EDC holding onto pivotal $1.12M May payment from 38 Studios
June 18th, 2012 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
The seven-figure payment that helped set in motion the rapid demise of Curt Schilling’s 38 Studios is now sitting in the R.I. Economic Development Corporation’s bank accounts.
38 Studios missed the $1.125 million payment to the EDC on May 1, technically putting it into default and making it ineligible for state tax credits. After trying to pay with a bad check May 17, 38 Studios made good the next day by cutting a check for $100,000 and wiring the rest of the money.
That money didn’t go to the investors who bought $75 million in taxpayer-backed bonds the EDC issued for 38 Studios, however; it was an “annual guaranty fee,” equal to 1.5% of the average amount of outstanding bonds, that 38 Studios owed the EDC itself under the terms of the 2010 loan deal.
EDC spokeswoman Judy Chong told WPRI.com the quasi-public agency split the $1.125 million into two pots. Under the 2010 law that created the $125 million Job Creation Guaranty Program, half the money was required to go into “a reserve fund from which shall be charged any and all expenses of the [EDC] with respect to guarantee or bond obligations of the [EDC] pursuant to these resolutions resulting from a program borrower’s default.”
Chong said the EDC is still weighing what to do with the other half of 38 Studios’ $1.125 million payment. ”The use of the other half has not been determined,” she said in email. “It could go toward payment of fees (such as legal fees).”
• Related: 38 Studios owed EDC money on May 1; did Schilling firm pay? (May 15)
Nesi's Notes covers politics and the economy in and around Rhode Island for WPRI.com. (Twitter: 
It should go into escroll(for taxpayers liability) and the key players involved should being paying for legal fees and loan payments.
Bee darling,
It’s “escrow”. Perhaps you were thinking of the green vegetable in wedding soup.
What about the $5 million the EDC gets from our electric bills every year?
Where does that go and who is spending it?
That money would only be a drop in the bucket for Rhode Island or the EDC, but it would be a boon to the workers who were unpaid for most of a month and who suddenly have to pay for their own health insurance. There are a lot of former 38 people who had the rug pulled out from under them by shifty business on both sides.
RI taxpayers are being lied to about what type of loan it actually is, if their representatives vote to no pay it, they dont have to ! governor chafstick is a moron plain and simple, his experts( still unknown) gave him bad advise, and the public comments hurt everyone not just 38 studios. the real story is yet to be unveiled pending legal jockeying. dig deeper and stop publishing one sided half stories. The taxpayers deserve the truth here. They are being mislead purposely.
Is Rhode Island the cess pool it appears to be? What a ridiculous state and state of affairs. I am glad I live in the civilized south with great weather, great beer and a guvment that don’t give a shat.