Columbia City Cinema has been struggling for some time now, and owner Paul Doyle has been looking for creative solutions to save the well-loved theater in the heart of the Rainier Valley.
So when he discovered the Small Company Offering Registration (SCOR) program through the Washington State Department of Financial Institutions (DFI), he thought he’d done just that.
According to DFI, SCOR offers an optional method of registration that utilizes a question and answer disclosure document and enables corporations and limited liability companies (LLCs) to raise up to $1 million during a period of up to 12 months through the sales of securities to the public.
Earlier this fall, Doyle started selling stock in an effort to raise $50,000 by the end of the year, and according to him – it was actually working.
“A lot of people, the smart and the generous, have already purchased stock,” he said in an email on Dec. 2. “So far we have about a hundred stockholders. We’ve made a good start but we have a ways to go. We need to sell about a thousand shares a day.”
Then, last week DFI’s Securities Division suddenly denied the cinema’s application, ordered him to halt stock sales and threatened to impose fines, saying in a press release that Doyle failed to provide potential purchasers of its stock with material information regarding the offering, such as financial statements to substantiate claims that the cinema has a “successful track record,” specific use of investor funds, and the risks inherent in purchasing the stock.
Doyle says “there is no merit to the states allegations.”
“We weren’t selling stock,” he said. “I was taking reservations for stock. There was no stock to sell because the way the program is designed the application becomes the stock offering once approved. Potential buyers must read and sign it in order to buy. I may not be an important state official, but I am smart enough not to sell stock before approval even if I had it to sell.”
He added that it’s hard to understand the state’s reasoning, and that his attorney is working on getting the problem resolved.
Columbia City Cinema – located at 4816 Rainier Ave. S. – is an RVP sponsor. Photo/do communications
Related:
- State Orders Columbia City Cinema to Halt Stock Sale, May Impose Fines (12/7/10)
- Columbia City Cinema Must Raise $50K by January 1 or Close (11/18/10)
- Columbia City Cinema Fights to Survive (11/1/10)
Who to know, where to eat & what to do in one of America’s most diverse zip codes!
{ 9 comments }
Wow. Paul is working so hard to have a successful business and regulators keep undermining it.
The state form seems straightforward enough and any reasonable small business should be able to answer the questions.
http://www.dfi.wa.gov/sd/scor.htm
As for “taking reservations” I’m not sure how this is different from selling. Most businesses call that booking an order and hence its a sale.
I want the Cinema to be successful but this path doesn’t seem to be the right one.
Of course he “failed to provide potential purchasers of its stock with material information regarding the offering.” We have all been duped by this shyster over and over with no accountability on his part. During the last begging campaign I wrote him a letter saying that I would donate if he provided some sort of details on how much was raised and what it was being used for and I never even got a reply! He has probably squirreled the money away in some offshore account!
And Wendy- I have a business here and I play by the rules but it is a little slow this Winter, could you please open your checkbook and make a donation to my for-profit business? You see, after several years of being open I got away with breaking fire codes by lying on my business application. Gosh, how was I to know I needed smoke alarms in an old wood framed building? There hasn’t been a fire at my business that I know of, so there clearly won’t ever be one, jeez! Maybe I can cook up a scheme to sell stock in my failing business, I’ll just never tell the investors that it is failing, maybe that will work…
I agree with Bob. Paul should be all the way real with people when asking for that kind of money. We want to see this community thrive as much as possible, but no one wants to get played for sucker.
Please read Paul’s story in his own words here:
http://southendseattle.com/?p=5239
The community may not like the way things have been handled, but he is doing his best to be straighten it all out.
I’m also someone that donated during one of the asks in the past. Seems like it’s time to let this version of the cinema go and let another owner or group give it a fresh go with a newly vetted business model.
I love that there are two very contradictory quotes in this article – that they had sold stock, and that they were not selling stock.
As far as Paul saying that there are no merits to the state’s allegations? How about backing that up?
Read the notice from DFI:
http://www.dfi.wa.gov/consumers/news/2010/columbia-city-cinema.htm
The cinema has $150,000 in debt and is putting out a public offering of $450,000. Where is this extra $300,000 going Paul?
All we hear about is how it’s everyone’s fault but Paul’s. Doing work without proper inspections creating a fire hazard? Paul’s answer is that other people do it! Why are they picking on me? Saying that you’re selling stock and then being told to cease and desist? Well I never sell stock!
Here’s my proposal. Create a new company, raise the same $450,000 and open up a cinema. With new management, of course.
The Neptune in the U-district is turning to a live theater act mode of operation. It will be interesting to see how it does with this business model.
There I go thinking half thoughts again.
One wonder if the Columbia City might be able to partner with another theater (Neptune?) and pick up acts from the other theater after their performances there have run their courses.
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