A local businessman is facing an indictment in U.S. District Court, alleging that he swindled about 100 investors with a purported plan to build a brewery and restaurant in Park City.
Rick Brough reports on the charges that have been filed against 60-year-old Timothy Andrew Nemeckay.
The grand jury indictment, issued on Aug. 26, said Nemeckay, as the founder and manager of a company called Mine Shaft Brewing, solicited investors from across the country, starting in 2013 up to July of this year.
Offering stock up to a total of $9.4 million, he represented that he would develop a brewery, restaurant and event center facility in Park City, which would produce thousands of barrels of alcohol for distribution, and would, by projections, become a top craft brewer in five years.
Nemeckay allegedly sent out newsletters, saying that the venture was succeeding with potential investors and interested developers. After the company announced it was pivoting to build the facility in Santa Clarita, California, a newsletter last fall said that one disgruntled investor may have gone to Utah securities regulators, but other investors shouldn’t be alarmed if they receive any communications about that.
The promotion called for a minimum investment of $20,000, and raised about $2.7 million.
However, out of those investor funds, Nemeckay allegedly spent $1.7 million for his personal use and benefit.
Less than $550,000 of the investment funding was used for developing the brewery.
And the indictment alleges that Nemeckay used over $312,000 of the funds to pay restitution for an investment offering—the second such time he had been sanctioned in recent years by the Utah Division of Securities. The indictment said that in 2014, the state also took action against him for selling unregistered securities, and a Stipulation and Consent Order called on him to pay a $350,000 fine. It adds that Nemeckay was not licensed to sell securities.
While investors were promised their money would earn 8 percent annual interest, the indictment says that on the rare occasions when interest payments were made, those funds came from new investor money.
Nemeckay, who is scheduled to make an initial appearance in federal court Sept. 24, is charged with a count of securities fraud, two counts of false statements to the securities and exchange commission; a count of wire fraud, and a count of money laundering.
The defendant and two associates are facing similar charges in Third District Court, filed by the Utah Division of Securities.
At this time, his attorney has not replied to an email asking for comment.
