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Thursday, May 31, 2012

Auditors Visit 38 Studios HQ

Jamia McDonald, the governor’s chief of staff, visited 38 Studios’ headquarters on Thursday with a newly hired team from the firm Deloitte who will conduct a forensic audit of the company’s finances stretching back to its founding by Curt Schilling in 2006. They were joined by 38 Studios’ chief financial officer and a few of its directors.

Don Geovany Soto (chris h.) Posted: May 31, 2012 at 05:12 PM | 42 comment(s) Login to Bookmark
Tags: business

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1. CFBF Hates Hyphens Posted: May 31, 2012 at 08:41 PM (#4144760)

Schilling tried to impress McDonald by limping around the studio while showing off the growing blood stain on his dress sock.

2. robinred

Posted: May 31, 2012 at 08:47 PM (#4144764)

forensic audit

This sounds very unpleasant.

3. Don Geovany Soto (chris h.) Posted: May 31, 2012 at 08:50 PM (#4144768)

This sounds very unpleasant.

I think forensic anything is probably not pleasant.

4. Never Give an Inge (Dave) Posted: May 31, 2012 at 09:23 PM (#4144794)

A forensic audit sounds as unpleasant to conduct as it does to receive.

5. DKDC Posted: May 31, 2012 at 09:56 PM (#4144812)

All sarcasm aside for a minute, I actually think this forensic audit would be fun to conduct.

Think about it, you're given the keys to 38 studios and your job is to pour over all of the financials, accounts payable/recievable, contracts, emails, files, phone records, etc. Whatever you need to figure out WTF happened.

I think it would be fascinating.

6. Los Angeles El Hombre of Anaheim

Posted: May 31, 2012 at 10:14 PM (#4144825)

You have a very unusual definition of "fun".

7. Pasta-diving Jeter (jmac66) Posted: May 31, 2012 at 10:20 PM (#4144831)

I think forensic anything is probably not pleasant.

forensic prostate exam would be the worst

8. Graham Posted: May 31, 2012 at 11:12 PM (#4144863)

When a team performs an audit, it usually means that each individual is delegated some totally mindless task like matching invoices to accounts payable/receivable ledgers and nothing else. Someone else will audit inventory. Only the top people on the team get to see all the different pieces and how they fit together. I imagine it's mind-numbingly boring. I personally have no audit experience, but some people with auditing experience have told me that companies will turn up the heat or A/C on you to make whole rooms extraordinarily uncomfortable. People will yell at you, curse at you, and I've even heard that some people will run from you. I doubt these forensic auditors will have to deal with too much of that since there shouldn't be any client employees there, but I would bet it's not going to be a pleasant experience.

9. Morty Causa Posted: May 31, 2012 at 11:13 PM (#4144864)

forensic prostate exam would be the worst

It's not the exam. It's the cramming for the test that's stays with you forever.

10. toratoratora Posted: June 01, 2012 at 12:42 AM (#4144908)

When a team performs an audit, it usually means that each individual is delegated some totally mindless task like matching invoices to accounts payable/receivable ledgers and nothing else. Someone else will audit inventory. Only the top people on the team get to see all the different pieces and how they fit together. I imagine it's mind-numbingly boring. I personally have no audit experience, but some people with auditing experience have told me that companies will turn up the heat or A/C on you to make whole rooms extraordinarily uncomfortable. People will yell at you, curse at you, and I've even heard that some people will run from you. I doubt these forensic auditors will have to deal with too much of that since there shouldn't be any client employees there, but I would bet it's not going to be a pleasant experience.

And that's just for a normal audit. Forensic audits use the application of accounting methods for the tracking and collection of forensic evidence, usually for investigation and prosecution.
This could get real ugly.

11. Ellis Valentine's Bright Future Posted: June 01, 2012 at 01:09 AM (#4144919)

A rare literal lol for #9.

12. Jose Can Still Seabiscuit Posted: June 01, 2012 at 09:04 AM (#4144975)

The audit process is generally a pleasant one. The company itself engages the accounting firm and you usually have a pretty good relationship with the client. A lot of the work is done by younger CPAs in training so a lot of times there is a fair amount of youthful enthusiasm happening.

Situations like this are very different of course. The stuff described in #8 happens and it becomes more like what I imagine a hostile witness is like on the stand, every question, even the simplest ones, become mini-battles.

From the auditor standpoint you reach a point where you say \"#### you" (not literally, at least not out loud) and just make up your mind to find something damning.

13. Shredder Posted: June 01, 2012 at 10:35 AM (#4145025)

All sarcasm aside for a minute, I actually think this forensic audit would be fun to conduct.

Think about it, you're given the keys to 38 studios and your job is to pour over all of the financials, accounts payable/recievable, contracts, emails, files, phone records, etc. Whatever you need to figure out WTF happened.

I think it would be fascinating.

Plus, think of all the free video games!

14. Slivers of Maranville (SdeB) Posted: June 01, 2012 at 10:47 AM (#4145038)

What happened to Touche? Offed, mafia-style?

15. Shredder Posted: June 01, 2012 at 10:54 AM (#4145040)

What happened to Touche? Offed, mafia-style?

I think it was just a rebranding, and it had to do with creating a bunch of different sub-entities. When I started there, I worked for Deloitte & Touche, LLP. When I left, our group was officially Deloitte Tax, LLP. At that time I thought it was pretty funny, since I had come over in the wake of Andersen. That all happened right after we went from Arthur Andersen to just Andersen, and changed our logo to an orange dot/sphere. Deloitte and Touche then became just Deloitte and changed their logo to a green dot. Seemed like a really bad omen to shorten your name and change your logo to a circle of some sort.

16. David Nieporent (now, with children) Posted: June 01, 2012 at 11:56 AM (#4145095)

your job is to pour over all of the financials

pore.

17. puck Posted: June 01, 2012 at 12:23 PM (#4145125)

A lot of the work is done by younger CPAs in training so a lot of times there is a fair amount of youthful enthusiasm happening.

a/k/a bonnie young ladies?

18. Slivers of Maranville (SdeB) Posted: June 01, 2012 at 12:32 PM (#4145131)

Was there ever a Mr. (or Ms) Touche?

19. Never Give an Inge (Dave) Posted: June 01, 2012 at 12:34 PM (#4145133)

I think it was just a rebranding, and it had to do with creating a bunch of different sub-entities. When I started there, I worked for Deloitte & Touche, LLP.

Their audit work is still branded as Deloitte & Touche LLP. I am looking at a client's audited financials from February and that's how they are signed. "Deloitte" is just a shorthand.

20. Never Give an Inge (Dave) Posted: June 01, 2012 at 12:35 PM (#4145135)

#18, yes.

21. gef the talking mongoose Posted: June 01, 2012 at 01:32 PM (#4145196)

pore.

As I was about to post.

"Pour(ing)" over all those documents would be extremely messy, if not horribly unsanitary.

22. RoyalsRetro (AG#1F) Posted: June 01, 2012 at 02:10 PM (#4145270)

Curt Schilling Put Up $5 Million In Gold Coins Trying To Save Failing Video Game Company

The Boston Globe reports that in February, the former Major League Baseball pitcher, who was as famous for his conflicts with the media and other players as he was for his prowess on the mound, posted 3,200 gold coins -- worth $5 million -- as collateral for a loan from Bank Rhode Island to save his struggling video game company.

According to the Providence Journal, Schilling sunk $50 million of his personal fortune into the company, which was named 38 Studios after his jersey number. Those funds compliment a generous $75 million in taxpayer-backed bonds promised to the company by Rhode Island's former governor, Republican Donald Carcieri, in 2011.

23. Robert in Manhattan Beach Posted: June 01, 2012 at 02:28 PM (#4145300)

#22 - Awesome. Now all we have to learn is that Schilling is currently residing at his underground survivalist bunker and the full right wing caricature will be complete.

24. Greg Franklin Posted: June 01, 2012 at 02:29 PM (#4145302)

If you had just posted the headline, AG#1F, that would have been a near-perfect Onion News headline on this subject. If only gehrig38 was a card collector like Dmitri Young....

25. spike Posted: June 01, 2012 at 03:06 PM (#4145350)

@22 Most interesting article. The link to the Boston.com coverage that mentioned 38 Studios had used the potential tax credits as collateral for yet another loan. It also makes me curious if the line of credit that was paid off with taxpayer funds - that Schilling was personally liable for - was the "gold coin" loan.

26. KT's Pot Arb Posted: June 01, 2012 at 06:15 PM (#4145539)

I'll be shocked if Schilling is guilty of anything other than pissing away his own fortune. Thought I wouldn't put it past dumb RI politicos doing anything possible to paint him as a villain to distract state voters from their ridiculously dumb gamble to "pick a winner" in a free market with taxpayer funds.

27. The Yankee Clapper Posted: June 01, 2012 at 06:26 PM (#4145555)

If Jon Corzine isn't in jail, Schilling should be OK.

28. Los Angeles El Hombre of Anaheim

Posted: June 01, 2012 at 07:00 PM (#4145582)

I don't understand how this could have happened. I mean, the governor who gave Schilling all that money was a CEO and everything!

29. DA Baracus is gritty and hits with RISP Posted: June 01, 2012 at 07:03 PM (#4145584)

Curt Schilling Put Up $5 Million In Gold Coins Trying To Save Failing Video Game Company

This story is a gift that keeps on giving. What's next, he put up his survival seeds as collateral?

30. willcarrolldoesnotsuk Posted: June 01, 2012 at 08:40 PM (#4145652)

I'm guessing that the next time we actually see Schilling, he's going to be blue from drinking colloidal silver.

31. tshipman

Posted: June 01, 2012 at 09:19 PM (#4145692)

ColdProsnian just became Curt Schilling's biggest fan.

32. David Nieporent (now, with children) Posted: June 01, 2012 at 10:08 PM (#4145820)

This story is a gift that keeps on giving. What's next, he put up his survival seeds as collateral?

It's going to turn out that Lenny Dykstra was his CFO.

33. McCoy Posted: June 01, 2012 at 10:11 PM (#4145824)

And Jose Canseco was his silent partner.

34. David Nieporent (now, with children) Posted: June 01, 2012 at 10:18 PM (#4145831)

Jose Canseco has never been silent.

35. GregD Posted: June 01, 2012 at 10:32 PM (#4145839)

A friend of a friend is a forensic accountant and loves it. They can do lots of data mining with software so it's less drudgery than when he started and often is real detective work. Though his favorite of their moves isn't accounting at all, really. They call cash-heavy businesses that are for sale, and then pose as potential buyers. When they ask the seller to justify the sales price based on the revenue, the sellers all the time very helpfully explain how they keep two sets of books and show them the "real" books so that they can get the sales price they think they deserve. Good times ensue.

36. spike Posted: June 04, 2012 at 03:16 PM (#4147874)

Wow - round table interview that pretty much calls out everyone involved

http://blogs.wpri.com/2012/06/03/watch-newsmakers-with-davis-and-sliwinski-on-38-studios/

37. Randy Jones

Posted: June 04, 2012 at 03:28 PM (#4147890)

So, some good news related to this mess. It looks like a bunch of the people who worked at Big Huge Games(the studio that was purchased by 38 Studios and actually made Kingdoms of Amalur) are being hired by Epic Games, who is starting a new studio with the former BHG people in Baltimore(where BHG was located). link

38. smileyy Posted: June 04, 2012 at 03:49 PM (#4147922)

Good engineers who ship stuff (I guess that's part of being good, but I wanted to emphasize) are always in demand.

39. gef the talking mongoose Posted: June 04, 2012 at 03:52 PM (#4147923)

Those funds compliment a generous $75 million

Dear Idiot Writer:

Please learn the difference between "compliment" & "complement."

Sincerely,

People who know how to read & write

40. spike Posted: June 07, 2012 at 02:13 PM (#4150920)

US Atty, RI State police, state AG and FBI have all opened investigations.

http://blogs.wpri.com/2012/06/07/us-and-ri-law-enforcement-open-38-studios-investigation/

"Curt Schilling owns more than 10% of 38 Studios LLC’s equity, according to court documents. The former Red Sox ace founded the video game company in 2006 as Green Monster Games and moved it to Rhode Island last year in exchange for a $75 million loan guarantee.

Separately, federal and state law enforcement officials confirmed the launch of a formal probe into 38 Studios and its efforts to secure Rhode Island tax credits to remain afloat.

“The state police, the attorney general’s office, the U.S. Attorney’s office and the FBI are opening an investigation into 38 Studios, both the money that came from the state as well as the money that came from Bank Rhode Island,” Rhode Island State Police Col. Steven O’Donnell told WPRI.com on Thursday afternoon."

41. Los Angeles El Hombre of Anaheim

Posted: June 07, 2012 at 02:47 PM (#4150978)

Piggybacking... Schilling's 38 Studios declares bankruptcy; law enforcement investigating

38 Studios has declared bankruptcy, according to a company spokesman.

The news comes as the head of the Rhode Island State Police tells The Providence Journal that state and federal authorities have launched an investigation into Curt Schilling's video-game company.

42. Los Angeles El Hombre of Anaheim

Posted: June 07, 2012 at 02:50 PM (#4150980)

Boston Globe has more details...

The company attached a 45-page list of creditors it owe -- from A Plus LLC in North Andover to Umbra software in Helsinki, Finland. The company reported it owed Rhode Island’s economic development agency $115.9 million, including interest and other payments over the life of the loan.

Workers are among those owed money. 38 Studios last paid employees on April 30 and missed the May 15 payroll before laying them off a week later, according to workers. In addition, about a half dozen employees could also be responsible for an additional home mortgage because of the company’s demise.

To encourage employees to relocate, 38 studios offered to help workers sell their homes when the company moved from Massachusetts to Providence and pay the mortgage in the meantime. But because of the sluggish real estate market, 38 Studios wasn’t able to sell all the homes.

As of Thursday, 38 Studios listed seven employees with unsold homes in Acton, Brockton, Maynard, Leominster, and Marlborough.

Glad it's not more.

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Auditors Visit 38 Studios HQ

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