SEC files charges relating to Curt Schilling's failed video game
Relating to bonds sold for Curt Schilling's 38 Studios, Wells Fargo and another agency are being charged by the SEC with fraud.
Former MLB pitcher Curt Schilling founded a company -- 38 Studios -- intending to make a video game several years ago. It went backrupt in 2012 and there have been legal proceedings ever since. Now the SEC (the Securities and Exchange Commission -- not the collegiate athletics conference) has filed fraud charges against Wells Fargo and Rhode Island Commerce Corporation relating to the case.
According to the SEC, the entities sold $75 billion in bonds to investors and loaned $50 million of those proceeds to 38 Studios to help finance its first video game. The remaining $25 million went to cover bond offering expenses and set up reserve and interest funds.
But the problem came when the entities failed to inform investors that 38 Studios believed it needed $75 million to complete its game and would need to come up with additional financing elsewhere. When that money did not come through, the company could not finish the game and ultimately went bankrupt.
So, essentially, the companies knew 38 Studios was going to need another $25 million but didn't present this information to investors, it is alleged. Wells Fargo disputes the charges.
Schilling and 38 Studios have been sued by the state of Rhode Island for defaulting on debt payments. The suit was was settled for $4.4 million in 2014.
