Monmouth County Investment Adviser And Tax Preparer Charged In $1.8 Million Investment Fraud Scheme
TRENTON, N.J. – A Farmingdale, New Jersey, man was arrested and charged today with defrauding investment clients out of more than $1.8 million, Acting U.S. Attorney William E. Fitzpatrick announced.
Scott Newsholme, 42, is charged by criminal complaint with one count each of mail fraud, wire fraud, and securities fraud. He was arrested by FBI and IRS special agents this morning and will appear later this afternoon before U.S. Magistrate Judge Tonianne J. Bongiovanni in Trenton federal court.
According to the complaint:
Since 2002, Newsholme owned and operated at least three different financial advisory and tax return preparation businesses. Between 2007 and 2016, Newsholme recommended to multiple clients that they invest their money with him, which he would use on their behalf to purchase various securities, including bond instruments issued by a private New Jersey country club, a bond investment in a video-game production company, and investments in the production of a movie. Newsholme also represented to clients that he would invest their money in more traditional securities, including mutual funds, annuities, life insurance policies, college education accounts, and money market funds.
Newsholme directed his investment clients to write checks to him or one of his companies so that he could execute the investments on their behalf.
However, rather than invest them as promised, Newsome used the funds for personal expenses, including multiple vehicles, bedroom furniture, debits at casinos, bank transfers to Newsholme’s personal bank accounts, and ATM withdrawals. In many cases, the investments that Newsholme recommended did not even exist.
In addition, Newsholme concealed his scheme by diverting incoming investment funds to pay other clients who had requested to withdraw funds from their investment portfolios. Newsholme also provided his clients phony account statements, security instruments, and other documentation showing the purported investments made on his clients’ behalf. Overall, Newsholme’s alleged scheme caused investment losses of over $1.8 million.
The mail and wire fraud counts each carry a maximum potential penalty of 30 years in prison and a $1 million fine. The securities fraud count carries a maximum potential penalty of 20 years in prison and $5 million fine.
In a separate civil action, the U.S. Securities and Exchange Commission (SEC) today filed a complaint against Newsholme in Trenton federal court.
Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, Newark Division, Red Bank Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher, and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation. He also thanked the SEC’s New York Regional Office, under the direction of Andrew Calamari, and the N.J. Bureau of Securities, under the direction of Bureau Chief Christopher Gerold, for their assistance.
The government is represented by Assistant U.S. Attorney J. Brendan Day of the U.S. Attorney’s Office’s Criminal Division in Trenton.
The charges and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
If you believe you are a victim of or otherwise have information concerning this alleged scheme, you are encouraged to contact the FBI at 973-792-3000.
Defense Counsel: Gregory E. Tomczak Esq., Scottsdale, Arizona