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.

Friday, September 6, 2019

Oshkosh moves to hold on to incentive payments coming due to Menominee Nation Arena owner

The developer of the Menominee Nation Arena has filed for bankruptcy protection.

By Miles Maguire

The city has taken legal action to avoid making incentive payments to the current owner of the Menominee Nation Arena.


“Fox Valley Pro Basketball Inc. … is eyeing tax increment financing funds to execute a Hail Mary attempt to avoid liquidation,” the city said in a motion filed Friday. 

“Unless the debtor demonstrates a credible ability to satisfy the requirements for assuming its agreement with the city, the court should not require the city give the debtor hundreds of thousands of dollars that would otherwise be available to a successor-in-interest that will operate the arena as a financially viable property."


The city has agreed to pay Fox Valley $5.5 million, with the first installment, about $430,000, to be disbursed Nov. 1. But in a 127-page filing, the city argues that it should not have to turn over this money because its agreement with the arena developer has not been fully carried out.

Greg Pierce, the president of Fox Valley, was not immediately available for comment. Mayor Lori Palmeri declined comment. 

The city wants Fox Valley to act by Oct. 31 to hold up its end of the bargain. This would entail paying costs incurred by the city, some of which are past due; satisfying existing liens; resolving existing loan defaults; and providing assurances about future performance. 

If the city is successful in holding on to the payments, it would undermine the arena developer's plan to reorganize under Chapter 11 of the bankruptcy code. The developer filed for bankruptcy protection Aug. 19, and a hearing is scheduled in the case Oct. 2. 

According to legal papers, the single largest revenue source that the arena is looking at from October through January is the tax incentive payment that could arrive in November.

As an alternative to an order allowing it to hold on to the money, the city said it should get some form of financial protection for payments that it makes. "If the City is required to pay this year’s ... payment to the debtor, the court [should] also require the Debtor to post a bond or provide other adequate protection for the city’s interest in the ... payment."

The developer owes more than $20 million to a variety of suppliers and lenders. Its largest creditor is Bayland Buildings Inc., the general contractor for the project, which is owed $13 million. Fox Valley also has a large number of individual shareholders, many of them from Oshkosh, who could lose their investments if the company goes under.

"We want to make sure the development succeeds. That's why we filed the motion," said City Manager Mark Rohloff. "Whoever ultimately owns the arena is who we want to help."

The incentive payments, called tax incremental financing or TIF, were promised to offset extraordinary development costs associated with the arena, including city infrastructure and environmental remediation. The public money should go to support the development and not the developer, Rohloff said.

The filing calls into question the developer's ability to move ahead. The arena "apparently only has just enough money to operate before accounting for its millions of dollars of debt and special assessments," the city said. It also criticized the terms of loan the arena has received from Windward Wealth Strategies, a local investment firm that is also headed by Pierce.

Without this intervention, the city faced the possibility that the incentive payments would be used to pay off the Windward loan.  "For the funds from the TIF to go to settle a bankruptcy, that’s not the purpose of the TIF incentive," Rohloff said. The money was always intended to support the arena, "not to pay off a popcorn vendor or anything like that."

The city's motion raises doubts about the developer's actions and representations. The filing cites a 2017 development agreement with the city in which Fox Valley said it had  “sufficient funds through equity and debt financing sources to continuously operate, maintain and fulfill" the arena project.

In addition "there are serious questions about how the debtor spent the $19.7 million it reported it raised to the Securities and Exchange Commission," the city said. 

The city itemized the amounts it is owed by the arena: 
  • Police and Fire...$12,659. 
  • Utilities...$7,609. 
  • Miscellaneous ... $173.
  • Attorney's fees ... $24,294. 

Monday, September 2, 2019

Around the Winnebago courthouse: meth cases, eluding police, passing out at Walmart parking lot

By Miles Maguire
A 35-year-old Oshkosh woman, who according to court papers “allows her 16-year-old son to sell marijuana, but not harder drugs,” pleaded guilty Aug. 30 to a charge of dealing methamphetamine from a house on West 8th Avenue.

Ivy M. Hill, who had seven other charges dismissed but read into the record, was sentenced to 30 days in jail with work release. She was also given three years’ probation and ordered to pay back as much as $1,245 in buy money that was used in undercover drug deals. (The exact amount will depend on whether previously convicted codefendants contribute to the reimbursement.)

According to court documents, Hill arranged for an undercover officer to buy 1.4 grams of meth on Oct. 8, another 3.87 grams of meth on Oct. 10, 3.9 grams of meth on Oct. 16, and 5.5 grams of meth of Oct. 24. On Oct. 19, court papers state, Hill provided three ecstasy pills and six baggies of marijuana on consignment to an undercover officer.

Hill was represented by Matthew Goldin. Stephanie Stauber appeared for the state before Judge Teresa Basiliere.

***

A 29-year-old Oshkosh man who ran two stop signs on Division Street “at a high rate of speed” and then blasted out of the parking lot behind the Magnet Bar when confronted by an officer pleaded guilty Aug. 26 to a charge of using a vehicle to elude police.

Andrew D. Erdmann, who lives in the 500 block of Washington Avenue, “appeared to be heavily intoxicated or under the influence of something” when stopped Dec. 17, according to court papers. For safety reasons, Oshkosh police did not attempt to pursue him. He was driving a white Ford F150 and was later apprehended by Neenah police.

Judge Karen Seifert gave Erdmann 12 months of probation, and a 90-day jail sentence was stayed. Erdmann was represented by Nila Robinson. Anthony Prekop appeared for the state.
***

A 48-year-old Oshkosh man who stopped paying child support in 2013 was sentenced Aug. 26 to 60 days in jail with work release.

Dennis E. Veach, of Sherman Road, pleaded no contest in July to a criminal complaint that said he was $26,971 in arrears as of June 2018.

Veach appeared before Judge Barbara Key. He was represented by Steven Smits, and Amanda Nash represented the state.

***

A 28-year-old Ripon man who was found passed out in a car at Walmart on Washburn Street pleaded no contest Aug. 28 to a charge of methamphetamine possession.

When police roused him, Devon B. Jansen “did not have any idea what time of day it was, or how he had gotten to Walmart,” police said in a criminal complaint.

Police found a scale, pills and six grams of meth in various vents in Jansen’s car, according to court documents. Police said Jansen first denied there were any drugs in his car. But after he was told what had been located, Jansen told police, “Oh, I forgot that was in there.”

Judge Karen L. Seifert imposed and stayed a 60-day jail term conditioned on counseling and attendance at Alcoholics Anonymous. A second charge of possession of a controlled substance was dismissed but read into the record. Ryan Ulrich represented Jansen, and Adam Levin appeared for the state.