The order refers to former Wenatchee Mayor Dennis Johnson as the former mayor, but not does not identify him by name. Only Executive Services Director Allison Williams is named in the document because she signed the statement to potential investors.
- In the spring and summer of 2005, Rick Kozuback made a number of presentations to interested groups in Wenatchee about a multipurpose events center.
- In August 2006, the city of Wenatchee hired an independent consultant to review Kozuback’s financial projections for such a center. The consultant concluded that the projections were overstated by up to 25 percent.
- In May 2007, the consultant was again asked to review Kozuback’s financial projections for the center. The consultant questions unexpected increases in operations and maintenance costs and management fees and unexplained “substantial” increases in food and beverage revenue projections.
- On May 24, 2007, the City Council voted to proceed with construction of the arena in a split vote, with Johnson casting the deciding vote.
- In June 2008, Global revised its financial projections for the arena, lowering the annual revenue projections from $1.2 million a year to about $370,000 a year, based on weak sales for things like luxury suites, premium seating, advertising and naming rights. Afterward, the bond underwriter advised city officials that the new revenue projections may make it difficult to sell bonds.
- Shortly after receiving the new revenue projections, Williams and Johnson “urged” Kozuback and Global to provide more optimistic numbers. “The former mayor and Williams held a conference call with Kozuback and Global’s financial consultant, during which the former mayor made an impassioned argument that Global’s projections had not been sufficiently optimistic, that they knew the local citizens better than Global, and those citizens would ultimately support the Regional Center even though Global was experiencing weak ticket sales and other troubling indicators regarding anticipated revenues,” the SEC order reads.
- On July 1, 2008, Global again revised its financial projections, this time forecasting annual revenues of about $840,000.
- The official statement to investors included only Kozuback’s revised financial figures and did not include the consultant’s concerns that those numbers were inflated. Although the consultant did two independent reviews of Global’s numbers, the statement to potential investors said there was no such independent review of the numbers.
- The official statement to investors also did not say that the city’s obligation to guarantee the debt was limited by its debt capacity, which was $19.3 million at the time. A paragraph in a preliminary version of the statement that highlighted the city’s limited debt capacity was deleted from the final version. However, there was a second reference to the limited debt capacity “hidden in an appendix in an “otherwise generic description” of debt, the SEC concluded.