Utah entrepreneur Steve Down was supposed to deliver the Evergreen Aviation & Space Museum to a new era of financial stability. Instead, the would-be savior of one of Oregon's biggest tourist attractions has been besieged by bankruptcy filings and accusations of securities fraud.

The worst may be yet to come. The Oregonian/OregonLive has learned that the FBI is taking a hard look at Down and his family of companies. Court documents show the criminal inquiry began as early as October 2017, and the case has progressed far enough that federal prosecutors have gotten involved.

Steve Down and his wife, Colleen. Steve Down Companies Courtesy of the Steve Down Companies

"I am aware of FBI inquiries that have taken place over the past year," Down said in an email to The Oregonian/OregonLive. "It is my understanding that my attorney will meet with the US Attorney's office sometime in October."

Brooks Pickering, a Utah-based consultant hired to help run The Falls Event Center, confirmed that a federal criminal investigation is underway.

The investigation creates more uncertainty for the home of the legendary Spruce Goose, billed as the largest aircraft ever built and famously flown only once — by Howard Hughes. Evergreen had cast its lot with Down in a 2016 restructuring, but the impact of Down's legal and financial travails goes way beyond the McMinnville museum. His companies have raised at least $130 million from individual investors.

From Eagle Point in southern Oregon, to Enterprise in the state's Northeast corner, to the Portland area, dozens of medical and dental workers poured portions of their retirement savings into Down's companies. Bankruptcy documents show that of the $97 million owed by Down's Falls Events Center, more than $12 million came from 34 Northwest dentists, doctors, chiropractors and other health-care professionals.

It remains unclear how much of their money, if any, those investors will get back.

"I'm not prepared to say it's a Ponzi scheme," said Mike Johnson, a Salt Lake City attorney representing Gil Miller, the consultant now running one of Down's bankrupt companies. "But obviously there are financial fraud issues involved here."

The downward spiral began in May, when the U.S. Securities and Exchange Commission accused Down of defrauding investors. Two months later, The Falls Event Center LLC — which owns several buildings at the aviation museum complex — filed Chapter 11 bankruptcy in July. Down relinquished control of the company, and it is now in the hands of an independent restructuring specialist.

High on the restructuring specialist's agenda: Investigating potential causes of action against Down and his management team on charges of fraud and breach of fiduciary duty, court documents show.

The bankruptcy has offered outsiders their first detailed look at Down's organization, which comprises at least eight disparate companies, all based in Utah. He liked to call himself a cause capitalist, an entrepreneur who cared about the higher good as much as the bottom line. His Even Stevens chain of sandwich shops, for example, claimed it provided a meal to a homeless person for every sandwich it sold. But behind the idealistic veneer, there were serious issues. Most of Down's companies were losing money and lots of it, according to court filings and interviews with investors and former employees.

At least three other smaller companies that were the legal owners of individual event centers also sought bankruptcy protection.

In an eye-opening deposition in the Falls Event Center bankruptcy case, the former chief financial officer of Down's organization, David Sullivan, said he became alarmed after attending one of the seminars the company conducted for potential investors. Sullivan, who is also Down's son-in-law, said he warned Down afterward to tone down the rhetoric, including his claim that the Falls Event Center was enjoying 35 percent profit margins.

The deposition transcript included this exchange between Sullivan and Laurie Cayton, of the U.S. Trustee's Office in Salt Lake City:

Sullivan: "So we had a bit of an argument about that, and I've probably spoken to him only twice since ... at family things."

Cayton: "Was there a reason that you did not feel comfortable — or you did not want to meet with investors anymore?"

Sullivan: "Yeah, I had been approached by ... I discovered that there was also a criminal investigation."

Cayton: "In addition to the SEC investigation?"

Sullivan: "Correct."

Cayton: "OK, was that something by word of mouth or were you approached by the FBI or someone else conducting a criminal investigation?"

Sullivan: "I was approached by the FBI."

FBI officials in Salt Lake City declined comment when asked whether the investigation remains active.

Sullivan quit soon after the FBI interview. He did not return phone calls seeking comment.

PORRITT'S STORY

David Porritt was hired as chief operating officer of Down's family of companies in 2016. His wife, Sandy, signed on to help run another Down company, CE Karma.

He told The Oregonian/OregonLive that he, too, had misgivings about what the organization was telling investors. He said he repeatedly urged Down to overhaul its corporate governance to disperse decision-making and increase transparency.

The quilt of businesses included the Falls Event Center, which rented space for weddings; CE Karma, which offered continuing education classes; Even Stevens, the sandwich chain; and Financially Fit, a financial education company. And Down made every major corporate decision for all of them, Porritt said.

In December 2016, Down informed Porritt he wanted to implement some of his recommendations and that he was promoting Porritt to make it happen. Soon after, Porritt learned that his boss had been subpoenaed by the SEC two months earlier.

Months of confrontation followed as Porritt said he repeatedly urged Down to be more transparent with investors.

He and his wife quit on March 29, 2017. "It was a cumulative thing," Porritt said. "He refused to even disclose the SEC probe to new investors."

Days later, Porritt himself was subpoenaed by the SEC and he said he told the securities regulators all he knew about Down's business practices. "I was happy to provide the SEC that information because I was unable to stop him."

THE NORTHWEST CONNECTION

Roseburg chiropractor Kiran Kaul and Grants Pass dentist Rick Miller have built successful health-care practices 70 miles apart. They have something in common beyond their Southern Oregon locations.

They both bet heavily on Down. Kaul invested $217,000 and Miller $1.4 million.

One Down company, CE Karma, offered cut-rate continuing education to the medical field. Doctors and dentists typically pay hundreds or thousands of dollars for these professional classes, but CE Karma offered them for as little as $35.

But the whole point was to get these well-heeled practitioners in the door, a captive audience for Down, who would stand up during intermissions and make the pitch for their investment capital.

"The cover was diabolical, going in with continuing education," Porritt said. "In hindsight you look at it, wow, what a devious plan. But it brought in a ton of money."

Kaul said he's written off the $217,000 he invested. He lost all hope when Down called him late last year pleading for more capital. "When you're asking a small-town guy like me for whatever I can come up with, that's desperation," Kaul said. "You could smell the fear."

Miller, meanwhile, is keeping the faith. "He's a good person," Miller said of Down. "The meetings we've had have all been extremely positive. All the investors believed him. "

MUSEUM PONDERS A POST-DOWN FUTURE

For the museum, Down's struggles present challenges and opportunities.

The museum was founded by Del Smith, longtime chief executive officer of Evergreen Aviation, a large private firm that at its peak employed thousands of people. Smith spent upward of $150 million building the museum and bringing in its centerpiece, the famed Spruce Goose.

But Evergreen Aviation went out of business and Smith passed away in 2014, plunging the museum into uncertainty.

Down entered the scene in 2016 when The Falls Events Center acquired several buildings at the museum complex. He was portrayed as a deep-pocketed executive who would be able to restore some stability. As part of the deal, Down's companies got all the revenue from the aquatic park located adjacent to the museum. But Down also agreed that his companies would pay the museum $70,000 a month.

The hoped-for stability has never arrived. Neither did the world-class hotel Down pledged to build near by.

When Down's organization began to struggle, he sold two prized World War II fighter planes out of the museum for $1.8 million. The museum board fumed but said it was powerless to stop the deal.

Then, last spring, the $70,000 payments stopped.

The museum sued The Falls Events Center in May.

Down's precipitous decline could hasten the day the museum is able to cut all ties with him. But it's not clear the museum has a Plan B.

Museum officials declined multiple interview requests. In a statement they said, "The recent chapter 11 filing of The Falls Event Center has not impaired the Museum's ability to execute on its mission to the public. The Museum will remain open for business and is confident that the proceedings involving The Falls Event Center will not impair the Museum's operations in any way."

Down may have one more surprise for the museum.

Financial documents filed with the state of Oregon in February show that Down put up two more museum aircraft — a PBY Catalina and a DC-3 — as collateral for money he borrowed from Gregory Moss, a Tucson dentist. Moss confirmed to The Oregonian/OregonLive that he loaned money to Down, though he declined to say how much.

Moss also confirmed he has taken steps to repossess the planes.

—Jeff Manning