NEW: RI Commerce Corp Votes on 38 Studios Litigation, Refuses to Disclose Details

NEW: RI Commerce Corp Votes on 38 Studios Litigation, Refuses to Disclose Details

The Rhode Island Commerce Corporation voted Wednesday on "litigation issues in relation to 38 Studios" -- but did so in executive session, and as such refused to divulge what transpired regarding the failed deal that left Rhode Island taxpayers on the hook for more than $88 million. 

"I refer all further comment to Max," said Rhode Island Commerce Secretary Stefan Pryor, following the executive session at the end of the meeting, referring to the State of Rhode Island's attorney in the 38 Studios case, Max Wistow. 

"I can't speak to the ongoing litigation," said Wistow.

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When asked, the Governor said she could not speak to executive session.

"Nope that's confidential, we took one vote, and discussed litigation," said Raimondo. "Talk to Max."

When asked if the vote count was unanimous, Raimondo said, "The fact of the vote is public, that's all we can say."

Following the meeting, Matt Sheaff, Director of Communications and Stakeholder Outreach for the Rhode Island Commerce Corporation, reached out to add to the Governor's comments. 

"The Governor wanted to clarify there were two votes and both unanimous and can't go into details," said Sheaff.  

Settlements to Date

The discussion and vote on Wednesday comes a full year after the state last settled with a 38 Studios defendant. 

In August 2015, Commerce reached a $12.5 million settlement with defendants Adler, Pollack & Sheehan P.C., Robert I. Stoltzman, J. Michael Saul, and Keith W. Stokes in the 38 Studios litigation; Commerce previously settled claims against Antonio Afonso, Jr. and Moses Afonso Ryan Ltd. for $4.37 million in June 2014. 

Wells Fargo in the News

In March, the United States Securities and Exchange Commission charged a "Rhode Island agency and its bond underwriter Wells Fargo Securities with defrauding investors in the 38 Studios bond offering."

"Municipal issuers and underwriters must provide investors with a clear-eyed view of the risks involved in an economic development project being financed through bond offerings,” said Andrew Ceresney, Director of the SEC Enforcement Division in March. “We allege that the RIEDC and Wells Fargo knew that 38 Studios needed an additional $25 million to fund the project yet failed to pass that material information along to bond investors, who were denied a complete financial picture.”

On Friday August 5, U.S. District Judge Jack McConnell refused to dismiss the SEC, but did agree to dismiss a Wells Fargo banker -- Peter Cannava - from the complaint.

The civil trial is scheduled to start in October.