SALT LAKE CITY — A self-described "cause capitalist" who created a popular sandwich shop agreed to pay a $150,000 fine to resolve allegations that he misrepresented the financial success of The Falls events centers he owns in Utah and four other states.
The Securities and Exchange Commission filed a complaint in federal court Thursday against Steven L. Down.
In addition, the SEC filed a consent agreement in which Down neither denies nor admits the allegations but agrees to pay the civil penalty and refrains from violating federal securities law on making untrue statements to obtain money or property. A judge must approve the agreement.
"The Falls’ own accounting records indicate that, from inception through September 2017, the event centers have never been profitable on the basis of generally accepted accounting principles," according to the complaint.
Down, 60, of Draper, opened his first events center in St. George in 2013 and now has eight in Utah, California, Colorado, Arizona and Oregon, the last one opening in March 2017. He has raised $120 million from about 300 investors for The Falls since 2011, the complaint says.
On his website, Down is described as a "cause entrepreneur" and "cause leader" who has started several businesses, including Even Steven Sandwiches, which donates money to a nonprofit organization for every sandwich sold.
In a statement Thursday, Even Stevens distanced itself from Down, saying he is a founder and one of many investors but has no role in the day-to-day management or operations of the company.
"Even Stevens Sandwiches is separate in ownership and operation from The Falls Event Center, was never a target of the SEC’s investigation, and is not named in today’s filing," according to the statement.
Down told prospective investors that the event centers, which are rented for parties or weddings, each earns a $350,000 profit per year, the SEC says.
Starting in mid-2016, according to the complaint, Down's executive team told him the centers were not making money and the business model was unsustainable due to $78 million in outstanding promissory notes.
"Down was at least negligent in making representations to investors regarding the profitability of individual event centers," the complaint says.
Attempts to reach Down by email and telephone were unsuccessful.