UTAH, Aug. 27, 2020 (Gephardt Daily) — A federal grand jury has returned a five-count indictment in a fraud case against Park City resident Timothy Andrew Nemeckay.
Nemeckay, 60, is alleged to have commited securities fraud, “making false statements to the Security Exchange Commission (SEC), wire fraud, and money laundering in connection with an alleged fraud scheme,” a statement from the Department of Justice, Utah District, says.
“According to the indictment, Nemeckay was the founder and manager of Mine Shaft Brewing, a Park City business,” the DoJ statement says. “The indictment alleges Nemeckay represented to investors that Mine Shaft was raising funds to develop a brewery and restaurant in Park City and later in Santa Clarita, California.”
Nemeckay collected approximately $2.7 million from approximately 100 investors from across the United States in connection with the Mine Shaft investment offering, the indictment alleges. The indictment alleges the fraud scheme started in early 2013 and continued until about July 6, 2020, the statement says.
“Far too many Utah headlines report homegrown fraud schemes. There are a disproportionate numbers of wolves in sheep’s clothing in our state,” a statement released Thursday by U.S. Attorney John W. Huber says.
“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.
“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 made a series of representations to investors in connection with the investment offering, including telling them that Mine Shaft was offering Series A Preferred Equity shares totaling $9.4 million and that Mine Shaft had already raised or had sizeable commitments for the funding needed. Investors were told, the indictment alleges, that the minimum investment amount was $20,000 and that the investment would earn 8% annual interest. Investors were also told that Mine Shaft would use funds to acquire and develop a brewery in Park City and that the location would produce thousands of barrels of alcohol for distribution.
“He represented that the location would operate as a restaurant and event center and become a top craft brewer in five years and that investors would receive the first right of refusal on additional investment rounds – among other things,” the DoJ statement says.
The indictment alleges Nemeckay issued and sent “investor newsletters” to convince investors to invest and that their investments were succeeding.
In furtherance of the scheme, the indictment alleges Nemeckay also made a variety of other false misrepresentations to investors, including telling them that Mine Shaft was seeking capital to fund the launch of the brewery when, in fact, he was seeking funding for his personal use. The indictment alleges Nemeckay used approximately $1.7 million of Mine Shaft investor funds for his own personal use. Less than $550,000 of investment funds were used toward developing a brewery in Park City and later Santa Clarita.
Interest payments were usually not made to investors, the indictment alleges, and when they were, the payments came from new investor money.
Read more about the case in the provided indictment document by clicking on the link, below.
