SEC Charges Advisor with Stealing Investor Funds for Gambling and Personal Expenses

The Securities and Exchange Commission charged a New Jersey-based tax preparer and investment adviser with stealing more than $1 million from clients to support his gambling habit and other personal expenditures.

The SEC alleges that Scott Newsholme of Farmingdale, New Jersey, fabricated account statements, doctored stock certificates, and forged promissory notes as part of a scheme in which he convinced clients seeking his financial planning advice to give him their money to invest in various securities.

Instead of investing clients’ money, Newsholme allegedly cashed their investment checks at a check-cashing store and pocketed the funds while assuring clients that their assets were safe and flourishing. According to the SEC’s complaint, he used investor money for personal expenses, gambling in Atlantic City, and Ponzi-like payments to clients who sought a return of their funds.

Newsholme is the proprietor of Howell, New Jersey-based MVP Financial LLC, a tax, accounting and financial planning firm. Between 1998 and 2014, he was a registered representative for two broker-dealers, Royal Alliance Associates and SII Investments.

Newsholme was discharged from SII in July 2014 following an internal investigation into a customer complaint where he allegedly falsely represented that he had transferred the client’s IRA funds from his previous broker-dealer to SII and made inconsistent statements during the investigation.

In September 2014, the Financial Industry Regulatory Authority barred Newsholme for failure to respond to its requests for information. He held Series 6, 7 and 63 securities licenses, but is not currently associated with any broker-dealer.

The SEC seeks the disgorgement of ill-gotten gains plus interest, penalties, and permanent injunctions. In a parallel action, the U.S. Attorney’s Office for the District of New Jersey announced criminal charges against Newsholme.

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