Originally published March 30, 2017. Updated April 4 to incorporate Jeffrey Jerome’s formal response to the state lawsuit.
Emmett businessman Michael Way says he often is looking for business investment opportunities, trying to find something enjoyable to help balance his frequently stressful work as owner of a bail-bond company.
One day in 2013, while perusing Craigslist ads, Way saw a listing for an investment opportunity in the “entertainment industry.” He contacted the advertiser, Jeffrey G. Jerome. Way met with him several times in Boise to learn about Jerome’s plans to buy the Powerhouse Event Center, a red-brick former power station near Downtown, and elevate it to a premier cultural-event venue.
“He seemed like a good guy,” Way told the Idaho Statesman. “He wanted help to buy the building. I said I would be interested in it.”
He said he gave Jerome $25,000 in earnest money to help buy the center. He never saw most of it again.
Way is one of at least 17 Idaho investors who were bilked by Jerome after he persuaded them to invest in Powerhouse, according to a lawsuit filed March 6 by the Idaho Department of Finance. The state says Jerome raised $238,500 through “sham businesses” and spent most of it to repay prior investors and to pay for “personal desires and expenses,” including his home-mortgage payments.
Jerome denied the allegations and requested dismissal of the lawsuit March 30 in a formal response in state district court in Boise. He prepared the response himself on a court-provided form and did not say why the case should be dismissed.
“No company capital was spent in any way contrary to written authorized purchases,” he said in an email to the Statesman on March 27.
Meanwhile, the Powerhouse, a two-story Romanesque landmark at 621 S. 17th St. built in 1912 by the acclaimed Boise architecture firm Tourtellotte and Hummel, sits silent, unused for the past year. Its beauty, heritage and proximity to Downtown helped Jerome attract investors who thought it would make it an ideal community venue.
“I was always in love with the building for its charm and potential,” said Gabriel Groff, one of the 17.
Bankrupted, sued and sued again
The coal-fired power plant stood unused for years before Idaho Power sold it in 2000 to Kowallis & Mackey, a Boise commercial real estate company. Kowallis & Mackey renovated it into an event center. People rented the Powerhouse for weddings, performances and other events.
It closed in 2010 as the Great Recession took a toll on business, but it soon reopened.
In 2012, Kowallis & Mackey sold it to FP Powerhouse, owned by commercial real estate executive David Wali, of Boise, and Michael Page, of Ketchum. That’s when Jerome got involved. Wali said he and Page leased the building to Jerome that July to operate as an event center.
Jerome, 46, grew up in Caldwell and lives in Southwest Boise. He had gone through a Chapter 7, or liquidation, bankruptcy in 2009, after a divorce.
The bankruptcy did not stop him from starting new businesses, at least on paper: He has founded at least 16 in Idaho since 2010, a review of public records shows.
But he had trouble paying his bills. He has been sued at least 20 times since 2010 in Ada County, mainly by creditors. They have received judgments for at least $100,000.
In August 2012, after Wali and Page leased the Powerhouse to Jerome, he told the Statesman’s Business Insider magazine that he had bought it. Asked why he made that claim, he now says, “To our knowledge at the time, we were in the process of purchasing the building.”
He left investors confused about who owned it, too.
“It depends on when I talked to him,” said Troy Cooper, of Star. “It was his building. He was purchasing the building. He had an arrangement in place to purchase the building in the future. The story always seemed to change.”
‘Excuse after excuse’
When Way met Jerome in 2013, Way was impressed. “I was meeting a lot of great people,” he said. “Jeff was wining and dining me and showing me the books and the profits.”
Way was impressed, too, by the scope of events at the center — concerts, art shows, corporate parties. A national TV news show, “Dateline NBC,” booked the Powerhouse to conduct interviews for an episode on Sarah Pearce, the Idaho woman released from prison in 2014 after serving 12 years for an attack in 2000 on Interstate 84 west of Caldwell. Linda LeBrane, a Washington state woman, was stabbed, beaten and left for dead.
Way gave Jerome his $25,000 in July 2013. But months passed without Jerome completing the purchase, Way said.
“I had a gut feeling something was not right, but I did not want to believe it, because in the bail bond business, I have to read people for a living,” Way said. “So I had denial going on and embarrassment going on. I started questioning myself: ‘Did he take my money? Did I get screwed here?’ ”
After a year had passed, Way asked for his money back. He kept asking. He said he often drove to the Powerhouse to confront Jerome, who would not answer the door, even when his vehicle was in the parking lot. When he did get Jerome to talk, “It was just excuse after excuse,” Way said.
Last May, Jerome gave Way a check for $1,000 and told him payments would start coming every month. Way tried to cash the check. “Of course, there was no money in that account,” he said.
So Way started going to the bank every day to try cashing it. Finally, one day there was enough money. It was the only payment Way said he has received.
Asked what happened to Way’s money, Jerome — who met briefly with a Statesman reporter but would answer questions only by email — said, “The capital was used for operating expenses per the operating agreement he signed.”
Department of Finance investigators say Jerome did not use Way’s money as earnest money as promised. Instead, he spent $23,000 of it to pay back rent.
Eviction and another bankruptcy
Jerome struggled and failed to keep up with his rent, Wali said. But events continued through early 2016, when the Powerhouse went dark.
Last September, in response to a judge’s order, Boise police evicted Jerome from the building. Wali said Jerome was evicted for failing to make lease payments and to keep the building in good working order.
Jerome said, “We discontinued payments until the ownership issues are resolved.”
Wali said that is nonsense: “Mr. Jerome has been a purveyor of alternative facts since before it was in vogue. Only Mr. Jerome could change being ‘evicted for nonpayment’ to ‘we discontinued paying’ as a strategy for being evicted.’ ”
In December, Jerome filed Chapter 13 bankruptcy, which allows debt-payment rescheduling and adjustments for wage earners. He claimed $274,535 in assets and $352,872.63 in liabilities, including $10,000 he owed in state and federal back taxes. The case is pending in federal bankruptcy court in Boise.
Investors tell similar stories
Investors Troy Cooper, Josh Lake and Gabriel Groff tell similar stories of being scammed.
Cooper met Jerome through mutual acquaintances about two years ago. “I was looking to start promoting concerts,” he said. “I had done a few and was looking to get into it as a side business.”
A year ago, Cooper gave Jerome $7,500 as a short-term investment to help Jerome secure money to fund concerts. According to the lawsuit, Jerome told Cooper his money would be placed into a bank account where it would sit untouched to secure a line of credit and then returned to him after 30 days.
“I started to get some bad feelings. I requested it back,” Cooper said. “There was always an excuse why I could not get it back. And then he went on a trip to Bora Bora right after I made my investment. So I am pretty sure my investment funded his trip to Bora Bora.”
Jerome confirmed to the Statesman he did take a multiweek trip to Bora Bora last summer. “My girlfriend took me on vacation,” he said.
Lake, of Boise, gave Jerome $12,500 in 2014. The lawsuit said Jerome used $2,500 of it as earnest money to buy a $165,000 liquor license for the Powerhouse. Jerome was never able to complete the purchase.
Jerome told the Statesman the $2,500 “was for half the deposit on a liquor license. The partner has not requested the capital back via his agreement.”
But Lake said he repeatedly asked Jerome for his money back. Lake said he and his attorney got Jerome early last year to agree to pay back Lake’s money in $1,000 monthly installments. The first two checks cleared. The third bounced, and then the checks stopped.
Groff, of Boise, said he gave Jerome $15,000 over eight months in 2015. “I can’t say what exactly was done with the investment, only that the funds were deposited in a few of Mr. Jerome’s many bank accounts,” he said.
According to the lawsuit, Jerome used at least 39 accounts at five banks.
State wants Jerome to pay
Investors’ complaints led the state to begin investigating and to sue.
The state wants Jerome to pay $141,176 in restitution to investors and at least a $60,000 fine. It is asking the court to permanently bar Jerome from selling securities in Idaho and from working in Idaho’s financial-services industry for 10 years.
Powerhouse co-owner David Wali said that’s not enough to achieve justice.
“I can’t believe, after all the trouble this guy has caused, that the worst that can happen to him is a fine from the state of Idaho,” Wali said.
No criminal charges have been filed, though Securities Bureau Chief Jim Burns said the state has not ruled out recommending that prosecutors pursue a criminal investigation.
Jerome has not yet filed a response to the lawsuit.
‘Waiting for a good person’
Wali said he and his partner decided to sell the building, and it is now under contract to a buyer they declined to name.
On March 9, three days after the state sued, one of Jerome’s companies, Powerhouse Holding Company LLC, filed a notice of pending lawsuit against the owners seeking to enforce what Jerome said is the company’s purchase option.
Last September, Cooper and Way watched from across the street as police evicted Jerome. They videotaped the incident.
“He did not know I was watching him be evicted,” Cooper said. “I sent him a message later that day asking how things were going. He said, ‘fine’ and then tried to get me to invest more money.”
Jerome told the Statesman he wants to pay back “partners who have contracts in good standing.” Way is skeptical.
“I am content and at peace in my heart with Jeff as far as losing the money,” Way said. “I can confidently say if that’s $25,000 I had to spend to protect others from losing any larger sums of money with him, that is money well spent.”
The investors the Statesman talked to said the biggest loser in the Powerhouse debacle is the community, because the building is a great event venue.
“The original goal is to make that building one of the coolest places to see a show, to create memories for a beautiful wedding, to host charity events, wine and beer tastings … the list goes on,” Josh Lake said.
“The only hard part in all of this is the building is just sitting there with a giant sign, empty, and waiting for a good person to revive what should have never died.”
We want to hear from you, and so do state investigators
Did you rent the Powerhouse Event Center from Jeff Jerome for a wedding, party, prom or other event? If so, we’d like to hear about your experience. Please email Idaho Statesman reporter Cynthia Sewell at email@example.com.
If you invested money with Jeff Jerome, the Idaho Department of Finance wants to hear from you. Call 208-332-8004.