Roseville begins tax foreclosure on The Falls Event Center
It’s been nine months since Roseville city and business leaders gathered for the ribbon cutting of The Falls Event Center at 240 Conference Center Drive, and a bleak future is already unfolding for the company.
Roseville City Council is scheduled to vote tonight as part of its consent calendar to foreclose on $9,330.66 in Mello Roos fees, or special property taxes in a Community Facilities District, which have been delinquent since April 10 for the property. The center also became delinquent Dec. 12 on $26,105.60 in property taxes, according to Placer County tax records and a county spokesman.
Roseville spokeswoman Megan MacPherson said Monday the city isn’t currently in discussion with The Falls Event Center.
Dennis Kauffman, the city’s director of finance, declined to elaborate but confirmed the city could take ownership of the center — which has an assessed value of $4.3 million and has earned rave Yelp reviews — if the owner doesn’t pay the delinquent Mello Roos.
“That could be the end result, but the hope is that they’ll pay,” said Kauffman, noting that the city has retained a Sacramento-based legal firm to assist in the process.
The Falls Event Center LLC, a company based near Salt Lake City that operates a string of high-end events centers around the country, has deeper problems elsewhere than Roseville, such as owing approximately $130,000 in late taxes for centers in Sacramento and Fresno counties, according to tax officials there.
The company has also been under investigation by the U.S. Securities and Exchange Commission, according to SEC documents obtained by The Press Tribune.
Company founder Steve Down spoke briefly Tuesday with The Press Tribune, saying he was unaware of tax irregularities at his Roseville center. After being asked if he could be recorded, Down declined further questions, saying, “You can write whatever you want to write.”
Down had been all smiles at his Roseville ribbon-cutting on March 1, discussing how he wanted to build a hotel near his new center to benefit the homeless.
“My legacy is what I call ‘cause capitalism,’” Down said at the time, noting he’d developed his philosophy after facing personal adversity.
Down didn’t elaborate on this adversity.
As reported by The Oregonian in July 2016, the SEC accused Down in 1996 of operating a pyramid scheme through a different company he owned at the time. Though a judge ruled that evidence was insufficient to prove the allegation, Down agreed to a two-year ban from some securities-related activities.
"If you want to find something negative, it's the one and only negative thing that I'm aware of on the internet," Down told The Oregonian in 2016.
The Oregonian has since reported that the SEC subpoenaed Down and several of his companies in late 2016. An SEC order from October 2016 indicates that The Falls Event Center and related companies were being investigated for possible sale of unlicensed securities and using false or misleading information to make sales.
One investor, Mark Allen of Foster City, said he’d invested over $100,000 five years ago with The Falls Event Center due to Down’s appeals. Allen said he has seen no return on investment but eventually hopes to make five times what he put in.
“I’m still optimistic,” Allen said.
Down confirmed for The Oregonian earlier this year that the SEC had notified The Falls Event Center in June about evidence of wrongdoing and could launch enforcement action, though he denied the allegations.
An SEC spokesperson declined Tuesday to confirm or deny investigations, which is standard for the agency. The SEC catalogues enforcement actions for 2017 on its website, though nothing was listed for Down or The Falls Event Center.
A former high-ranking company official, who declined to named, was skeptical that the company would be able to operate much longer, given its legal and financial problems.
“I can’t understand for the life of me why the SEC hasn’t taken action yet,” the former high-ranking company official said.
The former official dismissed Down’s talk of building a homeless hotel.
“They don’t have the money to pay a $500 landscaping bill in Roseville, let alone a hotel,” the former official said.
The former official said the Roseville center has been one of The Falls Event Center’s most profitable venues and that it has events booked for the next 12 to 18 months.
“The concern of course is that if something happens with the business, they won’t be able to fill those,” the former official said.