New Jersey Investment Adviser Fraud Scheme

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Regarding accountability for client investments, Newsholme provided false account statements and other documentation. As with Bernie Madoff’s fraud scheme, Newsholme operated his ponzi scheme by diverting incoming investment funds in order to pay other clients. In other words, Newsholme was stealing from one client, to pay another client; his chosen cover-up technique when a client requested to withdraw funds from their investment portfolio.

In furtherance of the scheme, in one instance Newsholme went as far as to provide a letter to an investment client from whom he misappropriated over $60,000. The letter, which Newsholme assured the client was prepared by an attorney, stated the client’s funds were merely in escrow. In reality, however, Newsholme fabricated the letter and forged the attorney’s signature to conceal the misappropriation of funds.

Over the course of the scheme, Newsholme misappropriated in excess of $3.1 million from his clients. Net investment losses exceeded $1.8 million.