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
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