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Ex-lawmaker testifies about his role in 38 Studios deal

January 15, 2016

PROVIDENCE, R.I. (AP) — A former Rhode Island lawmaker now working as a Vermont official returned to his home state Thursday to testify about its failed $75 million deal with ex-Boston Red Sox pitcher Curt Schilling’s now-bankrupt videogame company.

Steven Costantino, a Democrat, was chairman of Rhode Island’s House Finance Committee at the time of the 2010 deal with 38 Studios. He warned against political theater in his opening statement to an oversight committee investigating the deal on Thursday.

Costantino sponsored legislation creating a loan guarantee program to attract businesses but said it wasn’t his decision to give so much to 38 Studios to entice it to move from Massachusetts.

“It wasn’t my decision, it wasn’t the committee’s decision, it wasn’t the legislature’s decision on who would get the money,” he said.

Costantino said the legislation creating the $125 million economic development program “was an authorization, not a commitment.” He said it was the responsibility of the state’s economic development agency, part of the administration of then-Gov. Donald Carcieri, a Republican, to vet companies and do risk assessments before awarding incentives.

Carcieri, in a sworn affidavit in October 2012, said he understood from representations by economic development agency staffers that 38 Studios would have enough money to finish its flagship videogame. But the fledging company ran out of money two years after the deal, leaving Rhode Island taxpayers on the hook.

Constantino spent nearly four hours Thursday night answering questions from a state lawyer before the questioning was turned over to lawmakers, many of them his former colleagues, who thanked him for showing up.

The Oversight Committee had last month subpoenaed Costantino and Schilling but was unable to enforce its command because they don’t live in Rhode Island. Costantino, now commissioner of Vermont’s Department of Health Access, said he agreed to return because he wanted to explain what happened.

Schilling, who also played for the Baltimore Orioles, the Houston Astros, the Philadelphia Phillies and the Arizona Diamondbacks before ending his career with Boston in 2007, has said 38 Studios fully disclosed its financial condition.

Some lawmakers have said they felt left in the dark about last-minute maneuverings that raised the cap on the loan program, allowing 38 Studios to get $75 million, and asked why Costantino gave them no warning if he had concerns.

Costantino had traveled in spring 2010 with then-House Speaker Gordon Fox, a Democrat now in prison on unrelated corruption charges, to meet with Schilling and hear his relocation pitch at the company’s office in Maynard, Massachusetts.

Oversight Chairwoman Karen MacBeth, a Democrat who sat near Costantino on the House floor, said she does not believe the General Assembly would have approved the program if its members knew 38 Studios was its main beneficiary.

Fox pleaded guilty last year to bribery, wire fraud and filing a false tax return.

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