A federal grand jury in late August returned an indictment towards a Snyderville Basin man charging him with 5 counts associated to what prosecutors describe as a fraudulent scheme involving investments in Mine Shaft Brewing, LLC.
Timothy Andrew Nemeckay was charged with securities fraud, two counts of creating a false assertion to the Securities Change Fee, wire fraud and cash laundering. The prosecutors say Nemeckay organized a scheme designed to acquire investor monies fraudulently by making false statements and misrepresentations in addition to omitting data. He then diverted the funds for his private use, the indictment says.
The indictment claims he represented to buyers that Mine Shaft Brewing was elevating monies with plans to develop a brewery and a restaurant in Park Metropolis and in California. He obtained upward of $2.7 million, the indictment says. The investor roster totaled roughly 100 with buyers hailing from numerous locations within the U.S., it says.
He represented to the buyers that Mine Shaft Brewing had an providing of $9.four million in fairness shares with a minimal funding pegged at $20,000, the indictment says, including that he represented the monies could be used for the acquisition and improvement of a Park Metropolis brewery and earn 8% yearly in curiosity. It says the projections known as for a return of between 12 and 20 occasions on the funding.
He additionally represented the Park Metropolis location would “produce 1000’s of barrels of alcohol for distribution” and function a restaurant in addition to an occasion heart, the case towards Nemeckay says. Mine Shaft Brewing “projected it will grow to be a prime craft brewer in 5 years,” it says. Nemeckay, in the meantime, represented that the buyers would have a proper of first refusal in later rounds of funding and they might be supplied different advantages like the primary entry to beers and ciders produced in restricted portions, the indictment says.
The indictment, although, says as an alternative of searching for capital for the beginning of the brewery, Nemeckay “was searching for funding for his private use.” It says lower than $550,000 of the funds raised had been used for the brewery improvement in Park Metropolis and ultimately in Santa Clarita, California. The 8% annual return didn’t come to fruition, the indictment says, describing that “curiosity funds had been normally not made, and once they had been made, the funds got here from new investor cash.”
Roughly $1.7 million of the general upward of $2.7 million in investor funds was utilized by Nemeckay for his private profit, the indictment says, describing that he used $312,266.47 of the funds to pay restitution in a Utah Division of Securities case involving a separate funding providing.
The case covers the interval between early 2013 and early July of 2020.
The U.S. Legal professional’s Workplace for the District of Utah stated the securities fraud rely carries a possible most penalty of 25 years in jail upon conviction, probably the most severe of the doable sentences if he’s convicted.
“Far too many Utah headlines report homegrown fraud schemes. There are disproportionate numbers of wolves in sheep’s clothes in our state. On this indictment, the alleged offender was even beneath the thumb of securities regulators when he persuaded buyers to pay into his scheme, and he purportedly used investor cash to repay beforehand ordered restitution,” U.S. Legal professional John W. Huber stated in a ready assertion launched by the U.S. Legal professional’s Workplace for the District of Utah. “As soon as once more, we encourage these contemplating funding alternatives to do their due diligence earlier than handing over their life financial savings to somebody who doesn’t have their pursuits at coronary heart.”
Nemeckay’s legal professional, Patricia Geary Glenn, additionally launched a ready assertion. It reads: “We intend to vigorously defend towards these unfounded allegations — in courtroom — not in a one sided assertion of the kind launched by the US legal professional — that resorts to buy worn adages about wolves and sheep attire. The Mine Shaft Brewing model and Tim Nemeckay’s dedication to the corporate are fixtures within the Park Metropolis sports activities neighborhood. The one line the general public ought to take away from the DOJ press launch is the one concerning the presumption of innocence afforded to him whereas he goes by means of this course of and is vindicated.”