Manager Charged with Defrauding Two Celebrity Clients 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 superseding indictment returned here today.
Foster was charged in an original, seven-count indictment in July 2016. This superseding indictment contains 10 counts – including additional wire fraud, money laundering and bankruptcy fraud charges – as well as a second victim.
Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, 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 raised approximately $9 million from investors under false pretenses to start and market the sports beverage “OXYwater.” The two were convicted by a federal jury in March 2015 of multiple wire fraud, money laundering and tax fraud charges.
The 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.
Foster served as an officer or controller of Imperial Integrative Health Research & Development, LLC in Westerville, Ohio with Jackson and Harrison. Foster did not disclose that he served as a controller for the company or that he would earn commission based on investments.
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. It is alleged that Foster received approximately $250,000 in finder’s fees based on Smith’s investments into OXYwater and that Foster received additional money as a result of the unauthorized investments.
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,” U.S. Attorney Glassman said. “Foster allegedly withdrew more money from McKnight’s account than he had authorized, and failed to invest any of the money, but rather transferred it to one of Imperial’s business associates in order to help keep the business afloat.”
Foster also allegedly lied about disclosing the kickbacks during a deposition in Bankruptcy Court.
Foster was charged in the superseding indictment with four counts of wire fraud, five counts of money laundering and one count of bankruptcy fraud. Wire fraud is punishable by up to 20 years in prison, money laundering is punishable by up to 10 years in prison and bankruptcy fraud is punishable by up to five years in prison.
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 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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