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SALT LAKE CITY — The owner of the Falls Event Center says the Securities and Exchange Commission pulled a “bait-and-switch” with the civil complaint against him along with a final judgment signed by a federal judge Friday.
“We never consented to such allegations listed in the complaint and look forward to defending each and every allegation before a judge,” Steve Down said in a statement Friday. “We are outraged by the bait-and-switch committed by the SEC.”
The SEC alleged Down, of Draper, misled potential investors about the profitability of eight events centers, which can be rented for weddings and parties, in five states, including two in Utah — one at Trolley Square in Salt Lake City and the other in St. George. The company’s own financial records show the company never made money, according to the complaint.
In addition to the complaint, the SEC filed a consent document Down signed last December and a proposed order for final judgment calling for him to pay a $150,000 fine and refrain from violating federal securities law on making untrue statements to obtain money or property.
U.S. District Judge Jill Parrish approved the agreement and closed the case late Friday.
John Neubauer, the Falls corporate general manager, said the company intends to challenge the court order, though it was unclear what avenue it would take.
"What (the SEC) offered us back in December is completely different than what they filed in the court. We feel that we were wholly abused," he said.
Down’s attorney sent a letter to the SEC saying the complaint doesn’t reflect the negotiations leading to the consent decree and is unacceptable.
“The complaint is literally a death knell for the events center and Steve Down’s efforts to raise money for his businesses, which we assume you know,” according to the letter.
Related
SEC alleges Utah 'cause capitalist' misrepresented event centers' earnings
A self-described "cause capitalist" who created a popular sandwich shop agreed to pay a $150,000 fine to resolve allegations that he misrepresented the financial success of The Falls events centers he owns in Utah and four other states.Down, a self-described “cause capitalist,” started several businesses, including Even Steven Sandwiches, which donates money to a nonprofit organization for every sandwich sold.
Down told prospective investors that the event centers each earns a $350,000 profit per year, according to the SEC. Starting in mid-2016, Down's executive team told him the centers were not making money and the business model was unsustainable due to $78 million in outstanding promissory notes, the complaint says.
Down acknowledged to the Oregonian newspaper last September that his business had suffered setbacks, particularly in fundraising. He owns an events center in Oregon as well as an aviation museum and adjacent water park.
In his statement, Down said the Falls will continue to conduct business as usual.
“This is in no way a death knell to our company despite the recklessness and false allegations by the SEC,” he said.
