38 Studios & St. Joseph Pension Lawsuits Show Washington Bridge May Take Years to Recover

38 Studios & St. Joseph Pension Lawsuits Show Washington Bridge May Take Years to Recover

In the past decade, there have been two high-profile economic failures in Rhode Island.

One was the financial demise of 38 Studios, and the other was the collapse of the largest pension fund in the state's history, St. Joseph's.

Both had two significant similarities. First, the economic blunders were directly linked to failed governmental oversight.

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Second, attorney Max Wistow was appointed on both to seek the recovery of tens of millions of dollars. 

On Friday, Wistow and Savage Law Partners, the firms hired to pursue any legal actions against third parties who have responsibility for the failure of the Washington Bridge, issued a statement confirming that they will be filing legal action by mid-August.

“While we are continuing to finalize the details, we now can say with certainty that we intend to file suit against responsible parties to seek financial recovery on behalf of the State. That lawsuit will be brought on or before August 19, 2024.  No further details will be supplied until the lawsuit is filed,” said the attorneys.

The statement came as no surprise.

Don't expect the suit to name state employees who may have failed in their responsibilities. Wistow will pursue deep pockets with large insurance policies.

Savage and Wistow are about recovering monies; they are not empowered to dole out justice.

 

38 Studios

In 2010, Rhode Island’s Economic Development Commerce (EDC) approved $75 million to fund Curt Schilling’s 38 Studios video gaming company.

Within 18 months, the company was out of business. It ran out of cash and burned through tens of millions of taxpayer dollars.

The employees were laid off in March of 2012.

Then-Governor Lincoln Chafee hired  Wistow to file suit. Wistow had been successful in major lawsuits, including the Station Fire and a case against the Palestinian Liberation Organization (PLO).

In November of 2012, Rhode Island, with Wistow as the state’s attorney, filed lawsuit against:

WELLS FARGO SECURITIES, LLC; :BARCLAYS CAPITAL, PLC; FIRST SOUTHWEST COMPANY; STARR:INDEMNITY AND LIABILITY COMPANY; :

CURT SCHILLING; 

THOMAS ZACCAGNINO; RICHARD WESTER; JENNIFER MACLEAN; 

ROBERT I. STOLZMAN; ADLER POLLOCK & SHEEHAN, P.C.; 

MOSES AFONSO RYAN: LTD.; ANTONIO AFONSO, JR.; 

KEITH STOKES; and J. MICHAEL SAUL 

 

 

Some of Those RI Sued in 38 Studios Are Now Top McKee Staffers

Antonio Afonso, then a lawyer for the law firm Moses, Afonso Ryan, was forced to pay millions.

Afonso and his firm settled and paid the state of Rhode Island $4.37 million.

Today, Afonso is Governor Dan McKee’s chief-of-staff.

Taxpayers paid Afonso $228,992.31 in the most recent fiscal year, according to state records.

In the state's lawsuit, Afonso was cited in multiple counts in the lawsuit, including fraud and malpractice.

Another of those sued by the state was Keith Stokes. He was the director of the executive director of EDC.

In August of 2015, the law firm Adler, Pollock & Sheehan P.C.,  a partner in the firm and outside counsel to Economic Development Robert Stolzman, and top EDC executives J. Michael Saul, and Stokes settled with the state for $12.5 million.

This year, McKee named Stokes the head of director of equity and diversity for the state of Rhode Island.

 

 

And, the law firm Adler Pollock and Sheehan has been one of the McKee administration’s favorite law firms. Since McKee has been governor, the law firm has been paid millions for legal services, including significant legal work for the Rhode Island Department of Transportation.

In Wistow's 97-page 38 Studios lawsuit on behalf of the state of Rhode Island, he asserted that the key players, including McKee's now chief of staff Afonso and his new hire, intentionally misled the EDC board. 

'Defendants Stolzman, Adler Pollock, Moses Afonso, Saul, Stokes, and First Southwest knew or should have known that 38 Studios would not be able to repay under either its 'worst case' or even its 'most likely' revenue projections. Such information was required to be given the EDC Board in order to make Saul’s affirmative representations concerning 'worst case' or 'most likely' projections not misleading," claimed the state's lawsuit.

The outcome was a financial disaster for Rhode Island. GoLocal published more than 100 stories unveiling the financial fraud and sued then-Governor Gina Raimondo to force the release of Rhode Island State Police documents.

Maybe, more importantly, it created an atmosphere in which the public lacks trust in government leaders.

By the time the last of the 38 Studios defendants settled, it was February of 2017 — more than four years after the state filed suit and nearly five years after the company collapsed.

On Tuesday, GoLocal reviews another major financial ripoff and the players involved: The failure of the St. Joseph pension fund, the largest pension fund collapse in state history.