Commerce Corp. beefs up defense team in 38 Studios SEC case

Max Wistow signs on as defense counsel

Max Wistow, seen on the right, is now part of the defense team for the RI Commerce Corp.

PROVIDENCE, R.I. (WPRI) – The attorney who brought the state lawsuit against architects of the 38 Studios deal has now joined its defense against fraud charges leveled by the U.S. Securities and Exchange Commission.

In a “notice of appearance” filing on Thursday, the name of prominent attorney Max Wistow appeared on the docket, informing federal court in Providence that he would be representing the R.I. Commerce Corporation.

The SEC, which regulates the investment world, filed a civil complaint in March alleging the economic-development agency and Wells Fargo defrauded investors when they sold $75 million in bonds in November 2010 to fund 38 Studios, the game company founded by former Red Sox ace Curt Schilling.

Reached by phone, Wistow confirmed he had been retained by the state as part of the defense team and said he “will be working together with New York counsel that specializes in SEC work.”

“The case is new and I really can’t comment very much on it,” Wistow said. “We need to study it a bit more.”

Wistow will be intimately familiar with many of the details mentioned by the SEC, as the federal civil complaint parts of the suit he brought against some of the architects of the deal in November 2012. That suit is scheduled to go to trial this September.

As WPRI.com first reported in 2013, the state hired attorneys from the law firm Cohen & Gresser LLP that year to help respond to the inquiries from the SEC over a five-month period.

Cohen & Gresser describes itself as a boutique Manhattan law firm whose specialties include defending corporations from the SEC and other top regulators.

At the time, the EDC had paid the firm $102,615 in five installments, documents showed.

In the March civil complaint, SEC lawyers argued that the document provided to 38 Studios bond investors was “a misleading half-truth” due to the “recklessness or negligence” of EDC and Wells Fargo employees. The complaint argues they failed to make clear the company was not going to net enough money from Rhode Island to finish its game project.

U.S. District Court Judge John “Jack” McConnell has been assigned to the SEC case. A hearing has not yet been scheduled.

Two other attorneys from Wistow’s firm also signed on to the Commerce Corporation’s defense team: Benjamin Ledsham and Stephen Sheehan.

When the civil case was announced, Commerce spokeswoman Kayla Rosen said the agency was reviewing the SEC civil complaint but sees the allegations as “consistent” with the lawsuit brought by the state in November 2012.

“The corporation will continue to work toward its goals of recouping money for Rhode Island and holding the defendants in the Commerce Corporation’s lawsuit accountable,” Rosen said at the time.

Ted Nesi contributed to this report.

Tim White ( twhite@wpri.com ) is the Target 12 investigative reporter for WPRI 12 and Fox Providence. Follow him on Twitter: @TimWhiteRI

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