Scott Newsholme Charged with $3.1 million Fraud Scheme
New Jersey financial advisor Scott Newsholme pleaded guilty Wednesday to defrauding his investment clients out of $3.1 million, forging an attorney’s signature and preparing false tax returns for his clients, according to U.S. Attorney Craig Carpenito.
According to authorities, Newsholme, 43, allegedly stole $3.1 million from his clients that he then used for personal expenses, including multiple vehicles, furniture, and his gambling debts. The investors’ net investment losses were close to $1.8 million, according to the documents.
Newsholme pleaded guilty before U.S. District Judge Anne E. Thompson in federal court to three counts: wire fraud, aggravated identity theft, and preparing fraudulent tax returns, according to the US attorney’s office.
In September 2017, Newsholme was charged and then released on bail, but when authorities discovered in October 2017 that he was still continuing his fraud scheme while he was out on bail, he was charged with additional crimes, including aggravated identity theft. Newsholme’s bail was then revoked and he was held in jail pending trial.
According to his BrokerCheck Report, Newsholme was registered with SII Investments Inc. in Matawan, NJ from December 2008 until July 2014 when he was fired. Since 2002, he owned and operated three financial advisory and tax preparation firms. In 2007, he allegedly began recommending his clients invest their funds with him.
Newsholme purportedly directed his investment customers to write checks to him or one of his companies so that he could execute the investments on their behalf, according to court documents.
Instead of investing the money, Newsholme allegedly cashed or deposited the checks and used the funds for personal expenses, including multiple vehicles, bedroom furniture and gambling debts at casinos, according to the court documents.
According to authorities, Newsholme was able to conceal his scheme by purportedly diverting incoming investment funds to pay other clients who had requested to withdraw funds from their investment portfolios. He allegedly provided phony account statements, security instruments, and other documentation that falsely represented to the clients the status of their investments.
In addition to the wire fraud and aggravated identity theft charges, Newsholme also admitted preparing fraudulent tax returns on behalf of his clients that claimed inflated deductions for unreimbursed employee business expenses, charitable donations, and medical expenses to which his clients were not entitled, authorities said.
The US Attorney’s office says that the wire fraud charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine, and the false tax return charge carries up to three years and a $250,000 fine. The aggravated identity theft charge carries a mandatory sentence of two years in prison, which must run consecutive to the sentences on the other two counts. Sentencing is scheduled for July 19, 2018.
Failure to Supervise
The White Law Group is investigating potential claims involving the liability that SSI may have for failing to properly supervise Scott Newsholme.
Brokerage firms have a legal responsibility to adequately supervise the business activities of their employees. If a broker engages in a scheme that misleads clients the brokerage firm that employs them may be liable for negligent supervision.
When brokers make unsuitable investment recommendations or squander client funds, the brokerage firm that employs them may be liable for failure to supervise and responsible for investment losses.
If you were a client of Scott Newsholme and SSI and suffered losses, The White Law Group may be able to help you by filing a FINRA arbitration claim. For a free consultation with a securities attorney call 888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.
Tags: Chicago securities attorney, Scott Newsholme, Scott Newsholme class action, Scott Newsholme complaints, Scott Newsholme fraud, Scott Newsholme investigation, Scott Newsholme lawsuit, Scott Newsholme losses, Scott Newsholme New Jersey, Scott Newsholme SEC charges, Scott Newsholme SSI Investments, securities fraud attorney, Vero Beach securities attorney Last modified: April 13, 2018