DIGITAL MEDIA

38 Studios claims state withheld funds from ‘negotiated deal’

BLOOMBERG NEWS FILE PHOTO/TONY AVELAR
FORMER RED SOX pitcher Curt Schilling’s bankrupt video game company, 38 Studios LLC, claimed that the state of Rhode Island refused to honor a “fully negotiated deal and agreement” to give the company funding from film tax credits.
Posted 6/18/12

PROVIDENCE – Former Red Sox pitcher Curt Schilling’s bankrupt video game company, 38 Studios LLC, claimed that the state of Rhode Island refused to honor a “fully negotiated deal and agreement” to give the company funding from film tax credits, reported The Boston Globe.

According to public record documents obtained by the news source, William Thomas - the president and chief operating officer of 38 Studios - wrote a strongly worded letter to the state’s film office chastising Rhode Island lawmakers for withholding millions of dollars in film tax credits available to video game makers.

In the May 25 letter, Thomas suggested that the state promised to give the gaming company as much as $8.7 million in tax credits after 38 Studios made the $1.1 million payment to the state.

The state decided to withhold funding after 38 Studios missed its payment, but studio executives argued that the payment was made within a grade period and the company wasn’t actually in default, according to the news source.

“The intentional delay in issuing the [tax] credits has caused severe damages to the Company, its employees and the State of Rhode Island. To prevent further harm, we are urging you to please issue the 2011 tax credits as agreed,” Thomas wrote in the letter.

According to the Boston Globe, even if those were the terms of the deal made by former R.I. Economic Development Corporation Executive Director Keith W. Stokes, the EDC may not have had the authority to promise the state tax credits.

38 Studios noted that communication from Rhode Island officials stopped after a letter was sent to the company notifying it that the tax credits were being canceled.

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