Friday, September 13, 2019

Oshkosh arena developer is accused of securities fraud in civil lawsuit that reveals plans for casino, hotel

A new lawsuit reveals plans to build a casino in conjunction with the Menominee Nation Arena.


By Miles Maguire

A local businessman has accused the developer of the Menominee Nation Arena of securities fraud and misrepresentation, while also revealing some of the inner details of the project, including a long-term plan to build a hotel and casino on the south side of Oshkosh.


Eric Hoopman, who owns Black Teak Properties and started a technology company called DealerFire, filed this latest action Sept. 11. It names Greg Pierce, the president of Fox Valley Pro Basketball Inc., which is referred to as FVPB in the lawsuit.

Last month Hoopman sued Fox Valley, demanding the repayment of a $1 million loan and helping to set off a chain reaction that led the company to file for bankruptcy protection. Hoopman has now shifted his attention to Pierce personally as well as several of his employees, including Deb Allison-Aasby. 

Allison-Aasby is a member of the Oshkosh Common Council who served as senior vice president of the arena for a year and also worked as a financial adviser at another company owned by Pierce, Windward Wealth Strategies Inc. Her emails included in the court file show her trying to coax Hoopman into becoming a permanent investor in the arena. She is referenced in the lawsuit but is not named as a defendant.

Pierce “made material misrepresentations about [Fox Valley’s] gross income and projected profits, indicating that FVPB was projected to have over $3.5 million in gross income in 2018,” the lawsuit says. “Upon information and belief, such representations were false as FVPB did not have this level of gross income in 2018.”

The suit also names Walter Koskinen, chief compliance officer at Windward. “Koskinen made representations that they were in the process of receiving a loan guarantee from the NBA, the Milwaukee Bucks organization and/or the NBA G League president.” The G League is the NBA’s minor league, and its president at the time was Malcolm Turner, now athletics director at Vanderbilt University. 

“Pierce and Koskinen knew, or should have known, that their material misrepresentations were untrue,” the lawsuit states. 

The suit includes one count of securities fraud and four counts of misrepresentation.

One of the exhibits in the file is an Aug. 18, 2018, email from Pierce to Hoopman’s lawyer. The subject line is “Project Update - Team Equity - Hotel/Casino Phase 2.” 

“We are finalizing a plan to explore development opportunities with Menominee Tribe of Wisconsin for a hotel/casino and entertainment district,” Pierce wrote. “With our partnership with the Menominee Nation we think we can develop a hotel and casino property that will be highly valuable to our shareholders.” 

The idea of building a casino near the arena has been widely rumored, but this is the clearest indication to date of how far along those plans were.

Douglas Cox, chairman of the Menominee Indian Tribe of Wisconsin, was not immediately available for comment.

City Manager Mark Rohloff said he had heard the rumors about a casino plan but no formal proposal ever came forward. He also noted that casino approvals are a "long process" that involve multiple levels of review, including by the federal government.

The city has been working on creating an entertainment district in the area of the arena. But those plans have not been completed, Rohloff said.

Another exhibit in the lawsuit is a promotional flyer for "invitation only" meetings of investors in September 2017. At that time Pierce was planning to increase the price of shares by 15 percent based on new financial projections.

At the time, he expected gross income to jump threefold, from $836,000 that year to $3.6 million in 2018. He also projected payment of a 10 percent dividend and "no long-term debt." 

The emails between Hoopman and Allison-Aasby date to March 2018, a few months after Hoopman had extended the $1 million loan while Pierce and his associates worked to come up with permanent financing. 

Hoopman’s message indicates that he was under the impression that the long-term funding issue was close to being resolved. “If you guys need to pay off the loan early, I totally understand, and Greg mentioned that might be the case when we initially discussed the deal.” 

Allison-Aasby wrote back, saying that the plan was to get a long-term loan and then refinance loans like Hoopman’s, which carried an 18% interest rate. 

“I was hoping we could talk about the day to day operations and the successes we are having,” she wrote. “Ultimately, Eric, I want to discuss the possibility of making your investment in the arena permanent.”

Allison-Aasby denied that there was any conflict of interest between her job working for the arena and her role as a member of the Common Council.

"I would say if there were anything between Fox Valley Pro and the city, I had nothing to do with it," she said. "Nor did I ever vote [on any matter before the council] regarding Fox Valley." She stressed that she was an employee of the arena and was carrying out assignments as directed by "ownership." 

Other individuals named in this story were not immediately available for comment.

Tuesday, September 10, 2019

Builder throws another wrench into financial reorganization plans for Oshkosh arena

The Menominee Nation Arena is best known as the home of the Wisconsin Herd.
By Miles Maguire
The company that built the Menominee Nation Arena is arguing that it is the rightful owner of promised public subsidy payments, throwing another wrench into the financial reorganization plans of the facility’s owner.

In a Sept. 6 bankruptcy court filing, Bayland Buildings Inc. says that arena developer Fox Valley Pro Basketball Inc. signed over its interest in the city’s tax increment financing (TIF) payments. The money was promised as partial collateral for the $13 million mortgage loan that Bayland extended when Fox Valley was unable to pay its construction bill in 2018.

Bayland helped to push the arena developer into bankruptcy court last month by asking that a receiver be appointed to run the facility, best known as the home of the Wisconsin Herd minor league basketball team.

Fox Valley has asked for court permission to work out its debts, saying that it would use the city’s TIF payment and other revenues to pay operating costs in the meantime.

Last week the city filed a motion to hang on to the first $430,000 TIF payment, which is due Nov. 1. According to City Manager Mark Rohloff the money should go to whatever entity ends up running the arena, not necessarily the current owner.

If Oshkosh is told to make the payment so that the arena can continue operating, the city wants Fox Valley to put up a bond to cover the amount so that the money will be used to keep the facility running on a permanent basis and not just to satisfy overdue bills.

Rohloff did not seem too concerned about Bayland asserting its claim over the TIF money. “It demonstrates the need for the court to act on our motion,” he said.

Bayland’s filing extends beyond the TIF money to other contracts that Fox Valley entered into before it petitioned for Chapter 11 bankruptcy protection. Chapter 11 is a legal process that is intended to give a company breathing room with creditors while it works out a way to pay off its debts.

The building contractor says that money the arena earns from new deals should belong to the arena. But Bayland says it has the right to money that comes in under contracts that were signed before the bankruptcy filing, which could include rental income and advertising sponsorships as well as the TIF.

“Bayland does not consent to the debtor’s continued use of the proceeds of the prepetition contracts, which constitute Bayland’s cash collateral, absent assurance of adequate protection,” the company said in a legal filing. “Debtor’s use of the proceeds of the prepetition contracts will immediately and irreparably harm Bayland’s interest in its collateral.”

In other legal action, Greg Pierce, the owner of Fox Valley, has denied claims made by Bayland about his financial stewardship of the arena. He also called for Bayland’s foreclosure suit to be dismissed.

Similarly Pierce has filed a response to a lawsuit from his former attorney over nonpayment of bills asking that it be dismissed. He said he and his former lawyer modified their legal services agreement “such that plaintiff’s claim for payment is barred in whole or part.”

Efforts to obtain comment from Bayland and from Fox Valley’s current and former lawyers were not immediately successful.

Monday, September 9, 2019

Around the Winnebago courthouse: 10 years in wild radar stop, daily heroin runs to Milwaukee


By Miles Maguire
A routine traffic stop that turned into a potentially deadly encounter between two Oshkosh police officers and a driver who tried to use her car as a lethal weapon has led to a 10-year sentence for a former Boyd Street resident.

Caitlyn Nicole Heinz, 28, pleaded guilty in February to two counts of recklessly endangering safety, eluding an officer and causing a hit-and-run injury. Her sentence was finalized Sept. 5 with a modification to one of the overlapping terms she had received.

The April 2018 incident began when an Oshkosh police officer working radar clocked a car going 42 in a 30 mph zone near South Main Street and West 16th Avenue, according to the criminal complaint.

After executing a traffic stop, the officer was unable to identify the driver, who “appeared to be giving false information,” and he asked for backup. A second policeman arrived, who questioned Heinz further before the two officers decided that they would need to remove her from the vehicle.

As one officer tried to unlock the car’s door, the driver became “verbally combative” and grabbed for the transmission gear lever and “placed it all the way into drive,” police said.

The officers reached into the car, and Heinz “then accelerated quickly at a high rate of speed” with both policemen still inside.

One officer was able to disentangle himself within 15 feet and landed on the ground. But the other officer said he “ended up with my back against the steering wheel” using one hand to try to control the gear shift and “the other attempting to combat the female driver.”

At this point Heinz “latched onto my middle right finger with her mouth as I was yelling at her to stop, and she continued to bite even harder, moving her head back and forth as if she was trying to bite off the top of my middle right finger,” the officer said.

The driver put the car into reverse and drove it towards the other officer. The first officer was still in the car, with his back to the front windshield, which he struck and broke with his head as the car lurched around in a circle, according to court papers.

The second officer was able to dodge the car the first time, but as it circled around a second time he was struck by the driver’s side door, which was still open. Heinz continued to reverse until she hit a house on the east side of Doty Street, police said

“At that point things seemed to be slightly fuzzy,” the first officer said. The second officer then drew his firearm but realized he could not shoot at Heinz with his fellow officer still in the car. He ran up to Heinz’s vehicle, which she then floored, reaching an estimated speed of 30 to 40 mph, while she drove back across Doty Street until she struck the porch of a house on the other side, according to court records.

After she hit the first house, Heinz stopped biting the officer who was in the car with her. He was able to punch her in the face several times but when she accelerated, he “ended up physically flying back into the backseat of the vehicle,” he said. “I was actually almost upside down when we had finally come to a stop.” At that point the car had blown several tires, according to the criminal complaint.

Heinz ran from the scene but was caught by other officers after a short chase.

Judge Teresa Basiliere heard the case with Adam Levin as the prosecutor of record and Brianne Patzer and Kristina Sanders-Brown representing Heinz.

***

A 27-year-old Oshkosh woman, described as making daily runs to Milwaukee to pick up heroin for sale, was sentenced Sept. 6 to 18 months in prison after pleading no contest to drug charges from two incidents earlier this year.