Huron man pleads guilty in Chill-Can investment scheme
Garry Savage Sr. of Huron pleaded guilty earlier this week to 23 criminal counts related to an investment scheme involving the failed Chill-Can plant near downtown Youngstown.
The Ohio Department of Commerce Division of Securities announced Savage pleaded guilty both individually and on behalf of his company, Coast to Coast Chill Inc. His plea follows an investigation and criminal referral from the Ohio Division of Securities to the Ohio Attorney General’s Office.
The scheme involved diverting investor funds to pay himself and to repay other investors, as well as to omit material facts from investors. According to the November 2021 indictment, for which Savage was extradited from Florida in May 2022, Savage sold investments to 18 Ohio investors in Coast to Coast Chill, Inc., a Nevada corporation owned and operated by Savage. The funds were supposed to be invested by Coast to Coast Chill, Inc., into the Joseph Company International to build a facility in Youngstown to manufacture self-chilling beverage cans. According to the indictment, investors’ funds were misappropriated.
“Securities laws exist to protect investors from the serious harm caused by fraud and deceit,” said Ohio Securities Commissioner Andrea Seidt. “Fraudulent schemes such as this will never be tolerated. The Ohio Division of Securities will continue to work diligently to ensure victims have the opportunity to seek justice and restitution.”
Savage pleaded guilty to seven counts of securities fraud; eight counts of sales of unregistered securities; six counts of fraudulent or deceptive conduct by an investment adviser representative; and two counts of theft. All other pending counts were nullified because of the plea.
Savage remains in the Erie County Jail, where he has been held since August 2022. His sentencing is scheduled at 10:30 a.m. Dec. 30, according to a news release from the Ohio Department of Commerce.
HISTORY OF THE PLANT
The Nov. 11 sheriff’s sale for the former Chill-Can plant site was canceled, with Youngstown planning to file a court motion asking that the Mahoning County auditor’s appraised value for the property be used for a later sale, a city official said.
Because three appraisals of the 21-acre property on the city’s East Side couldn’t determine its value, the sale can’t go ahead as scheduled, said Lou D’Apolito, a city deputy law director who’s been deeply involved in the Chill-Can litigation.
The appraisers wrote that 26 of the 86 parcels on the site are owned by the city and two are owned by Scott Berger, who used to work for M.J. Joseph Development Corp., the Chill-Can’s parent company. Also, the city owns additional parcels surrounding the location.
“Without an appraisal, they can’t go ahead with the sale,” D’Apolito said. “We’ve prepared a (court) motion asking to use the auditor’s value as the price.”
The auditor’s office appraises the Chill-Can property at approximately $2 million.
The city planned to file a motion earlier this month with Mahoning County Court Judge John M. Durkin of Mahoning County Common Pleas Court to compel the sheriff to set the opening bid at the auditor’s appraised price, D’Apolito said. The opening bid for the property would be sold for two-thirds that price if the motion is granted, he said.
The city is definitely interested in buying the property for future development, D’Apolito said.
Durkin ruled Aug. 22 in favor of Youngstown and MS Consultants Inc., the two lead plaintiffs in the foreclosure case against M.J. Joseph, which walked away from the undeveloped property.
The entire process of filing the motion, having Durkin rule on it and then schedule the sheriff’s sale will take a while, D’Apolito said.
“We’re a ways away from that sale,” D’Apolito said. “That’s going to take some time.”
Durkin ruled M.J. Joseph owes $1.5 million to Youngstown plus 3% interest from Nov. 21, 2022, and $322,908 to MS plus 18% interest since Oct. 5, 2018, as well as $2,150 to MS and $500 to the city in court costs.
M.J. Joseph also was ordered to pay the county treasurer for delinquent taxes, assessments, interest and penalties. M.J. Joseph owes $22,814 in delinquent taxes to the county, and hasn’t paid the $20,456 it owes this year, according to the auditor’s website.
The city plans to use the $1.5 million it is owed — in addition to the fact it owns numerous properties in and around the Chill-Can site — in its effort to purchase the Chill-Can site, D’Apolito said.
At one time, the proposed Chill-Can plant was expected to lead an economic revival of the city’s lower East Side, but the project never materialized.
The city also won by default a $733,481 court sanction — $414,948 the city spent on acquiring 15 properties bought for the failed project, which included relocation expenses, and $318,533 in demolition and abatement costs.
The money owed to MS Consultants is for unpaid design work on the supposed project.
The unpaid property taxes have to be paid from the sale of the property. But if the city doesn’t exceed that and the $1.5 million it is owed, MS would get nothing.
There’s also a valid $2.58 million default judgment from Richard A. Briskey, a Sunbury businessman, against Mitchell Joseph, the head of M.J. Joseph, as well as that company and three other affiliated businesses in a breach-of-contract lawsuit. Durkin ruled that Briskey’s interests are behind the city and MS.
Joseph, who also owned M.J. Joseph’s sister companies, claimed when the project broke ground in November 2016 that the facility would cost about $18.8 million and be in full operation by 2018 to produce the world’s only self-chilling beverage can.
M.J. Joseph was required under an agreement with the city to construct four buildings and create 237 jobs by Aug. 31. 2021.
There are three unfinished buildings at the undeveloped site.
Mitchell Joseph filed May 10 for Chapter 13 bankruptcy protection in the U.S. Bankruptcy Court’s Central Division of California with his wife, Susan Jo Joseph, and Joseph Co. International Inc. A judge dismissed the case July 11.
The company exists only on paper with Mitchell Joseph unable to be reached for comment.
Since Brian Kopp and Justin Markota, M.J. Joseph’s company’s former attorneys, filed requests Sept. 11, 2023, to withdraw from three M.J. lawsuits, likely over nonpayment of fees, the company never hired new legal counsel and ignored court deadlines and hearings. That resulted in the default judgments in favor of the city and MS Consultants on money owed by the company and the foreclosure decision.