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Ex-FA Gets Eight-Year Prison Sentence for Multimillion-Dollar Fraud

November 27, 2018

A former financial advisor who ran a $3.1 million fraudulent scheme has been sentenced to eight and a half years in prison, according to local reporting.

Scott Newsholme, of Howell, N.J. pleaded guilty in April to wire fraud, preparing fraudulent tax forms, aggravated identity theft and forging a lawyer’s signature.

From 2007 to 2017, the former advisor told multiple clients he would use their funds to invest in various instruments, such as bonds issued by a country club, investments in a movie and bonds in a video game company, as well as more traditional investments such as mutual funds, life insurance policies and more, according to Patch.com.

In all, Newsholme apparently took over $3.1 million from his clients and eventually cost them more than $1.8 million in losses, spending their money on personal expenses such as furniture, vehicles, gambling, bank transfers to his own accounts and ATM withdrawals, the local news website writes.

He also used funds from new clients to pay back previous clients, according to Patch.com. In addition to the prison sentence, U.S. District Judge Anne Thompson sentenced Newsholme to three years of supervised release, the website writes.

The SEC barred Newsholme in April, according to Patch.com. Finra had barred him in December 2014 for failing to respond to its requests for information about his discharge from SII Investments in July of that year, according to his BrokerCheck profile. The company discharged Newsholme following allegations he had misrepresented the nature and value of a client’s account and provided inconsistent statements during the firm’s investigation of the matter, according to BrokerCheck.

Meanwhile, a Massachusetts investment advisor has pleaded guilty to a separate $3 million fraud, according to news reports.

Kimberly Kitts, of Orleans, Mass., pleaded guilty to investment advisor and wire fraud and aggravated identity theft, according to the Boson Herald, which cites federal prosecutors.


Since 2011, Kitts ran several schemes to misappropriate her clients’ money, including cashing out their annuities and directing distributions from their individual retirement accounts, the paper writes.

She then used the money to pay for vacations, vehicles and other personal expenses, according to the Boston Herald.

The SEC charged Kitts in July with defrauding clients.

In December 2017, Finra barred Kitts for failing to provide requested information about getting discharged from Royal Alliance Associates the previous month, according to her BrokerCheck profile.

The company discharged her after it received correspondence from a client’s lawyer “alleging a conversion or misappropriation of funds,’ according to BrokerCheck.

By Alex Padalka
  • To read the Boston Herald article cited in this story, click here.
  • To read the Patch.com article cited in this story, click here.