Granite Bay Man Indicted On Charges Of Wire Fraud And Money Laundering
SACRAMENTO, Calif. - A federal grand jury indicted Brent Lee Newbold, 57, of Granite Bay, California, charging him wire fraud and money laundering, United States Attorney Benjamin B. Wagner announced today.
According to court documents, the defendant engaged in a fraud scheme centered on a business called Holy Cow. Holy Cow produced a “green” cleaning product, which it marketed to stores such as WalMart, ACE Hardware, and Bed, Bath & Beyond. Newbold was the former Chief Executive Officer of Holy Cow.
The indictment alleges that to raise money from investors, Newbold made a variety of misrepresentations about the financial health of the company, including misrepresentations about the company’s debt levels and how invested funds would be used. Contrary to his representations, Newbold regularly used investor funds to pay himself, his wife, his mortgage, and previous investors. Ultimately, Newbold enticed one corporate investor, Spence Enterprises, and at least 14 other individual investors to give him money in connection with Holy Cow. In December 2007, based on Newbold’s misrepresentations and false promises, Spence Enterprises bought Holy Cow. Spence Enterprises believed it was buying a financially stable company when, in fact, it was not.
The indictment further alleges that after Spence Enterprises began funding Holy Cow to promote its growth, Newbold, without authorization, diverted approximately $1,000,000 of money from Holy Cow corporate accounts to himself, his wife, his mortgage company, and his previous lenders and investors. After Newbold was confronted by Spence Enterprises about improperly diverting company money, Newbold opened a secret account at American River Bank. The American River Bank Account was held in the name of Holy Cow, Inc., but Newbold was the sole signatory on the account, and the account statements were sent to his personal residence. Newbold used the American River Bank Account to receive funds from undisclosed individual investors in Holy Cow.
Finally, the indictment alleges that between July 2008 and January 2010, Newbold solicited approximately 14 individual investors. Newbold represented to these investors that he was authorized to act on behalf of Holy Cow; he owned Holy Cow; he owned the majority of Holy Cow stock; Holy Cow was financially sound, stable and profitable; he could bind and obligate Holy Cow; and/or that investor money would be used for business purposes, such as working capital, fulfilling an order, or buying new product. Contrary to his representations, Holy Cow was not financially stable. In fact, Holy Cow had high debt levels as a result of the defendant’s investment fraud scheme and was not profitable. Contrary to his representations, Newbold had no authority to bind or obligate Holy Cow, he did not own the company, and Newbold did not use all investor money for business purposes. In some cases, Newbold provided individual investors with false Holy Cow stock certificates, false Holy Cow purchase order reports, and/or corporate promissory notes that falsely purported to bind Holy Cow and identified Newbold as an “Authorized Agent” of Holy Cow. Contrary to his representations, Newbold regularly used investor money for personal purposes, including paying off prior lenders, paying down his mortgage, and paying himself and his wife. By December 2009, Spence Enterprises put Holy Cow into bankruptcy as a result of the unauthorized and undisclosed debt Newbold was taking on in connection with Holy Cow. The gross loss amount in this case exceeds three million dollars.
This case is the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. Assistant United States Attorney Michael M. Beckwith is prosecuting the case.
With respect to the wire fraud, if convicted, the defendant faces a maximum sentence of 20 years in prison, a $250,000 fine, and a 3-year term of supervised release for each count of conviction. With respect to the money laundering, the defendant faces a maximum sentence of 10 years in prison, a $250,000 fine, and a 3-year term of supervised release for each count of conviction. The actual sentence, if convicted, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.
The charges are only allegations and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.