38 Studios Employees May Be Even More Screwed Than We Thought

How bad can things get? That’s a question former employees of Kingdoms of Amalur: Reckoning developer 38 Studios are probably asking themselves in the wake of news that their former employer may have left them with more than just a hole in their resumes.

As the whole world now knows, at the center of the shocking collapse of 38 Studios is a 75 million dollar loan from the state of Rhode Island, meant to entice the developer to move operations from Massachusetts, bringing much needed jobs to a state that suffers America’s second-highest unemployment rate. Those jobs would obviously include people who already worked for the developer, which is why 38 Studios created an internal program to help employees relocate. Details are sketchy, but that program apparently had the employee authorize 38 Studios to sell their home on their behalf. Unfortunately, in yet another sign that things at the top may have been very shady indeed, the Verge is reporting that ‘several sources’ confirm that many of the homes in question were never actually sold.

Already reeling from receiving bounced paychecks on May 15, not to mention the immediate cessation of health care benefits when they were laid off, these employees are now on the hook for a second mortgage they thought was already taken care of. One former employee reports that they only found out because “The bank contacted them this week to ask why they mortgage wasn’t being paid”. The total number of affected employees is unknown, but whether a large or small number, it raises serious questions about how employee relocations were managed. What, precisely, was 38 Studios doing with employee property if they weren’t selling it as promised? And how were they covering the matter up? The employee cited above claims they were told outright by 38 Studios that their house had been sold. Presumably this would have come with some kind of corroborating documentation. Only a fool would accept word of mouth on something that could destroy your credit.

It may be some time before we get a complete handle on this mess, but a picture of the company’s management is starting to emerge, and quite frankly, it’s not a very pretty one. As the Verge notes, if money from the Rhode Island loan was used to compensate employees for their Massachusetts homes, or finance new homes in Rhode Island, it means 38 Studios may have violated their loan agreement. If so, it wouldn’t be the only violation. Rhode Island Governor Lincoln Chafee has confirmed that the company definitely broke their agreement when they failed to notify Rhode Island of the layoffs ahead of time. He will now be seeking an audit of how the developer used the money loaned to them.

We expect that audit will uncover facts the company would rather remain hidden, which means this story will get a whole lot dirtier before it ends. No wonder Curt Schilling is barely saying anything. This wasn’t always the case, of course. In March, he went on Sean Hannity’s show to complain about how bad it is for the Government to be involved in business. Knowing what we now know, we have to agree, even if we probably understand the point a little differently. But perhaps it’s best he keep his mouth shut this time.

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3 Comments on 38 Studios Employees May Be Even More Screwed Than We Thought

Zee

On May 25, 2012 at 4:52 pm

Thank you for punctuating this story with a photograph of typical c-level executives.

clamsarehot

On May 25, 2012 at 6:33 pm

Yikes, letting a company sell your home for you? That seems like a terrible idea, especially if it’s not “too big too fail”.

Hueristic

On May 26, 2012 at 4:37 pm

Just what RI needs. :(