PROVIDENCE, RHODE ISLAND – The U.S. Securities and Exchange Commission on Monday charged Rhode Island’s economic development agency and Wells Fargo with defrauding investors in the state’s disastrous $75 million deal with 38 Studios, the video game company started by former Red Sox pitcher Curt Schilling.
The civil complaint, filed in U.S. District Court in Providence, accuses the Rhode Island Commerce Corp. and Wells Fargo Securities of making materially misleading statements when they sold the bonds used to fund the deal.
Schilling moved his company from Massachusetts to Rhode Island in 2010, after the agency agreed to give it a $75 million loan guarantee. The deal was financed through bonds offered to investors. Less than two years later, 38 Studios ran out of money and closed its doors, filing for bankruptcy.
Schilling isn’t accused of wrongdoing in the SEC action, but he and others, including Wells Fargo, are being sued by the economic development agency in state court. That case has so far netted nearly $17 million in settlements. Schilling has blamed state officials for failing to support his business venture.