Farmingdale Financial Adviser Defrauded Clients Of $1.8M, Feds Charge

TRENTON, NJ — A Farmingdale man has been arrested and charged with defrauding investment clients out of more than $1.8 million, Acting U.S. Attorney William E. Fitzpatrick announced Wednesday.

Scott Newsholme, 42, is charged with one count each of mail fraud, wire fraud, and securities fraud, Fitzpatrick's office said. He was arrested by FBI and IRS special agents Wednesday morning and was due to appear Wednesday afternoon before U.S. Magistrate Judge Tonianne J. Bongiovanni in Trenton federal court.

Authorities say Newsholme has owned and operated at least three different financial advisory and tax return preparation businesses since 2002.

Between 2007 and 2016, Newsholme recommended to multiple clients that they invest their money with him, which he would use on their behalf to purchase various securities, including bond instruments issued by a private New Jersey country club, a bond investment in a video-game production company, and investments in the production of a movie, authorities said.

Newsholme also represented to clients that he would invest their money in more traditional securities, including mutual funds, annuities, life insurance policies, college education accounts, and money market funds, authorities said.

Newsholme had clients write checks to him or one of his companies so that he could execute the investments on their behalf, authorities said, but instead of investing them, Newsholme used the funds for personal expenses, including multiple vehicles, bedroom furniture, debits at casinos, bank transfers to
Newsholme’s personal bank accounts, and ATM withdrawals. In many cases, the investments
that Newsholme recommended did not even exist, authorities said.

Authorities said Newsholme concealed his scheme by diverting incoming investment funds to pay other clients who had requested to withdraw funds from their investment portfolios, and provided his clients phony account statements, security instruments, and other documentation showing the purported investments made on his clients’ behalf.

Overall, Newsholme’s alleged scheme caused investment losses of over $1.8 million.

In a separate civil action, the U.S. Securities and Exchange Commission filed a complaint against Newsholme in Trenton federal court.

Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, Newark Division, Red Bank Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher, 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 Sanjay Wadhwa, and the N.J. Bureau of Securities, under the direction of Bureau Chief Christopher Gerold, for their assistance.

The government is represented by Assistant U.S. Attorney J. Brendan Day of the U.S. Attorney’s Office’s Criminal Division in Trenton. The charges and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

If you believe you are a victim of or otherwise have information concerning this alleged scheme, you are encouraged to contact the FBI at 973-792-3000.

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