20
Wednesday, March 8, 2017 The Nugget Newspaper, Sisters, Oregon
DEVELOPER: Order
finds Adolf mislead
his investors
Continued from page 1
to fund the facility in Sisters.
Adolf has been attempt-
ing to finance a senior-living
facility in Sisters (called the
Lodge in the consent order)
since 2011, first working with
the owners of the McKenzie
Meadow Village (MMV) near
Sisters High School and, after
that relationship was severed,
on his own at a location near
Sisters’ post office.
According to the consent
order entered January 11, the
Adolfs and their businesses
sold securities — investor
shares in the project — with-
out proper registration and
without their being registered
as securities salespersons.
Additionally, the order states
that in their representations to
investors they “made untrue
statements of material fact or
omitted to state material facts
necessary to make the material
facts … not misleading.”
Securities Division spokes-
man Adam Yeaton told The
Nugget that investigations by
the Securities Division are
generally undertaken based on
“a complaint by an investor or
an interested third party.”
Adolf initially worked
with the Reed, Willitts,
and Kallberg families of
Sisters to develop a facility
at MMV. Adolf’s site plan
was approved by the City in
2011. Due to Adolf’s inabil-
ity to secure financing for the
project, the property own-
ers granted repeated exten-
sions on his contract, being
assured that Adolf would
successfully acquire the
financing. After three years’
delay due to lack of ade-
quate finances, the contract
with Adolf was terminated.
Bend resident Kevin
Cox, owner of Ageia Health
Services, who has built and
operates six senior-living
facilities, came forward with
a proposal to build the MMV
facility. In the meantime,
Adolf applied to the City for
permits to build his facility on
the empty property adjacent to
the post office, between Larch
and Locust streets.
Those permits have long
been approved, but have not
been pulled, according to
City of Sisters planner Patrick
Davenport.
“They’re still sitting there,
waiting for that to happen,
Davenport said.
The planner noted that
there is a clock ticking on the
project: If work is not begun
before state code updates go
into effect, Adolf will have
to reapply. Davenport did not
have a timeline as to when that
might happen.
The consent order explores
Adolf’s failure to secure debt
financing to launch and com-
plete the project, stating:
“Over approximately the last
five years, Mark Adolf has
lulled investors by sending
numerous emails claiming that
lenders were interested in the
Lodge and that the project was
on track. In the emails, Mark
Adolf blamed various causes
for his inability to secure
financing, such as the Dodd-
Frank Act, bank mergers, and
lenders pulling back from
rural areas. During this time,
he failed to inform investors
about significant ongoing
problems with the Lodge. For
instance, he failed to inform
investors in August 2013 that
the purchase and sale agree-
ment for the proposed site for
the Lodge had expired. He also
failed to inform investors that
a competing facility was being
planned at the site formerly
planned for the Lodge, or that
Pinnacle was suing the com-
pany involved with the new
facility for allegedly stealing
his designs for the Lodge.”
The order asserts that the
Adolfs “failed to adequately
disclose certain fees which
they would receive from the
investors regardless of the
success of the Lodge. The
executive summary provided
to investors included an esti-
mated $10.7 million in total
construction costs and stated
that ‘a Development Fee for
owner and investor represen-
tation and oversight of design,
development, and construc-
tion’ would be included in the
costs, but did not disclose the
$350,000 in fees which would
go to the Adolfs, through
Pinnacle, immediately after
they had finished raising
money from investors…
“Through Pinnacle, Mark
Adolf paid $48,749 to himself
and Anita Adolf for the first 25
percent fee immediately after
the Lodge had finished raising
money from investors, even
though the Lodge had not
closed construction financing
on the property yet.
“Mark Adolf misrepre-
sented to investors the circum-
stances under which he would
withdraw this fee by claim-
ing that he would take the fee
‘at the close of construction
financing,’ but taking it when
construction financing had not
yet closed.”
Securities Division spokes-
man Yeaton confirmed that the
Adolfs have signed the con-
sent order, which resolves the
violations.
The order requires the
Adolfs to cease and desist
from violations and makes
them “jointly and sever-
ally liable” to pay a fine of
$10,000 and investigative
costs of $5,000.
The parties also agreed that
the consent order “does not
constitute, and is not intended
to be used as, an admission
of or evidence of any fault,
omission or liability of any
Respondent in any civil, crim-
inal, arbitration, or administra-
tive proceeding.”
The effect of the consent
order on Adolf’s project is
unclear. Adolf responded after
deadline to multiple phone
messages and an emailed list
of questions from The Nugget
with an email stating that he
was out of town for a funeral.
Adolf subsequently
emailed The Nugget, declin-
ing to comment, stating,
“Considering the accuracy,
tone, and slant of previous
article (sic) in The Nugget… I
do not feel that any informa-
tion I might provide to you
would be portrayed accurately
or in an honest light…”
Full consent order can be
found with the online ver-
sion of this story at www.
NuggetNews.com.
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