LEGAL BRIEFS: Sentencing in Two Utah Cases Produce Penalties of $2 Million Each: One for the Death of a Salt Lake County Jail Inmate and the Other for a Multiyear Mail Fraud Scheme

Salt Lake City, Utah-based Wellcon must pay $2.0 million because one of its medical employees withheld prescription medication from a Salt Lake County Jail inmate.

This violation "breached the medical standard of care and caused injury, pain, suffering ..." and the death of the inmate, Jeremy Aus.

Separately, Park City, Utah resident Timothy Andrew Nemeckay was sentenced last Thursday in the U.S. District Court of Utah to pay over $2.0 million in combined restitution and disgorgment penalties stemming from his guilty plea last September for committing a multiyear wire fraud campaign against 100 investors. Nemeckay will also spend one year and one day in prison for his crimes.

Sentences in two separate court cases tried in Salt Lake City, Utah have now been handed down, and both stipulate $2.0 million penalties, fines, and/or disgorgments be made, respectively, by a Salt Lake City company, and a Park City, Utah resident, following the outcomes of their individual trials.

And in the case of the Park City resident, he was also sentenced to "... 12 months’ and one day imprisonment" for his crimes.

The Case of Janis Aus vs. Wellcon, Inc.

Specifically,

The jury in the case of Janis Aus vs. Wellcon, Inc. found that Salt Lake City-based Wellcon must pay $2.0 million because one of its medical employees withheld prescription medication from a Salt Lake County Jail inmate.

{NOTE: The employee was not named.}

Nevertheless, according to the news release published by The Spence Law Firm,

"Janis Aus accused Salt Lake City-based Wellcon, Inc., of abruptly discontinuing her son Jeremy Aus's prescription medication when he was booked into the jail on Nov. 6, 2013. Jeremy Aus died 10 days later, on Nov. 16, 2013, after he suffered from severe withdrawal from his benzodiazepine anxiety medication. He was facing misdemeanor charges."

The announcement further states that "... the company's employee, an advanced practice registered nurse (APRN) breached the medical standard of care and caused injury, pain and suffering to Jeremy Aus."

The case, No. 210906801, was tried in the Third Judicial District Court of Salt Lake County, Utah.

It should be noted that Janis Aus had previously settled federal claims against the Salt Lake County Jail.

The Case of Timothy Andrew Nemeckay, Mine Shaft Brewing, Wire Fraud, Lying to Investors, and Self-Enrichment Ranging from Luxury Vacations to Strip Clubs

Last September, Timothy Andrew Nemeckay (64) of Park City, Utah pled guilty to U.S. Securities and Exchange Commission charges of wire fraud in a case brought against him and two co-defendants for their multiyear efforts to defraud over 100 investors in connection with a scheme to supposedly create Mine Shaft Brewing and "... build a brewery and restaurant in Park City to market malt liquor, beer, and hard cider."

According to a news release published last Thursday by the United States Attorney's Office (District of Utah), U.S. District Court Judge David Barlow has sentenced Nemeckay to

• Imprisonment of one year and one day,
• Restitution of over $1.7 million,
• Disgorgment of over $300,000 from the sale of his family's Park City home, as well as
• A variety of other penalties and restrictions preventing him from any future involvement in financial securities, raising monies, or serving as an officer or director of either a publicly traded firm or a firm looking to raise external investment monies.

What was fascinating to me about this case is the level of detail the SEC uncovered in its research for its case against Nemeckay, with data stretching back to 2011, only a portion of which I share below.

For example, in April 2014, the Utah Division of Securities filed a Notice of Agency Action and Order to Show Cause against Nemeckay alleging that he "... had committed securities fraud and various licensing and registration violations between 2011 and 2013."

Subsequently,

"... Nemeckay signed a Stipulation and Consent Order ...."

and the

"... Division fined him $350,000 and barred him from associating with a broker-dealer and from becoming licensed."

But, as outlined in Judge Barlow's 06 October 2023 ruling in the plea deal between Nemeckay / his co-defendents and the SEC (as referenced in the prior two paragraphs), Nemeckay, his co-defendants, and Mine Shaft

• "... started seeking buyers for Mine Shaft securities in 2013;"
• "... utilized at least seven PPMs (Private Placement Memorandums) promoting $400,000 in convertible promissory notes and $14,990,000 in Series A membership interests;"
• Sent an 11 June 2018 email to prospective investors claiming that “[O]ur Mine Shaft Brewing docs have been inspected inside and out by the SEC and we / were [sic] given the green light to raise capital and make [Mine Shaft] successful.”

{NOTE: The SEC says these and each/all of the claims made by/about Mine Shaft were false.}

From early 2013 to 2020, the SEC reported that Nemeckay, his co-defendants, and Mine Shaft raised about $2.7 million from over 100 investors.

Of these monies raised, the news release explains that "... Nemeckay misappropriated approximately $1.7 million ... by comingling funds into his personal and business-related accounts."

Among the way the U.S. Attorney's Office stated that Nemeckay enriched himself with these monies by

— "... pay(ing) himself,
— "(making payments toward his) previous securities violations,
— "(paying) personal bills and utilities,
— "(making) personal mortgage payments,
— "(buying) luxury items at Louis Vuitton and Christian Louboutin,
— "(purchasing) concert tickets,
— "(paying for memberships in and attending) swingers clubs,
— "(paying for entertainment at) strip clubs, and
— "(paying for) vacations to Hawaii and Cancun, Mexico."

Yeah ... it was bad ... really, really bad.

Bottom line, Nemeckay is on his way to prison will pay over $2.0 million in restitution and disgorgment as well.

PUBLISHER'S NOTE, #1: Our Approach to Reporting on Business Law and Legal Proceedings at Utah Money Watch

I recently received a moving communique from one of my online colleagues who outlined a pretty awful tale of troubling and potentially illegal activities taken by an individual that had emotionally, mentally, and financially hurt her family.

This message did not seek my help, per se, nor suggest that I report on the alleged misdeeds.

But it did cause me to reflect deeply about the numerous experiences I have had (or have learned from others), that actually reach the level of illegality (or bordered on doing so), to ask this serious question:

What is the role of Utah Money Watch and its parent organization when it comes to reporting on business law and legal proceedings?

Since this is a question that has been raised previously (and I'm sure it will be raised again), it felt appropriate to address this matter here for those interested.

ONE: Accusations, Claims, Indictments, Arrests, and/or Trials do NOT Make an Individual or Organization Guilty.

Although I may personally wish this was not the case, if the explosive growth of communication and publishing technologies over the past 2+ decades has taught me anything, it's that anyone can now publish virtually anything at anytime about anyone or any organization should they choose to do so.

And just because you can find something published somewhere on the Web does NOT make it so.

Hence, unless or until someone or some organization is actually found guilty in a court of law, or by a governmental body authorized to do so, we will NOT publish reports about accusations, claims, indictments, arrests, or trials ... regardless how salacious / heinous they may appear to be.

TWO: If the Legal News Does NOT have Ties to Utah, We Will NOT Report about It.

Period.

THREE: If the Legal News is NOT Also Business-Related, We Will NOT Report about It.

Period.

Does this help? I hope so.

Interestingly, I did find that the exercise did help me.

So ... as always, thanks for your ongoing support and encouragement.

Dave Politis,
Founder, Editor, and Publisher,
Utah Money Watch

PUBLISHER'S NOTE, #2

In case you're not aware of Utah Money Watch, our goal is to publish Utah-focused monetary, financial, and/or business news, context, and analysis on a timely/regular basis, ideally information NOT available through any other source.

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Here again, the intent is to publish news, information, context, and analysis NOT available through any other source.

To that end, this article was originally published and distributed to our Subscribers at approximately 6:10am (MT) on Monday, 15 July 2024.

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