

Even in a state that long served as New England’s Mafia headquarters — and a state whose best-known modern political figure, Buddy Cianci, the former Providence mayor, was sent to prison in a federal corruption case known as Operation Plunder Dome — the 38 Studios debacle has registered as a painful embarrassment. (When I called influential Rhode Islanders and told them I was writing about 38 Studios, virtually all of them, even if they had opposed the deal, answered with some version of, “Do you have to?”)

Rhode Islanders are used to being played by their politicians. What makes them cringe is the suspicion that virtually all their elected leaders might have been played by someone else.

Are Rhode Islanders tired of the games? Are they tired of the entire political class playing them like a video game from hell? Here comes the next question: besides Fox, did anyone else in state house leadership have corrupt ties to this deal? What about Speaker Nicholas Mattiello? He has already spoken out in favor of paying back the “moral obligation” loans. He says that he wants the depositions on the state lawsuit released to the public:

Mattiello, who has been roundly criticized for not conducting his own investigation into the failed start-up that received the bulk of a $75 million loan from a program passed by the legislature in 2010, said he doesn’t know anything about how the doomed deal came together. However, he’s asking now for information to be made public.

Yet, no investigation. Why? He has balked at conducting his own investigation, saying the House of Representatives is not an investigating body.

This argument conflicts with then-Speaker Fox’s statements in 2013, during questions on WPRI, and Fox, we now know, had shady reasons for not seeking an independent investigation. He had the initially power to sign off on subpoenas and refused to: “It’s pursuant to the rules. Follow the house rules.” Asked if he would recuse himself allow for subpoenas, Fox answered:  “I could, and I’ve thought about it.” Then he shared: “We in House leadership have started to do oversight into 38 Studios.”

House leadership included then House Majority leader Mattiello.

With the current speaker refusing to release even financial records relating to his campaign funds, perhaps Mattiello is running out of lives in this political game, just like his corrupted, incarcerated predecessor.

 

Arthur Christopher Schaper is a blogger, writer, and commentator on topics both timeless and timely; political, cultural, and eternal. A life-long Southern California resident, Arthur currently lives in Torrance. Follow his blogs at The State of the Union and As He Is, So Are We Ministries and on Twitter.



  • Max

    Didn’t most of us suspect this after a couple weird Fox interviews. On one interview, he sounded like a five year old that got caught stealing. Anyway, if you didn’t suspect it, you certainly can’t be surprised. Too bad this state has such a fondness for the corrupt otherwise it would put the onus on Mattiello to prove he’s no more than the dumb clown he appears to be.

  • Daniel Sullivan

    I, for one, don’t want any further investigation into it because its going to waste more of our RI tax dollars. We already have to pay back the loan. If the FBI or federal AG want to investigate fine, as long as it doesn’t come out of Rhode Islander’s pockets. Fox is already in jail. The 38 studios situation was a big learning experience for most of lil’ Rhody. Now the public is fighting all private companies trying to fleece the public for cash (see: Pawtucket Red Sox seeking a new stadium). I’m certainly counting my blessings I never got hired when I applied to 38 Studios. They were supposed to be the tech employment savior of Rhode Island.

    • Max

      Can’t agree. If there are other primary participants that haven’t been exposed, they need to be outed.

    • Mike678

      Wow. “We already have to pay back the loan.” And why is that? Because of the crooked Politicians covered their own butts with our money. But you don’t want to waste more money. No responsibility or accountability–so the system stays in place for the next disaster. Is this what passes for thought in people these days? Simply unbelievable.

      • Daniel Sullivan

        We have to pay back the loan because we let it happen;and it would detrimentally effect our bond levels if we default, if there is an investigation it needs to take place at the Federal level otherwise its a waste of RI tax dollars because they’re all in it together, no one will find any wrongdoing.

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