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.

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