Olshen Pleads Guilty to Mail Fraud, Money Laundering in Connection with Fraud Scheme Involving Sports Drink
SALT LAKE CITY—Randy Olshen, age 52, of Newport Beach, Calif., indicted by a federal grand jury in September on charges of mail fraud, wire fraud, and money laundering in connection with an investment fraud scheme, entered guilty pleas to money laundering and wire fraud Friday in federal court. At times relevant to the charges in the case, Olshen maintained a residence in Summit County, Utah.
Olshen was one of the founders and president of an entity known as Innovative Health Solutions, LLC (IHS), organized in 2008. IHS specialized in manufacturing and selling sports hydration drinks designed to boost energy and stamina. Olshen, in an effort to promote the growth of IHS, sought investors and made representations to encourage investments in the company.
As a part of the plea agreement reached with federal prosecutors, Olshen admitted that beginning around 2009 and continuing until about February 2013, he devised a scheme to get money and property from IHS investors through materially false representations and the omissions of material facts. He also admitted he diverted portions of the invested funds for purposes not disclosed to or authorized by investors.
For example, Olshen admitted in the plea agreement that he represented to victim investors that IHS had approximately $1.1 million in sales in 2009, when it had approximately $98,275 in sales in 2009. He represented that IHS had projected sales of more than $28 million in sales in 2012, when it had approximately $579,239 in sales in 2012. He also represented that the company had large receivable accounts with various national chains such as Costco, Rite Aid, CVS, and Food Lion. In fact, no such large receivable accounts were owed to IHS.
Olshen admitted he created two sets of IHS accounting records, one that accurately represented company finances and one that was provided to investors and potential investors; fabricated paperwork, such as sales records, to support his misrepresentations regarding the growth of IHS; failed to make numerous payments to creditors; paid a portion of investor funds to others as commissions for obtaining investments for IHS; that he personally declared Chapter 7 bankruptcy around October 18, 2011; and that he used IHS funds for his own personal benefit and expenses in excess of his reported salary. He concealed these material facts from investors as a part of his fraud scheme.
The loss to IHS victim investors resulting from his scheme is approximately $7 million. A final figure will be determined at sentencing. There are more than 50 victims.
The plea agreement includes a recommended sentence of 54 months in federal prison and 36 months of supervised release at the conclusion of the prison term. The sentence is subject to the approval of the court. Sentencing in the case is set for July 29, 2015, at 2:30 p.m.
The case is being investigated by special agents of the FBI, IRS Criminal Investigation, and the Utah Division of Securities. It is being prosecuted by the U.S. Attorney’s Office in Salt Lake City.