They thought, possibly correctly, that he was the stalker who was sending threatening letters to Tress MacNeille, but so far as I know, that part of the story wasn't ever actually proven. He also was hardly the only wacko who was semi-stalking the cast, with most of them from early online communities like Usenet, specifically alt.tv.tiny-toon I believe and other cartoon-related newsgroups.
Similarly, "the Biggest Fan" is sometimes assumed to be Falk but has characteristics of a lot of different Internet autists of the time.
Also didn't the showrunners deny they canceled the show because of Falk at some later date?