FARMINGDALE – A Farmingdale man recently pleaded guilty to a long-running scheme defrauding clients out of more than $3.1 million, forging an attorney’s signature, and preparing false tax returns for clients, according to US Attorney Craig Carpenito.
Forty-three year old Scott Newsholme pleaded guilty before US District Judge Anne E. Thompson in federal court on April 11. He has been charged with wire fraud, aggravated identity theft, and preparing fraudulent tax returns.
Newsholme faces a potential penalty of 20 years in prison and a $250,000 fine for the wire fraud charge; a mandatory sentence of two years in prison, which must run consecutive to the sentences on the other two counts for the aggravated identity theft charge; and a maximum potential sentence of three years in prison and a $250,000 fine for the false tax return charge.
Sentencing is scheduled for July 19, 2018.
Newsholme was charged with mail fraud, wire fraud, and securities fraud back in September of 2017, but was released on bail. Following this, law enforcement charged him with an amended criminal complaint with mail fraud, wire fraud, securities fraud, and aggravated identity in October 2017 after finding out he was continuing his scheme.
Since then, Newsholme’s bail was revoked and he was detained pending trial.
According to documents and statements made in court, Newsholme has owned and operated three different financial advisory and tax return preparation businesses since 2002.
Between 2007 and 2017, he recommended to multiple clients that they invest their money with him, which he would use on their behalf to make investments in securities like bond instruments issued by a private New Jersey country club, a bond investment in a video-game production company, investments in the production of a movie, and also mutual funds, annuities, life insurance policies, college education accounts, money market funds, and an escrow account for the purchase of a house.
After directing his clients to write checks out to him or his company to perform these investments, Newsholme cashed the checks and used the money for personal expenses. He allegedly used it for vehicles, bedroom furniture, debits at casinos, bank transfers, and ATM withdrawals, according to documents and statements from court.
By diverting incoming funds to those clients who requested to withdraw their money from their investments, Newsholme was able to cover up his scam for some time. He also gave his clients phony account statements, security instruments, and other documentation that falsely represented to the clients the status of their investments.
Newsholme gave a letter to one of his clients back in October 2017 claiming that the client’s money (approximately $62,000 of it) was being held in an escrow fund. He then forged an attorney’s signature on the letter without authorization from the attorney. In court, Newsholme admitted to the letter forgery.
Also, while preparing false tax returns, Newsholme claimed inflated deductions for unreimbursed employee business expenses, charitable donations, and medical expenses to which his clients were not entitled.
Carpenito credited special agents of the FBI, Newark Division, Red Bank Resident Agency, under the direction of Acting Special Agent in Charge Bradley W. Cohen, 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 Director Mark P. Berger, and the N.J. Bureau of Securities, under the direction of Bureau Chief Christopher Gerold, for their assistance.