38 Studios: RI Settles with Curt Schilling, Others for $2.5 Million

PROVIDENCE, RI — Rhode Island officials have settled with Curt Schilling and others for $2.5 million after a court-ordered mediation.

The Rhode Island Commerce Corporation announced Monday that it has agreed to the proposed settlement with Schilling, Thomas Zaccaginio, Richard Wester, Jennifer MacLean and their insurer, Starr Indemnity and Liability Company, in "all 38 Studios litigation."

The state sued multiple people and entities in an effort to recoup some of the $88 million lost after the former Red Sox pitcher's video game company went belly-up. The collapse of 38 Studios put the state on the hook after the company received millions in funding through moral obligation bonds.

If finalized, this settlement brings the total collected by the state in the ongoing effort to recoup those losses to $45 million, which is just more than half the $88 million lost from the 38 Studios bonds.

Retired Superior Court Justice Francis J. Darigan Jr. mediated the settlement.

Lawyers with Shechtman Halperin Savage LLP, who represented the Commerce Corporation, "determined that the recoverable assets on any judgment entered against the defendants in the litigation, including any remaining insurance coverage, would be expected to be less than $2,500,000," according to a state news release. "The firm reached this conclusion after a comprehensive and detailed analysis of the assets of the individual defendants. Accordingly, the proposed settlement is more than the Corporation can reasonably expect to recover even if the Corporation prevails against these defendants at trial, and has the additional advantage of certainty."

The state will see just more than $2 million from the settlement with about $500,000 covering legal fees.

The Corporation previously settled claims against Wells Fargo Securities, LLC and Barclays Capital Inc. for $25.625 million in August 2016; Antonio Afonso Jr. and Moses Afonso Ryan Ltd. for $4.4 million in June 2014; and Adler, Pollock & Sheehan P.C., Robert I. Stolzman, J. Michael Saul and Keith W. Stokes for $12.5 million in August 2015, according to the release.

The Corporation is still engaged in litigation against First Southwest Company.

"That litigation will go forward in order to further reduce the taxpayers' potential exposure on the remaining moral obligation," the Corporation said.

At a media briefing, Darigan told reporters that the state is "satisfied" with the settlement. He noted that none of the settlement money will be coming out of Schilling's pocket, but instead, from his insurance company.

The 38 Studios debacle has consumed Rhode Island for years ever since the video game studio failed. Taxpayers and some lawmakers were misled into believing the bond packages approved by the General Assembly were for a multitude of small companies and startups instead of an orchestrated deal to funnel large sums to Schilling's company. A state police probe of the deal has not led to any charges.

This story is being updated.