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House panel wants to hear from Schilling, Fox

PROVIDENCE — Members of the House Oversight Committee said Thursday they want to hear from former Red Sox pitcher Curt Schilling and ex-Speaker Gordon Fox as they continue to review the state’s deal to lure 38 Studios to Rhode Island with a $75 million loan guarantee.

The committee convened Thursday under Rep. Karen MacBeth, the new chairwoman, to consider who might be called to testify and to discuss a request for documents in the state’s lawsuit over Schilling’s now-defunct video game company.

In addition to Schilling and Fox, the panel said it would like to hear from former Republican Gov. Don Carcieri; Sean Esten, an economic development agency employee who raised concerns about the wisdom of the loan guarantee; attorney Michael Corso; and former Finance Committee Chairman Steven Costantino, the sponsor of the legislation that created the loan guarantee program under which 38 Studios got the funding.

The House and Senate Oversight committees have been looking into the approval by the then-Economic Development Corp. in 2010 of a $75 million loan guarantee for 38 Studios, which later went bankrupt. The state is on the hook for some $90 million related to the transaction.

The EDC’s suit, which names Schilling and 13 others, claims its board was misled into approving the loan guarantee.

The suit alleges the defendants knew, or should have known, that 38 Studios was on track to run out of money and concealed that information. The defendants deny the charges.

MacBeth, D-Cumberland, had said previously she wanted to subpoena key figures. But she backed off that rhetoric Thursday, saying witnesses would first be asked to appear voluntarily. While she called subpoena power a last resort, she added: “You are not going to be able to stop me from getting the answers.”

Speaker Nicholas Matielllo had also expressed reservations about the necessity for subpoenas.

MacBeth and Senate Oversight Chairman James Sheehan, D-North Kingstown, also are seeking the public release of depositions and other exhibits in the case.

Superior Court Judge Michael Silverstein was expected to hear arguments today related to the materials’ release. The Providence Journal and Sheehan first sought them under a public records request.

The defendants want the judge to keep them confidential, citing a confidentiality order agreed to in the case. They say that, even if the judge finds they are subject to public disclosure, that shouldn’t take place until all witnesses have been deposed.

EDC lead attorney Max Wistow has objected, calling the defendants’ claim that all the materials are confidential “overbroad.”

Excerpts from some of the depositions — including those of former EDC Executive Director Keith Stokes and his then-deputy, Michael Saul — have already been filed with the court as exhibits.

In his deposition, Saul, who is among the defendants, said he believed 38 Studios would have enough money, including from the loan and other sources included in the company’s financial projections, to complete its flagship video game, according to a transcript excerpt. Stokes also said he believed the company would have sufficient funds.

“My state of mind was that this was a positive investment based on the information that was presented to me,” he said, according to the transcript.

In a sworn affidavit in October 2012, Carcieri said he understood from representations by EDC staff, including Stokes, that 38 Studios would have enough money to finish.

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