SEC says RIA stole $1 million from clients, using some of it to support gambling habit

The Securities and Exchange Commission has charged a New Jersey-based tax preparer and RIA with stealing more than $1 million from clients to support his gambling habit and other personal expenditures. The SEC alleges that Scott Newsholme, a registered investment adviser in Farmingdale, N.J., fabricated account statements, doctored stock certificates, and forged promissory notes as part of a scheme in which he persuaded his planning clients to invest in various securities. Instead of investing the money, Mr. Newsholme allegedly cashed their investment checks at a check-cashing store, assured clients that their assets were safe and then used the money for personal expenses, gambling in Atlantic City, and Ponzi-like payments to clients who sought a return of their funds. In a parallel action, the U.S. Attorney's Office for the District of New Jersey has announced criminal charges against Mr. Newsholme. In its civil action, the SEC seeks the disgorgement of ill-gotten gains plus interest, penalties, and permanent injunctions.