SEC Obtains Final Judgment and Bars Investment Adviser for Defrauding Clients
Litigation Release No. 24444 / April 5, 2019
Securities and Exchange Commission v. Scott Newsholme, Civil Action No. 3:17-cv-06813 (D.N.J. filed Sept. 6, 2017)
United States v. Scott Newsholme, No. 17-05015/18-00191 (D.N.J. filed Sept. 6, 2017)
Scott Newsholme, Exchange Act Release No. 83056 (Apr. 17, 2018)
The Securities and Exchange Commission has obtained a final judgment against Scott Newsholme, a New Jersey-based tax preparer, who was charged with defrauding his clients after convincing them to give him their money to invest.
According to the SEC's complaint, filed September 6, 2017, Newsholme fabricated account statements, doctored stock certificates, and forged promissory notes as part of a scheme in which he convinced clients seeking his financial planning advice that he would invest on their behalf. The SEC alleged that instead of investing clients' money, Newsholme cashed their investment checks at a check-cashing store and pocketed the funds while assuring his clients that their assets were safe and flourishing. The SEC further alleged that Newsholme made Ponzi-like payments to certain investors, and misappropriated more than $1 million from his investment clients to support his lifestyle and gambling habit.
In a parallel criminal case, Newsholme pled guilty to wire fraud in violation of 18 U.S.C. § 1343, aggravated identity theft in violation of 18 U.S.C. § 1028A, and aiding and abetting the preparation of false tax returns in violation of 18 U.S.C. § 7206(2). Newsholme was sentenced to 102 months in prison, followed by three years of supervised release, and was ordered to pay $2,043,291 in restitution. Following Newsholme's criminal conviction, the SEC barred Newsholme from the securities industry.
On March, 22, 2019, the U.S. District Court for the District of New Jersey, entered a final judgment against Newsholme. The final judgment enjoins Newsholme from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The final judgment also ordered Newsholme to pay disgorgement and prejudgment interest in the amount of $1,567,384, which was deemed satisfied by the entry of the restitution order in the parallel criminal case.
The SEC appreciates the assistance of the U.S. Attorney's Office for the District of New Jersey and the Federal Bureau of Investigation.