Park City-area man indicted in fraud case centered on brewery investments
A federal grand jury in late August returned an indictment against a Snyderville Basin man charging him with five counts related 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 making a false statement to the Securities Exchange Commission, wire fraud and money laundering. The prosecutors say Nemeckay organized a scheme designed to obtain investor monies fraudulently by making false statements and misrepresentations as well as omitting information. He then diverted the funds for his personal use, the indictment says.
The indictment claims he represented to investors that Mine Shaft Brewing was raising monies with plans to develop a brewery and a restaurant in Park City and in California. He received upward of $2.7 million, the indictment says. The investor roster totaled approximately 100 with investors hailing from various places in the U.S., it says.
He represented to the investors that Mine Shaft Brewing had an offering of $9.4 million in equity shares with a minimum investment pegged at $20,000, the indictment says, adding that he represented the monies would be used for the acquisition and development of a Park City brewery and earn 8% annually in interest. It says the projections called for a return of between 12 and 20 times on the investment.
He also represented the Park City location would “produce thousands of barrels of alcohol for distribution” and operate a restaurant as well as an event center, the case against Nemeckay says. Mine Shaft Brewing “projected it would become a top craft brewer in 5 years,” it says. Nemeckay, meanwhile, represented that the investors would have a right of first refusal in later rounds of investment and they would be offered other benefits like the first access to beers and ciders produced in limited quantities, the indictment says.
The indictment, though, says instead of seeking capital for the start of the brewery, Nemeckay “was seeking funding for his personal use.” It says less than $550,000 of the funds raised were used for the brewery development in Park City and eventually in Santa Clarita, California. The 8% annual return did not come to fruition, the indictment says, describing that “interest payments were usually not made, and when they were made, the payments came from new investor money.”
Approximately $1.7 million of the overall upward of $2.7 million in investor funds was used by Nemeckay for his personal benefit, 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 investment offering.
The case covers the period between early 2013 and early July of 2020.
The U.S. Attorney’s Office for the District of Utah said the securities fraud count carries a potential maximum penalty of 25 years in prison upon conviction, the most serious of the possible sentences if he is convicted.
“Far too many Utah headlines report homegrown fraud schemes. There are disproportionate numbers of wolves in sheep’s clothing in our state. In this indictment, the alleged offender was even under the thumb of securities regulators when he persuaded investors to pay into his scheme, and he purportedly used investor money to pay off previously ordered restitution,” U.S. Attorney John W. Huber said in a prepared statement released by the U.S. Attorney’s Office for the District of Utah. “Once again, we encourage those considering investment opportunities to do their due diligence before handing over their life savings to someone who doesn’t have their interests at heart.”
Nemeckay’s attorney, Patricia Geary Glenn, also released a prepared statement. It reads: “We intend to vigorously defend against these unfounded allegations — in court — not in a one sided statement of the sort released by the US attorney — that resorts to shop worn adages about wolves and sheep apparel. The Mine Shaft Brewing brand and Tim Nemeckay’s dedication to the company are fixtures in the Park City sports community. The one line the public should take away from the DOJ press release is the one about the presumption of innocence afforded to him while he goes through this process and is vindicated.”
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