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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of Ohio

FOR IMMEDIATE RELEASE
Thursday, May 16, 2019

Celebrity Business Manager Sentenced to 89 Months in Prison for Defrauding Clients, Bankruptcy and Tax Charges

COLUMBUS, Ohio – A business manager was sentenced in U.S. District Court here today for crimes related to a $7.9 million scheme to defraud his celebrity clients.

 

Kevin R. Foster, 43, of Montclair, N.J., was sentenced to 89 months in prison and ordered to pay more than $7.9 million in restitution.

 

In August 2018, a jury convicted Foster of 16 charges, including wire fraud, money laundering, bankruptcy fraud, tax evasion and filing false tax returns.

 

Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, William Cheung, Acting Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, and Todd A. Wickerham, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division, announced the sentence imposed today by Chief U.S. District Judge Edmund A. Sargus, Jr.

 

This case stems from the prior prosecution of Thomas E. Jackson and Preston J. Harrison, who collected approximately $9 million from investors under false pretenses to start and market the sports beverage “OXYwater” through their company, Imperial Integrative Health Research and Development (“Imperial”). The two were convicted by a federal jury in March 2015 of multiple wire fraud, money laundering and tax fraud charges.

 

Foster, as the principal of his management/accounting firm, Foster & Firm, Inc., and as business manager for Shaffer Smith (“Ne-Yo”), induced Smith to invest $2 million into OXYwater under false representations. Unbeknownst to Smith, Foster invested an additional $1.5 million of Smith’s money into the product without his consent and fraudulently took out $1.4 million in lines of credit under Smith’s name by forging his signature.

 

Foster also defrauded a second celebrity client, Brian McKnight, as a way to secure money to help keep Imperial solvent.

 

Ne-Yo and McKnight agreed to invest in the company, not knowing that Foster served as an officer/controller of Imperial. Foster withdrew more money from his victims’ accounts than they had authorized, and transferred some of it to one of Imperial’s business associates in order to help keep Imperial afloat. Foster also used the stolen funds to enjoy a lavish lifestyle, with luxury cars – including a Rolls-Royce, Bentley, Jaguar, and Mercedes – a personal driver, extravagant suits and jewelry, season tickets to the New York Giants, courtside season tickets to the New York Knicks, and Super Bowl tickets.

 

 

Foster continued to divert funds from Ne-Yo and McKnight, unbeknownst to them, until Imperial went into receivership. Foster then filed for bankruptcy relief on behalf of Imperial in order to claim himself as the majority owner, and made multiple false and misleading statements under oath during his bankruptcy deposition.

 

In addition, Foster failed to report on his 2012 and 2013 tax returns the millions of dollars that he stole from Ne-Yo and McKnight. He also claimed millions of dollars in bogus deductions in order to further reduce his tax liability.

 

“Foster deceived his victims into believing they were investing in a profitable sports beverage company when, in reality, he was using their money as a personal slush fund for his lavish lifestyle,” U.S. Attorney Glassman said. “His ongoing and systematic deception also included stealing millions of dollars of additional funds. Not only did Foster betray the trust of his clients who believed he would act in their best interest, but he also used his accounting expertise to fraudulently report his income and live a virtually tax-free life.”

 

“Today’s sentencing marks the successful end of an investigation that uncovered an investment fraud scheme laced with a web of financial lies that generated millions of dollars through false promises and deceit,” said Acting Special Agent in Charge William Cheung of the IRS-Criminal Investigation (CI) Cincinnati Field Office. “When you knowingly mix deceit and trickery into the financial well-being of individuals, you create a recipe for devastation that could last a lifetime.”

 

Foster was charged in an original, seven-count indictment in July 2016. A superseding indictment containing 10 counts was returned in November 2017. The final, second superseding indictment added six more charges in May 2018.

 

Foster’s restitution includes more than $1.4 million to the IRS.

 

U.S. Attorney Glassman commended the investigation of this case by the IRS Criminal Investigation and FBI, and Assistant United States Attorney Jessica H. Kim who is prosecuting the case.

 

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Topic(s): 
Financial Fraud
Component(s): 
Contact: 
jennifer.thornton@usdoj.gov
Updated May 17, 2019