The U.S. attorney in Colorado has charged Utah businessman David R. Nemelka with 34 counts of mail fraud and money laundering in an indictment filed in Denver.
Nemelka said in a press release issued Wednesday that he "unequivocally" denies any wrongdoing."I am proud of my involvement and contribution with all of the public companies" mentioned in the indictment, Nemelka said.
Nemelka said the action taken by Colorado U.S. Attorney Michael J. Norton was spurred by a former Utah assistant attorney general who wants to "weaken me."
The indictment issued by a Colorado grand jury alleges Nemelka was one of four people involved in a scheme to defraud customers of Power Securities Corp.
The company, which specialized in the sale of selected penny stocks, had headquarters in Denver and Las Vegas. It also had 15 branch offices throughout the country.
Two of Power's top officials, Richard T. Marchese and Orville Leroy Sandberg, are also named in the indictment.
The indictment accuses the defendants falsely telling Power's customers it was acting in their best interest by recommending the purchase and sale of certain publicly traded securities. The defendants failed to disclose that Nemelka secretly controlled those stocks.
The stocks were from four companies: Miller Diversified Corp., Greeley, Colo.; Genexus International Inc., Salt Lake City; AST Group Inc., El Cajon, Calif.; and Westwind Group Inc., Los Angeles.
Nemelka paid kickbacks to Marchese, Sandberg and others to sell the securities he controlled, according to the indictment.
In addition, it says, Nemelka and Marchese agreed to set up two companies, Double Diamond Oil and Gas Inc. and Debton Pipe Line Co. Inc., to conceal payments to Marchese and Sandberg.
Nemelka is scheduled to make an initial appearance in the U.S. Magistrate's Court in Denver on Tuesday.
Several people involved in the scheme gave testimony to the grand jury.
Nemelka thinks the Colorado investigation was initiated by former Utah Assistant Attorney General Jay Butler. Butler led an investigation into Nemelka's dealings in stocks sales of Sweet Thanks International Inc., a Woods Cross candy company.
A 4th District Court judge ruled documents were illegally taken from Nemelka's home as part of the investigation and the case was eventually dropped.
"It is like a tag team match," Nemelka said in his statement. "I beat him in court in Utah so he initiated the contact with Denver in which he secretly and inappropriately supplied Denver with copies of documents taken in what the courts have determined was an illegal search."
The fourth person named in the indictment is Laura Lee Sorenson, a West Jordan woman, who serves as Nemelka's secretary.