Securities commissioner issues order against Derby man, company

02/10/2014 10:33 AM

02/11/2014 6:32 AM

The Kansas Securities Commissioner’s office has issued a cease and desist order, and a notice of intent to impose fines, against Proud Veterans LLC, a Derby-based national construction firm with ties to the U.S. Department of Defense, and its CEO, Nick Gnemi of Derby.

The order preliminarily finds that Proud Veterans and Gnemi committed securities fraud by selling an unregistered security, making untrue statements and omitting material facts about the unregistered security, the agency said in a news release.

Under the action taken Monday, Proud Veterans and Gnemi are ordered to stop offering or selling unregistered securities. The notice of intent is a prelude to fines of up to $25,000 for each violation of the Kansas Uniform Securities Act.

Gnemi said Monday morning he received the complaint via e-mail on Friday. He said he was overseeing a DOD construction project at Fort Dietrich in Maryland.

“That’s interesting,” he said about the securities order. “I don’t know how to respond to that. As a service-disabled veteran, I’ve just learned to go with the flow with the government, figure out what they want and need and do the paperwork that’s required.”

“I come from the Army Corps of Engineers, and I thought we had a lot of paperwork now. But now with everything that requires licenses, things like that. ... From my vantage point, I don’t want to speak ill of our government. This is more that I as a business owner have to stay on top of all the variations that are before us. It’s incumbent on me to get on top of this.”

According to the petition filed by the securities commissioner, Gnemi allegedly told a Kansas resident they could invest money with the company to be used for stock and grain and milk that would be delivered to foreign countries like Afghanistan, Dubai, Egypt and others. The Kansas resident was allegedly told the investment would return 17.25 percent risk-free per year.

After making the investment, the Kansas resident received only a partial payment in return, with the explanation that Proud Veterans did not have enough money in its account to cover full payment. The resident requested the return of the investment, but has not received the money.

Proud Veterans and Gnemi now have 30 days to request a hearing to challenge the preliminary findings in Monday’s order.

Securities officials are asking anyone approached by Gnemi to invest in Proud Veterans to contact them at 785-296-3307.

The Proud Veterans company website,, lists several military projects the company has built, and work as local as the Wichita Fire Training Center. It advertises itself online as a “turn-key solution in commercial, residential, new construction, renovation or installation.”

Wichita Fire Chief Ron Blackwell said Monday afternoon that the department “has no knowledge” of Proud Veterans involvement in the training project.

U.S. Army officials did not respond Monday afternoon to requests for verification of the projects listed on the Proud Veterans website.

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