Rhode Island agency reaches $12.5 million settlement with 4 defendants in 38 Studios lawsuit

Rhode Island's economic development agency has agreed to a $12.5 million proposed settlement with four defendants in the lawsuit over the state's failed $75 million deal with Curt Schilling's video game company 38 Studios.

The Rhode Island Commerce Corporation announced it filed the settlement in Superior Court on Friday with lawyer Robert Stolzman and his firm Adler, Pollack & Sheehan P.C., along with J. Michael Saul and Keith Stokes, former agency leaders.

Stolzman and his firm previously represented the Economic Development Corporation, which has since been renamed the Rhode Island Commerce Corporation. Adler Pollock & Sheehan said in a statement that it will never agree with the agency on issues of responsibility, liability and damages, but it is in everyone's best interests to end the dispute.

Lawyers for Stokes and Saul couldn't immediately be reached for comment. Stokes is the former EDC executive director, and Saul was his deputy.

Max Wistow, who represents the Commerce Corporation, said in the court filing that there's interest in settling because the agency risks losing at trial, or getting little from a larger settlement award because there's nothing left in the defendants' insurance policies to pay.

Wistow urged the judge to approve the "good faith settlement." A hearing is scheduled for Aug. 21.

Ex-Red Sox pitcher Schilling's failed video game company got a $75 million state-backed loan. The EDC sued Schilling and 13 executives of his company, former agency employees, investment banks and others over the collapse, alleging fraud, negligence and breach of fiduciary duty, among other things.

The lawsuit does not ask for a specific dollar amount, but for the defendants to repay the bonds.

If approved by a judge, the settlement would be the second deal in the case.

A judge previously approved a $4.4 million settlement between the agency and lawyer Antonio Afonso Jr. and his firm, Moses Afonso Ryan, which worked on the sale of the bonds that financed the deal.

The Commerce Corporation said it is moving forward with the lawsuit against remaining defendants Wells Fargo Securities, LLC, Barclays Capital Inc., First Southwest Company, Starr Indemnity and Liability Company, Schilling, Thomas Zaccagnino, Richard Wester and Jennifer MacLean.