Chill-Can Investor Names Joseph in Suit
YOUNGSTOWN, Ohio – Keith Riegelsberger is believed to be the first private investor to name Mitchell Joseph and his companies as defendants in a civil lawsuit related to the stalled Chill-Can project in Youngstown.
Joseph, the CEO and chairman of Joseph Co. International, is the developer who promised an $18.8 million project that would create a manufacturing hub in Youngstown for the world’s first self-chilling can. The company also operates a plant in Irvine, Calif., and in the United Kingdom.
Joseph Co. International and M.J. Joseph Development Corp. are also named as defendants in the complaint.
The lawsuit, filed Aug. 25 in Lorain County Common Pleas Court, seeks to recover more than $1.5 million that Riegelsberger says he invested with Coast to Coast Chill Inc., a company Garry Savage owns and manages. According to the complaint, Savage said the company owned royalty rights to Chill-Can operations in California and Ohio.
Savage was arrested in April and is incarcerated in Erie County Jail. He has been indicted on 86 felony counts that include securities fraud, grand theft and aggravated theft.
Savage, Coast to Coast, two of his now-defunct investment companies and a former associate are also named in the complaint.
Savage pitched Riegelsberger with an opportunity to invest in Coast to Coast as early as 2015 but he declined, the lawsuit says. Savage persisted and told Riegelsberger that Joseph Co. had plans to construct a Chill-Can campus in Youngstown to manufacture the beverage cans, documents say.
Savage also reassured Riegelsberger that the Joseph Co. patents – which he estimated as more than $1 billion – secured Riegelsberger’s investments, according to the complaint.
Riegelsberger ultimately invested $1,514,300 in Coast to Coast between July 2016 and 2018, monies that he believed would be used for the Youngstown operation and not toward Savage’s salary or commission.
Of the investment, $1,343,350 went to the Joseph Co., and “Savage Sr. retained $72,500 for himself,” documents state. The civil complaint also notes that $50,000 of Riegelsberger’s investment went to another investor while another $48,300 was diverted to an unknown entity or individual.
In a letter to investors dated June 21, 2019, and included as an exhibit to the complaint, Savage assured Riegelsberger that the Chill-Can Youngstown project remained on track and aimed to be “very successful” because of market demand. “The demand is from companies such as AB/InBev (Budweiser), Heineken, Jagermeister, Coke, Pepsi and others,” the letter says.
Coast to Coast, Savage said, was a master licensee for the “world’s only self-chilling beverage can.” He projected that investors would begin to see income distributions in early 2020 when manufacturing ramped up in Youngstown.
The Youngstown plant was never completed and not a single can has been produced, six years after the project was announced.
“To date, the plaintiffs have not received any royalties, dividends, or cash distributions on their investments in Coast to Coast,” the civil complaint states.
Savage said his clients’ investments were “protected by the Exit Strategy Agreement with the Joseph Co. International,” the June 2019 letter says. The exit strategy agreement, the complaint continues, was also signed by Mitchell Joseph, “thereby assisting Savage Sr. to consummate a sale of unregistered securities in Coast to Coast, in violation of the Ohio Securities Act.”
As such, the complaint alleges, all defendants, including Joseph, are liable under Ohio law that stipulates purchases “may be rescinded for any violation of the Ohio Securities Act.” The law further provides that the person making the sale or contract, or any person who participated in or aided the sale, “are jointly and severally liable to the purchaser,” the lawsuit states.
An email seeking comment from Riegelsberger’s attorney, Travis Filicky, was not returned. Another email to M.J. Joseph’s local counsel, Brian Kopp, was also not returned.
PRESSING THE CASE AGAINST SAVAGE
According to prosecutors, Savage sold investments in Coast to Coast to Ohio clients between July 2016 and February 2019 and was to then invest the money into Joseph Co. International for the Youngstown project.
Instead, the government alleges that Savage – whose broker’s license was permanently suspended in 2019 for violating Ohio securities law – misled clients and used their money to pay himself and repay other investors.
Prosecutors allege that Savage defrauded 13 Ohio residents – including Riegelsberger – via an investment scheme through Coast to Coast. He has pleaded not guilty and is awaiting trial.
The state’s criminal case says that “all of the investors were either retired, elderly, or nearing retirement age. Four of the investors died prior to the conclusion of the investigation.”
In all, these clients invested a total of approximately $2.761 million into Coast to Coast, with Savage paying himself about $230,156, according to court documents. Approximately $558,676 went to pay other investors, documents show.
In one tragic case, Patricia and John Heilman opted to invest $124,500 in Coast to Coast, $107,000 of which came from John’s retirement accounts, according to a bill of particulars filed in the criminal case.
In September 2019, “John Heilman committed suicide as a result of and after he learned of his investment losses after speaking to Savage,” documents state.
Prosecutors allege that Savage also failed to inform clients that his license had been revoked, or that Joseph Co. had sued Savage for breach of contract and negligence in August 2017, in the Superior Court of Orange County, California.
The case was settled a month later, its terms undisclosed.
The August 2020 edition of The Business Journal first reported that Savage was among the early investors in the Chill-Can project.
Savage and the Joseph Co. began doing business together in 2016, when Savage signed contracts where he agreed to pay $7.5 million for Chill-Can rights to the Ohio territory and another $5.8 million for Florida, according to documents obtained by The Business Journal.
Those contracts were the basis of Joseph’s lawsuit against Savage and Coast to Coast.
Yet in 2020 Savage told The Business Journal that he would “take over the whole financing part for the Joseph Co.,” insisting that he owned a stake in Youngstown and rights to a potential expansion in Florida. The discredited broker said at the time that his charge was to raise the money necessary to finish these projects.
Savage said Coast to Coast spent some $5 million for Chill-Can rights, asserting he also held royalty rights to every chill-can sold worldwide.
“The money going into the Youngstown plant is mine. It’s always been mine,” he declared. He then proclaimed that he could secure additional investment to finish the Youngstown plant, start another operation near Miami, then begin work on a third plant in Iowa.
Joseph Co. Chairman and CEO Mitchell Joseph, however, told The Business Journal at the time that Savage held no financial interest in the Youngstown project, just the Florida license. “That is his only licensee relationship with the Joseph Co.,” he said. He also emphasized the company had “zero” plans for a plant in Iowa.
A separate complaint against Savage filed in Collier County, Florida, in September 2021 related to Coast to Coast suggests that the Joseph Co. by this time had cut ties completely with Savage.
According to court documents, Joseph Co. “confirms that neither defendant Savage Sr., or Coast to Coast own any royalty rights in connection with the Chill-Can.”
Pictured at top: A sign still stands at the Chill-Can site touting the promise of self-chilling cans.
Copyright 2024 The Business Journal, Youngstown, Ohio.
