Founder Fawn Weaver Fired as Uncle Nearest Whiskey Faces Federal Fraud Investigations

Founder and CEO, Grant Sidney, Inc. and Uncle Nearest, Inc., Fawn Weaver speaking at the 2024 Forbes Power Women’s Summit at Jazz at Lincoln Center in New York, NY on Sept. 11, 2024. (Photo: Efren Landaos/Sipa USA)(Sipa via AP Images)

Federal authorities are investigating Uncle Nearest Premium Whiskey, according to newly filed court documents that mark the latest escalation in the ongoing legal battle surrounding one of the nation’s fastest-growing whiskey brands.

According to a quarterly report filed by the court-appointed receiver overseeing the Tennessee distillery and first reported by the New York Times, documents have been provided to both the U.S. Securities and Exchange Commission and the U.S. Attorney’s Office for the Southern District of New York as part of separate investigations into potential financial misconduct.

The latest filing also confirms that Weaver and her husband, former CEO Keith Weaver, have officially been terminated from the company.

The filing does not specify what either agency is investigating, and neither office commented on the matter, according to the New York Times.

The disclosure comes nearly a year after Uncle Nearest entered court-supervised receivership following a default on more than $100 million in debt owed to lender Farm Credit Mid-America. Court records have since revealed additional financial issues, including unpaid federal taxes, disputes with creditors and allegations surrounding a $20 million loan tied to venture capital firm MarcyPen, which is partly owned by rapper and entrepreneur Jay-Z.

In February, founder Fawn Weaver acknowledged during court proceedings that the loan had initially been withheld from creditors, an issue that has become a focal point of the receivership.

Although both had effectively lost operational control when the receiver was appointed last August, they had remained employed by the company while the restructuring process continued.

Receiver Phillip Young wrote that removing the couple from their positions has reduced confusion among employees and vendors and helped improve day-to-day operations.

Uncle Nearest was founded in 2017 to honor Nathan “Nearest” Green, the formerly enslaved distiller credited with teaching Jack Daniel the art of whiskey making. The brand quickly became one of the fastest-growing names in American whiskey and one of the industry’s most prominent Black-owned spirits companies.

The company reportedly once claimed a valuation of $1 billion as its products expanded nationally and internationally.

Since entering receivership, however, the picture of the company’s finances has grown increasingly complex.

Court filings have alleged the company lacked a complete investor ownership record, failed to pay federal income taxes dating back to 2018 and accumulated roughly $200 million in combined debt to lenders, suppliers and other creditors.

In May, U.S. District Judge Charles Atchley ruled that the Weavers had engaged in fraudulent conduct related to the handling of the MarcyPen loan, finding the funds were transferred into a separate holding company account rather than made available to creditors. The judge also sharply criticized Fawn Weaver’s courtroom testimony.

The Weavers have denied wrongdoing in court filings and have instead blamed many of the company’s financial problems on former chief financial officer Michael Senzaki. They sued Senzaki late last year.

In another twist, Young recently filed his own lawsuit against Farm Credit Mid-America, accusing the lender of negligence for allegedly failing to identify warning signs related to the company’s finances. He also indicated additional lawsuits could be filed against multiple former executives and related entities.

Despite significant cost-cutting efforts — including laying off roughly 40% of employees and pursuing the sale of several non-core assets — Young said Uncle Nearest continues to operate at a loss.

The receiver is also working toward a possible sale of the company’s assets to an unnamed Black-led investor group. Court filings indicate a Chapter 11 bankruptcy filing is also being considered as part of that process, which could eliminate much of the company’s debt while wiping out existing shareholder equity.

The federal investigations add another layer of uncertainty to what has become one of the most closely watched corporate disputes in the American whiskey industry.