On May 10, 2018, the Securities and Exchange Commission filed a complaint in the U.S. District Court for the District of Utah against The Falls Event Center, LLC (The Falls), a Utah limited liability company, and its CEO Steven L. Down of West Jordan, Utah (Down) for making material misrepresentations to investors concerning the profitability of certain of The Falls' event centers.

As alleged in the SEC's complaint, The Falls builds and operates small event centers. Since 2011, The Falls and Down raised approximately $120 million from more than 300 investors from the offer and sale of, among other things, convertible secured promissory notes. According to the complaint, Down solicited investments in The Falls by making presentations to groups of professionals during continuing education seminars that he sponsored. In his presentations, Down represented that some or all of the event centers were and continued to be profitable. The complaint alleges that certain of these representations to investors were untrue.

According to the complaint, from the first half of 2016 forward, members of The Falls' executive team informed Down that the event centers were not profitable. In addition, they informed Down that his event center model was unsustainable because of the millions of dollars owed to investors and to the event center mortgage holders.

In addition, The Falls' own accounting records, which Down received regularly from the Falls' CFO, indicate that, from inception through September 2017, the event centers were never profitable.

Without admitting or denying the SEC's allegations, The Falls and Down have consented to the entry of a final judgment permanently enjoining them from future violations of Sections 17(a)(2) of the Securities Act of 1933. Down has also agreed to pay a civil penalty of $150,000.

The SEC's investigation was conducted by Scott Frost, Alison Okinaka and Cheryl Mori of the Salt Lake Regional Office, and the litigation will be led by Amy Oliver and Daniel Wadley.