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Lawsuits allege restaurant founder defrauded investors

February 1, 2019

Separate lawsuits allege the founder of the Scotty’s Brewhouse restaurant chain : which has a local store on Jefferson Boulevard : defrauded investors in the company.

One investor, Fort Wayne-based Nairamat Investments LLC, claims in documents filed in U.S. District Court in Fort Wayne its principal, Steve Cibor, was lured into spending money on a restaurant in Carmel as part of a plan to grow the business.

Chain founder Steve Wise allegedly offered Cibor a 25 percent ownership stake in that restaurant.

“Wise’s inducement to (Cibor) to invest $300,000 in Brewhouse was part of a scheme to defraud plaintiff by soliciting such investment without any intention or possibility of return,” the lawsuit states.

The lawsuit names Wise, Scotty’s Holdings LLC, PRP Scotty’s Holdings LLC and Berekk A. Blackwell as defendants. The Scotty’s chain was sold in 2016 to Arizona-based Due North Holdings LLC, and Blackwell is a vice president with that company.

Business records kept by the Indiana Secretary of State show Blackwell also is the manager of Scotty’s Holdings LLC.

Another lawsuit filed in state court by Mark Bosler of Fort Myers, Florida, and Michael Murray of Indianapolis accuses Wise : who kept a 5 percent ownership stake in Scotty’s, according to court documents : of engaging “in a series of frauds and violations of the Indiana Securities Act, which enriched himself and his business at the expense of the plaintiffs, who combined lost over $1 million.”

That lawsuit, filed Tuesday in Marion Superior Court in Indianapolis, alleges Wise told both men several times he would sell Scotty’s Holdings for $20 million : a figure that would pay them back and “make them whole.”

Due North announced in December 2016 it had purchased the company. Scotty’s Brewhouse filed for Chapter 11 bankruptcy protection late last year and said it would close operations in Carmel, Muncie, downtown Indianapolis and Waco, Texas.

“Wise knew all along that the company would never sell for anywhere near 5 million,” lawyers for Bosler and Murray state in court documents.

The Fort Wayne store : forced to close briefly last week after a small fire and a leaking sprinkler damaged part of the restaurant : is not named in either lawsuit. The local restaurant since has reopened.

Wise denied defrauding investors in a statement released Thursday by his lawyers at Indianapolis firm Hoover Hull Turner LLP. He said Cibor’s decision to invest was voluntary and that Nairamat was aware the investment came with risk.

“When I and the other investors in Scotty’s Holdings LLC sold our ownership interests in 2016, I owned 71 percent of the company,” Wise’s statement said. “Unfortunately, the Scotty’s Brewhouse chain experienced financial difficulties that adversely impacted the return to all investors, including me. With respect to my ownership interest, I have been treated no differently than the other investors.

“I did not mislead Nairamat or any other Scotty’s Brewhouse investor in any way in connection with their decisions to invest in Scotty’s Brewhouse. I intend to defend myself against Nairamat’s false allegations and show that at all times I acted in the best interests of the investors.”

No hearings are scheduled in either case against Wise.

mleblanc@jg.net

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