Rhode Island Secretary of State Ralph Mollis has begun investigating possible violations of state lobbying rules involving former Boston Red Sox pitcher Curt Schilling's failed video-game company, 38 Studios LLC.
Raina Smith, Mollis' director of communications, confirmed the probe on May 6 after a report by television station WPRI said nobody from 38 Studios ever registered to lobby state lawmakers or the governor's office while doing business in Rhode Island from 2010 to 2012. The station cited a "consulting services agreement," valued at $300,000 and dated January 2011 between Providence, R.I., attorney Michael Corso and the game company.
According to WPRI, that agreement called for Corso to interact "with government agencies and various public officials."
Mollis told WPRI he may call for State House hearings.
38 Studios received a $75 million loan guarantee in 2010 from the Rhode Island Economic Development Corp., backed by the state's moral obligation, as an enticement to move to downtown Providence from Maynard, Mass. The company in 2012 filed for liquidation under Chapter 7 of the Bankruptcy Code, leaving Rhode Island on the hook for $75 million in bond principal, plus $38 million of interest.
The controversy generated a buzz in the capital markets and triggered national debate over state funding for companies in high-risk sectors.
Debate over whether to pay the debt may resume at the state capitol this month.
Gov. Lincoln Chafee's proposed budget for fiscal 2015 includes a $12.5 million payment for 38 Studios debt. Last year, after lawmakers made noise about possibly making that year's payment on the debt, Moody's Investors Service threatened to downgrade Rhode Island, saying a moral obligation was tantamount to a general obligation.