38 Studios execs knew MMO funding would fall short, court docs say

Emails sent by former 38 Studios vice chairman Thomas Zaccagnino suggest some studio executives knew that the money they accepted from the Rhode Island Economic Development Corporation wasn't enough to finish development on Project Copernicus, the company's aborted MMORPG. WPRI-12 reports that the emails were submitted to the court of Rhode Island along with hundreds of other documents after the Rhode Island House Oversight Committee subpoenaed key figures in the case back in April. Zaccagnino sent the email to key members of the studio in response to an email from 38 Studios' then-CEO Jen Maclean balking at the prospect of telling Rhode Island representatives that the net proceeds from the loan would be enough to allow 38 Studios to finish development of Project Copernicus. “I really do not think we should highlight the fact that we might be under capitalized…wont go over well with the staff or board,” Zaccagnino wrote. The state of Rhode Island's ongoing lawsuit against the 38 Studios executives and state representatives who orchestrated the loan is predicated on the complaint that the defendants "knew or should have known, but failed to inform the EDC Board, that 38 Studios was destined to fail according to 38 Studios’ own financial projections," so these email records are potentially a big deal in the case. Back in 2012, former EDC board member Donna Cupelo filed a sworn affidavit with the court alleging that she was led to believe that 38 Studios would have enough cash to complete Copernicus if the deal went through. Cupelo also swore that financial projections submitted by 38 Studios suggested the company would be have positive cash flow of roughly $13 million by 2012. This proved not to be the case, as the studio collapsed in 2012. It's worth noting that the legal team representing former EDC executive director Keith Stokes, who is one of the defendants in the case, alleged that the EDC Board was in fact "acutely aware that the capital needs of 38 Studios where [sic] in excess of $125MM as acknowledged in the 2010 EDC Inducement Resolution," in a court filing last year. The case is expected to go to trial, though no date has yet been set.