Almost four years after it went belly-up, 38 Studios--the Kingdoms of Amalur: Reckoning developer founded by former Red Sox pitcher Curt Schilling--is back in the news. The Securities & Exchange Commission announced today in a news release that it has charged Wells Fargo and the state group formerly known as the Rhode Island Economic Development Corporation for defrauding investors with regards to the controversial $75 million loan that brought 38 Studios from Massachusetts to Rhode Island back in 2010.

　　The $75 million bonds were initially approved and given to 38 Studios with the promise that the company would relocate to Rhode Island create jobs in the state. It did that, but 38 Studios still failed, leaving taxpayers on the hook.

　　Here is a summation of the SEC's complaint that was filed in Providence federal district court (written by the SEC):

　　The RIEDC loaned $50 million in bond proceeds to 38 Studios. Remaining proceeds were used to pay related bond offering expenses and establish a reserve fund and a capitalized interest fund.The loan and, in turn, bond investors would be repaid from revenues generated by video games that 38 Studios planned to develop.The bond offering document produced by the RIEDC and Wells Fargo failed to disclose to investors that 38 Studios had conveyed it needed at least $75 million in funding to produce a particular video game.Therefore, investors weren't fully informed when deciding to purchase the bonds that 38 Studios faced a funding shortfall even with the loan proceeds and could not develop the video game without additional sources of financing.When 38 Studios was later unable to obtain additional financing, the video game didn’t materialize and the company defaulted on the loan.SEC enforcement director Andrew Ceresney said in a statement that the RIEDC and bond underwriters at Wells Fargo failed to provide a clear assessment of the risk involved with the $75 million bond.

　　"Municipal issuers and underwriters must provide investors with a clear-eyed view of the risks involved in an economic development project being financed through bond offerings," he explained. "We allege that the RIEDC and Wells Fargo knew that 38 Studios needed an additional $25 million to fund the project yet failed to pass that material information along to bond investors, who were denied a complete financial picture."

　　Additionally, the SEC charged Wells Fargo's lead banker, Peter M. Cannava, and two RIEDC executives, Keith Stokes and James Michael Saul, with "aiding and abetting the fraud."

　　"Stokes and Saul agreed to settle the charges without admitting or denying the allegations and must each pay a $25,000 penalty," the SEC said. "They are prohibited from participating in any future municipal securities offerings. The SEC's litigation continues against Cannava, Wells Fargo, and RIEDC."

　　Another segment of the SEC's complaint specifically claims that Wells Fargo and Cannava specifically misled investors in the following ways (again; descriptions written by the SEC):

　　Wells Fargo disclosed its bond offering compensation as a share of the placement agent fee plus a $50,000 payment from 38 Studios. No other fees or compensation to Wells Fargo were disclosed, and the bond placement agreement stated that no other money was anticipated.Investors weren't informed that Wells Fargo had a side deal with 38 Studios that enabled the firm to receive nearly double the amount of compensation disclosed in offering documents.This additional compensation, totaling $400,000 and paid from bond proceeds, created a conflict of interest that Wells Fargo should have disclosed to bond investors.Cannava was responsible for Wells Fargo's failure to disclose its additional fees.For more on this case, you can read the full SEC news release here.

　　The 38 Studios collapse began when Schilling was unable to keep up on debt payments to the state of Rhode Island for the aforementioned $75 million dollar loan to the developer. After that, the government assumed ownership of the company and shut it down. The government then filed a lawsuit against Schilling and other architects of the state's loan to the studio.

　　At an auction in December 2013, 38 Studios properties Rise of Nations and Rise of Legends were purchased, but Kingdoms of Amalur and the MMO Copernicus were not picked up. Subsidiary Big Huge Games, which was closed amid the 38 Studios bankruptcy, was resurrected by co-founder Brian Reynolds.

　　In September 2015, the Rhode Island Superior Court released thousands of documents and deposition transcription excerpts pertaining to the loan agreement.