A former New Jersey broker was sentenced to eight-and-half years in prison Tuesday by a federal judge for perpetrating a long-running scheme to defraud clients out of millions of dollars, forging an attorney's signature without authorization in connection to that scheme and preparing false tax returns, according to the U.S. Attorney's office in Trenton.
The broker, Scott Newsholme, had earlier pleaded guilty to the charges. Mr. Newsholme, 43, of Farmingdale, N.J., between 2007 and 2017, stole more than $3.1 million from his clients, resulting in net investment losses of more than $1.8 million, according to the U.S. Attorney's office. He concealed his scheme by diverting incoming investment funds to pay other clients who had requested to withdraw funds from their own accounts.
Mr. Newsholme could not be reached for comment. His attorney, Lisa Van Hoeck, an assistant federal public defender, did not return a call for comment.
In September 2017, Mr. Newsholme was charged with mail fraud, wire fraud, and securities fraud, and was released on bail, according to the U.S. Attorney's office. A month later, after law enforcement discovered that he had continued his scheme while out on bail, he was charged again, his bail was revoked, and he was detained pending trial.
According to his BrokerCheck report, Mr. Newsholme was fired by SII Investments Inc. in 2014 after a client charged that he had taken funds from her individual retirement account while he was at a previous brokerage firm.
Mr. Newsholme directed his clients to write checks to him or one of his companies so that he could execute alleged investments on their behalf, according to the U.S. Attorney's office. Rather than invest the money as he represented, he cashed or deposited the checks and used the funds for personal expenses, including multiple vehicles, bedroom furniture, debits at casinos, bank transfers to Mr. Newsholme's personal bank accounts, and ATM withdrawals.
The Securities and Exchange Commission barred Mr. Newsholme from the securities industry in April, while the Financial Industry Regulatory Authority Inc. barred him in 2014, according to BrokerCheck.