Grand Jury Returns Tax Charges Against Celebrity Manager in Relation to OXYwater Case
COLUMBUS, Ohio – A federal grand jury has charged Kevin R. Foster, 42, of Montclair, N.J. with charges related to a fraud scheme in a second superseding indictment returned here today.
Foster was charged in an original, seven-count indictment in July 2016. A superseding indictment containing 10 counts – including additional wire fraud, money laundering and bankruptcy fraud charges – as well as a second victim, was returned in November 2017. Today’s second superseding indictment adds six more charges – two counts of tax evasion and four counts of filing a false tax return.
Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, Richard E. Zuckerman, Principal Deputy Assistant Attorney General, Tax Division, Ryan L. Korner, Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigation, and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division, announced the new charges.
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.
The original charges against Foster allege that he, 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 allegedly 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.
The superseding indictment also alleges that Foster defrauded a second celebrity client, Brian McKnight, as a way to secure money to help keep Imperial solvent.
McKnight agreed to invest in the company, not knowing that Foster served as an officer/controller of Imperial. Foster allegedly withdrew more money from McKnight’s account than he had authorized, and transferred some of it to one of Imperial’s business associates in order to help keep Imperial afloat.
The latest indictment alleges that Foster failed to report on his 2012 and 2013 tax returns the millions of dollars that he stole from Ne-Yo and McKnight. Foster also allegedly claimed millions of dollars in bogus deductions in order to further reduce his tax liability.
U.S. Attorney Glassman and Principal Deputy Assistant Attorney General Zuckerman commended the investigation of this case by the IRS Criminal Investigation and FBI, and Assistant United States Attorney Jessica H. Kim and Department of Justice Tax Division Trial Attorney Jason M. Scheff, who are prosecuting the case.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
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