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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

SECURITIES AND EXCHANGE 

COMMISSION,

Plaintiff,

v.

ERIC C. WAIDELICH,

Defendant.

___________________________________/

CIVIL ACTION No.

HON.

COMPLAINT

Plaintiff, Securities and Exchange Commission (“Commission”), alleges and states as 

follows:

SUMMARY

1. The Securities and Exchange Commission brings this civil action in connection 

with violations of the antifraud provisions of the federal securities laws by Defendant Eric C. 

Waidelich (“Defendant” or “Waidelich”). Defendant was the City Administrator for the City of 

Allen Park, Michigan (“the City” or “Allen Park”) who reported to the City’s Mayor and to 

Allen Park’s governing body, the City Council. 

2. In 2008 the City began planning an economic development project in the form of 

a $146 million movie studio (“Studio Project”) with eight sound stages, led by a Hollywood 

executive director. The City intended to support the development in part by $31 million of 

issuing bonds, which it ultimately did on November 12, 2009 and June 16, 2010 (collectively 

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“Bonds”). The City initially intended to repay the bond debt service with $1.6 million of 

revenue from leases at the Studio Project. 

3. As the City Administrator, Defendant Waidelich was primarily responsible for 

executing the City Council’s directives, including the plans for the Studio Project and the 

supporting Bonds.

4. By the time the City issued the Bonds, however, the plans to implement and pay 

for the Studio Project had deteriorated significantly. None of these changes, however, were 

reflected in the Bond offering documents nor in any of the City’s other public statements. 

5. Instead, the Bond offering documents continued to repeat the City’s original plans

for the Studio Project. In fact, by the time the Bonds were issued, the Studio Project had 

deteriorated to the point where it was much smaller, consisting of building and operating a 

vocational school. The deterioration put the City’s ability to service the debt for the Bond 

offering at substantial risk. 

6. In addition, in connection with the Bond offerings, the City included outdated 

budget information which did not reflect Waidelich’s knowledge that the City faced a budget 

deficit for Fiscal 2010 of at least $2 million, or over 8.4% of its total general revenue fund. 

7. Waidelich was aware of the deterioration of the scope and viability of the Studio 

Project as well as of the City’s budget deficit. He nonetheless participated in drafting the 

offering documents for the Bonds which falsely stated that the Studio Project would still be the 

$146 million, full-service facility with eight sound stages, led by the Hollywood executive.

8. Through the activities alleged in this Complaint, Defendant Waidelich, directly or 

indirectly, engaged in transactions, acts, practices or courses of business which constitute 

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violations of Section 17(a)(2) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 

77q(a)(2)] and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 

U.S.C. § 78j(b)] and Rule 10b-5(b) [17 C.F.R. §240.10b-5(b)] promulgated thereunder.

 DEFENDANT

9. Defendant Eric C. Waidelich, age 46, resides in the City of Allen Park, Michigan 

and was employed by the City as its City Administrator from November 2007 to March 2011.

 JURISDICTION

10. This Court has jurisdiction over this action pursuant to Section 22(a) of the 

Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa]. 

Venue is proper in this Court pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)]

and Section 27 of the Exchange Act [15 U.S.C. § 78aa].

11. The acts, transactions, practices, and courses of business constituting the 

violations alleged herein have occurred within the jurisdiction of the United States District Court 

for the Eastern District of Michigan and elsewhere. 

12. Defendant Waidelich, directly and indirectly, made use of the means and 

instrumentalities of interstate commerce, the means and instruments of transportation and 

communication in interstate commerce, and the mails, in connection with the acts, transactions, 

practices and courses of business alleged herein.

 FACTS

 Background

13. The Allen Park City Administrator was responsible for running the City’s daily 

operations including preparing and submitting annual budgets to the City Council, and carrying 

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out City Council directives. The City Administrator was required to report to the City Council 

on “any and all matters” that “may require the Council’s attention and action” and to perform 

“such other duties as may be prescribed . . . by ordinance or by direction of the Council.” 

14. The City of Allen Park is located 13 miles from the City of Detroit, Michigan. It 

previously has been governed by a City Council consisting of six elected members and the 

Mayor. The City is currently in receivership and was governed by an Emergency Manager 

whose appointment expired at the end of September 2014. After the Emergency Manager

departed, a Receivership Transition Advisory Board (RTAB) consisting of members appointed 

via a final Order of the Emergency Manager was installed to oversee the transition of the City to 

home rule. The City ultimately will return to being governed by a seven-member City Council.

15. In April 2008 the State of Michigan enacted legislation that provided significant 

tax credits to film studios conducting business in Michigan. In August 2008 the City was 

approached by an owner and operator of a California film and post-production sound studio 

(“Producer”) who inquired about building the Studio Project in the City. 

16. The City Council believed that the Studio Project would bring much-needed 

economic development to the City. To support the Project, the City Council therefore agreed to

offer what ultimately became a total of $28.275 million of general obligation limited tax bonds 

issued on November 12, 2009 (“2009 Bonds”) and another $2.725 million of general obligation 

limited tax bonds issued on June 16, 2010 (“2010 Bonds”).

 The Public Private Partnership

17. The City and the Producer planned that the Studio Project would be financed and 

built through a Public Private Partnership (“PPP”), consisting of a limited liability corporation 

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with the City, the Producer and a private developer (“Developer”) as members. The City would 

use the municipal bond proceeds to buy land which it then would donate to the PPP to use for the 

Studio Project. The Developer would finance and build necessary structures on the land while 

the Producer would manage the Project and find investors to fund the film production. 

18. In April 2009 the City issued a press release that included relevant plans about the 

Studio Project. These plans, which the City then maintained on its website through at least June 

2010, were that the Studio Project would be a full-service film and media production facility that 

would employ thousands of union and skilled workers, be located on 104 acres, consist of 

750,000 square feet of facilities, have eight sound stages, and be led by a Hollywood production 

executive, at a cost of $146 million. 

19. In May 2009, as Defendant Waidelich was preparing the City’s Fiscal 2010 

budget, the City faced a deficit of approximately $2 million. The Producer offered to provide up 

to $2 million to remove the deficit. Although Waidelich originally understood the $2 million 

would be a “financial gift,” the Producer sent Waidelich a letter on May 14, 2009, stating that the 

$2 million was a “capital repayment” contingent on the City’s contribution of land to the PPP. 

20. In early June 2009, the Producer, the City, and the Developer signed an agreement for the 

PPP, pursuant to which the Developer committed $20 million for the Project’s first phase. 

 The Collapse of the PPP and the City’s $2 Million Budget Shortfall

21. In July 2009 the City’s bond counsel advised the City that bond proceeds could 

not be used to purchase land that then would be donated to the PPP. 

22. Because the City could not donate assets purchased with bond proceeds, it could 

not meet the contribution requirements necessary for membership in the PPP. As a result, the 

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plans for the PPP collapsed. The collapse of the PPP meant that the Developer, who had pledged 

to contribute $20 million, no longer had any obligations to the Studio Project. 

23. The collapse of the PPP also meant that the City had a projected deficit for Fiscal 

2010 of $2 million, because the Producer no longer was obligated to pay the City $2 million. 

Although Defendant Waidelich knew this, he took steps to create the false impression that the 

City would still receive the $2 million. The $2 million purported “donation” represented 8.4% of 

the City’s budgeted $22 million in Fiscal 2010 revenue and was instrumental in creating the false 

appearance that the City’s budget for Fiscal 2010 had no deficit. 

24. In addition, the Producer’s proposal to attract investors, media producers and 

tenants for the Studio Project had been based on the assumption that he would manage and 

control the entire Project. When the PPP collapsed, however, the City decided to own and 

manage the property itself. By August 2009, the plan was that the Producer was only going to 

lease 100,000 square feet and to operate a vocational school to train potential workers in the 

movie production business.

Wayne County and the City’s Public Statements

25. Wayne County originally planned to support the Studio Project by issuing up to 

$12 million of municipal bonds and granting favorable tax status to the Studio Property. The 

County, however, raised numerous concerns about the viability of the Project from the start, 

expressing these concerns in writing and meetings with both Defendant Waidelich and the City’s 

mayor.

26. By August 2009, the County informed the City that it would not grant favorable 

tax status to the property. 

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27. The City nevertheless issued a press release on August 14, 2009 which announced 

that ground breaking for construction was beginning at the Studio Project, that all Studio Project

details, including financing, were complete and that the “all-encompassing film, TV and media 

production facility will open in October.” None of these statements was true.

28. In late September 2009, the County further advised the City that it would not 

issue the $12 million municipal bonds without additional information. Defendant Waidelich 

advised the mayor that without the County’s municipal bonds, the City could incur up to $4 

million of additional interest. On October 6, 2009, the County confirmed that it would not 

provide any municipal bond financing for the Studio Project. 

29. In response to concerns raised by a resident during an October 13, 2009 public 

City Council meeting, neither the mayor nor Defendant Waidelich discussed any of the negative 

developments that were impairing the Studio Project, including the fact that there were no 

prospects for building sound stages.

30. Thus, the City’s plan for the Studio Project deteriorated significantly between 

April 2009, when the City issued its first press release, and November 12, 2009, when the City 

issued the 2009 Bonds totaling $28.275 million. By the time the 2009 Bonds were issued, the 

City no longer had any private investor money in place to build or develop the Studio Project and 

the Producer no longer had the ability to lead the development or attract investors. 

 The 2009 Bond Documents Did Not Disclose Material Negative Information

31. Defendant Waidelich was the primary source of the information used in drafting 

the offering documents for the 2009 Bonds. Waidelich received drafts of the offering documents 

and provided comments that were incorporated into the final versions. Waidelich’s electronic 

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signature certified the offering documents on behalf of the City, stating that to the City’s best 

knowledge and belief, the document was “true and correct” and did not “contain, nor omit, any 

material facts or info which would make the statements contained herein misleading.” 

32. The offering documents, however, did not disclose any of the adverse 

developments regarding the Studio Project. Similarly, the Offering Statements contained no 

disclosure or discussions regarding any potential risks.

33. In fact, the offering documents contained a number of material misstatements. 

First, the offering documents for the 2009 Bonds repeated all of the information about the Studio 

Project that had been contained in the City’s initial April 2009 press release announcing the 

Project, even though the plans for the Studio Project had deteriorated significantly after April 

2009. 

34. In addition, the offering documents stated that the City intended initially to repay 

the Bonds by leasing facilities at the Studio Project and using the lease revenues towards 

payment of the Bonds. This representation was highly relevant to the City’s ability to service 

its debt since the expected annual debt service otherwise would have constituted approximately 

10% of the City’s budget. The offering documents also stated that the City had existing leases 

“under contract” totaling $1.6 million for 48% of the available space and that additional lease 

arrangements, representing 27% of the available space, were currently in negotiation. 

35. By the time the 2009 Bonds were issued, however, the projected $1.6 million of 

annual lease revenue included at least $300,000 from the Producer which Waidelich knew was 

uncertain. Defendant Waidelich also was aware that there were no existing negotiations 

regarding 27% of available space. 

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36. Finally, the City attached its projected Fiscal Year 2010 budget as an appendix to 

both its 2009 and its 2010 offering documents. The budget, which reflected the City’s 

expectation that it would have a general fund surplus at the end of Fiscal Year 2010, appeared to 

be balanced because it was based on the assumption that the Producer would donate $2 million to 

the City. Waidelich, however, knew that the Producer no longer intended to pay $2 million to 

the City. The budget attached to the offering documents thus was materially misleading. The 

City really faced a projected $2 million deficit for Fiscal Year 2010. 

 The Bonds were rated “A” and Issued in November 2009

37. Standard & Poor (“S&P”) reviewed information provided by the City and others 

in order to rate the City’s 2009 Bonds. Waidelich did not inform S&P that the Producer no 

longer intended to pay $2 million to the City and thus misled S&P regarding the actual condition 

of the City’s Fiscal Year 2010 budget.

38. On October 20, 2009 Standard & Poor (“S&P”) assigned the 2009 Bonds an “A” 

rating. S&P’s write-up noted that the FY 2010 budget was balanced only because of the $2 

million donation, and pointed out that the City would have to address this structural imbalance. 

39. The “A” rating by S&P was material to investors who purchased the 2009 Bonds.

 Additional Adverse Developments Occurred Before the City Issued its June 2010 Bonds

40. After the 2009 Bonds were issued, the City retained a company to manage the 

Studio Project site. On February 12, 2010, the management company advised that the City

would experience a significant decrease in net cash flow at the site at least for the first three 

years, rather than the increase from lease revenues it had expected. This was due to hiring agents 

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to solicit prospective tenants, management companies, providing rent forgiveness and building 

out properties. 

41. On May 6, 2010 the City served the Producer with an eviction notice. The City 

and the Producer then negotiated an amended lease for only one-half the amount of space at onehalf the price, with rent payments postponed until August 2010. 

42. Despite these additional significant negative developments affecting the Studio 

Project, the City issued the 2010 Bonds on June 16, 2010. Although two weeks before the 2010 

Bonds were issued, the City Council had adopted a budget for Fiscal Year 2011 which 

acknowledged the $2 million budget shortfall, the offering documents for the 2010 Bonds again 

incorporated the City’s Fiscal 2010 budget figures which omitted the $2 million shortfall. 

43. The 2010 Bond offering documents misleadingly continued to list tenants at the 

Studio Property with purported “total leases under contract represent[ing] approximately $1.6 

million of annual revenue.” The 2010 Bond offering documents stated that the total annual debt 

service was $2.6 million, an increase from the $2.2 million stated in the 2009 Bonds. 

44. Finally, notwithstanding that the Producer by this time had reduced his presence 

at the Studio Project by half, the offering documents falsely continued describing the Studio 

Project as a “$146 million, full-service movie, television and new media production studio” that 

would consist of 750,000 square feet, eight sound stages, employ thousands of unionized skilled 

workers, and be managed by the Producer. 

45. Defendant Waidelich again was the primary source of information for the 2010 

Bond offering documents. He also reviewed and approved them and certified, on behalf of the 

City, that, to the City’s best knowledge and belief, the document was “true and correct” and did 

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not “contain, nor omit, any material facts or information which would make the statements 

contained herein misleading.” 

46. On September 29, 2010 the Producer advised the City that he was terminating his 

lease at the Studio Property. He vacated the site on October 4, 2010. Defendant Waidelich 

resigned on February 27, 2011.

 The Effect of the Studio Project Collapse on the City

47. The collapse of the Studio Project had a significant impact on the City’s financial 

condition. The City filed a notice on the Electronic Municipal Market Access system 

(“EMMA”) on December 29, 2010 that it was not filing an annual report for fiscal year 2010. 

48. On March 8, 2011 S&P downgraded the City’s unlimited tax bonds and its limited 

tax GO bonds to BB+.

49. The City did not file any continuing disclosure until January 4, 2012, at which 

time it announced it had received a “going concern” opinion from its auditors. On June 21, 2012 

the Michigan State Treasurer began a Preliminary Review of the City, pursuant to State law, and 

issued a Final Report on August 8, 2012 recommending the appointment of an Emergency 

Manager. The Studio Project was listed as a primary factor in the City’s deteriorating economic 

condition. An Emergency Manager was appointed in October 2012.

50. The City’s most recent annual audit report, dated December 16, 2013, for Fiscal 

2013, again includes a going concern opinion because of the City’s general fund deficit of 

$694,185 and its Studio Project fund deficit of $10,370,611. 

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CLAIMS FOR RELIEF

COUNT I

Violations of Securities Act Section Act 17(a)(2)

[15 U.S.C. Section 77q(a)(2)]

51. Paragraphs 1 through 50 are re-alleged and incorporated herein by reference.

52. By his conduct as alleged above, Defendant Waidelich, in the offer and sale of 

municipal securities, by the use of means and instruments of transportation or communication in 

interstate commerce and by use of the mails, directly and indirectly, obtained money or property 

by means of untrue statements of material fact or omissions to state a material fact necessary in 

order to make the statements made, in light of the circumstances under which they were made, 

not misleading.

53. Defendant Waidelich was reckless or negligent in the activities described herein.

54. By reason of the foregoing, Defendant Waidelich violated, and unless enjoined 

will likely again violate, Section 17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2)]. 

 COUNT II

 Violations of Exchange Act Section 10(b) and Rule 10b-5(b)

 [15 U.S.C. Section 78j(b)] and 17 C.F.R. Section 240.10b-5]

55. Paragraphs 1 through 50 are re-alleged and incorporated herein by reference.

56. By his conduct as alleged above, Defendant Waidelich, in connection with the 

purchase and sale of municipal securities, by the use of means and instruments of transportation 

or communication in interstate commerce and by use of the mails, directly and indirectly, made 

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untrue statements of material facts and omitted to state material facts necessary in order to make 

statements made, in the light of circumstances under which they were made, not misleading. 

57. Waidelich, at a minimum, acted recklessly in the activities described herein.

58. By reason of the foregoing, Defendant Waidelich violated, and unless enjoined 

will likely again violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b5(b) thereunder [17 C.F.R. § 240.10b-5(b)]. 

RELIEF REQUESTED

WHEREFORE, the Commission respectfully requests that the Court enter a judgment: 

A. Permanently enjoining Defendant Waidelich, his agents, servants, employees, 

attorneys, and all persons in active concert or participation with them, and each of them, from 

further violations of Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)] and Section 10(b) of 

the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] promulgated 

thereunder; 

B. An Order pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 

78u(d)(5)] permanently barring Defendant Waidelich from participating in an offering of 

municipal securities, as defined in Section 3(a)(29) of the Exchange Act [15 U.S.C. § 

78c(a)(29)], including engaging in activities with a broker, dealer, or issuer for purposes of 

issuing, trading, or inducing or attempting to induce the purchase or sale of any municipal 

security, provided, however, that such injunction shall not prevent Defendant Waidelich from 

purchasing or selling municipal securities for his own personal account;

C. Retaining jurisdiction of this action in accordance with the principles of equity 

and the Federal Rules of Civil Procedure in order to implement and to carry out the terms of all 

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orders and decrees that may be entered or to entertain any suitable application or motion by the 

Commission for additional relief within the jurisdiction of this Court; and

D. Granting such further relief as the Court may deem appropriate.

Date: November 6, 2014 Respectfully submitted,

s/ Sally J. Hewitt

John E. Birkenheier (Illinois Bar No. 6270993)

Sally J. Hewitt (Illinois Bar No. 6193997)

Counsel for Plaintiff U.S. Securities

and Exchange Commission

175 West Jackson Blvd., Suite 900

Chicago, IL 60604

(312) 353-7390

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