SEC Bars New Jersey Investment Adviser Running Ponzi Scheme to Fund Gambling Habit

Posted on April 8th, 2019 at 5:12 PM
SEC Bars New Jersey Investment Adviser Running Ponzi Scheme to Fund Gambling Habit

From the Desk of Jim Eccleston at Eccleston Law LLC:

The SEC has obtained a final judgment against investment adviser Scott Newsholme of Farmingdale, New Jersey for allegedly defrauding elderly clients in a $3.8 million Ponzi-like scheme.

According to the SEC's complaint filed September 6, 2017, since at least 2007, Newsholme, who had owned and operated three financial advisory and tax preparation businesses, recommended to multiple clients that they invest their money with him, which he would use on their behalf to invest in various securities and other investments. Those investments included 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.

At the same time, Mr. Newsholme fabricated account statements, modified stock certificates and forged promissory notes as part of a scheme to persuade his clients to invest their assets using his services. Moreover, Mr. Newsholme allegedly lied to his clients and cashed their investment checks at a check-cashing store and pocketed the money to fund his gambling habit. Mr. Newsholme later presented his clients with forged and deceptive documents, and made Ponzi-like payments to clients who sought a return of their funds.

According to the SEC, Newsholme misappropriated more than $3.1 million from his investment clients, resulting in net investment losses of more than $1.8 million. The final SEC judgment ordered Newsholme to pay disgorgement and prejudgment interest in the amount of $1,567,384.

In a parallel action, Newsholme pled guilty to wire fraud, aggravated identify theft, and aiding and abetting the preparation of false tax returns. Newsholme was sentenced in 102 months in prison and ordered to pay $2,043,291 in restitution.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities FraudCompliance ProtectionBreach of Fiduciary DutyFINRA Matters, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: james eccleston, eccleston law, eccleston law llc, eccleston, new jersey, sec, scott newsholme, stock certificates, misappropriation of funds

Return to Archive



I just received this letter from the CFP Board. Thank you, Thank you, THANK YOU!

David Y


August 8, 2022
SEC Files Suit Against Georgia Advisor Over Misappropriation of Client Funds

The Securities and Exchange Commission (SEC) is filing suit against a Georgia-based advisor, Christopher Burns, who allegedly misappropriated client funds.

August 5, 2022
SEC Fines RIA $5.8 Million Over 12b-1 Fee Infractions Tied to Wrap Accounts

The Securities and Exchange Commission (SEC) has imposed a $5.8 million fine against Private Advisor Group over 12b-1 fee violations tied to its wrap fee program. 

August 4, 2022
North Dakota Regulators Seek to Close Down Advisory Firm Selling Crypto and Weed Products

The North Dakota Securities Commissioner’s office is seeking to shut down a small West Fargo-based registered investment adviser (RIA) after its owner allegedly violated state securities laws and improperly took custody of $17.8 million in client funds beginning in 2017.