Criminal probe launched into 38 Studios

PROVIDENCE, R.I. (WPRI) – Rhode Island’s major law enforcement agencies have launched a criminal investigation “into every aspect” of troubled video game company 38 Studios.

Rhode Island State Police Col. Steven G. O’Donnell said his agency is conducting the proble along with the FBI, the Rhode Island U.S. Attorney’s office and Attorney General Peter Kilmartin's office.

“Everything is on the table,” O’Donnell said. “Rhode Island Institutions, banks, anybody federally insured and any venture capital money that has come into the company."

O’Donnell spoke with WPRI 12 at the State House moments after meeting with Gov. Lincoln Chafee. He said no one from outside law enforcement ordered the investigation and said it "was just time” to launch the probe so that investigators could examine the books.

“We review anything that is happening out there and for the last several weeks we’ve been monitoring all the activities at 38 Studios,” O’Donnell said.

He told WPRI.com the agencies are looking at the taxpayer-backed $75 million loan guarantee “as well as the money that came from Bank Rhode Island.”

Bank Rhode Island loaned 38 Studios $8.5 million earlier this year against tax credits that have not been issued to the firm. The governor declined to comment on the investigation during a news conference Thursday afternoon, referring all questions to O'Donnell.

"I can confirm that the U.S. Attorney's office has been in contact with FBI and state police on the 38 Studios matter," Jim Martin, a spokesman for Rhode Island U.S. Attorney Peter Neronha, told WPRI.com. The various agencies had been discussing the potential investigation in recent days, Martin said.

O’Donnell declined to say if investigators have issued a subpoena or a search warrant in the 38 Studios case yet. He said the company’s bankruptcy filing was a coincidence and will have no effect on the probe.

A business owner across the street from the video game company said he has not seen any sign of law enforcement at the company’s headquarters in recent days.

O’Donnell said the agencies are adding detectives with expertise in accounting to their financial crimes unit to help tackle the investigation.

“It will be a day-to-day basis,” O’Donnell said. “We’ll just get the information, make our interviews and use other investigative tools to get this done.”

Tim White ( twhite@wpri.com ) is the Target 12 investigative reporter for WPRI 12 and Fox Providence. Follow him on Twitter: @white_tim