California Investment Manager Found Guilty After Trial of Leading $33 Million Fraud Scheme
|U.S. Department of Justice August 07, 2014|
WASHINGTON—A California investment manager was found guilty in federal district court in Salt Lake City, Utah for his role in a $33 million investment fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Carlie Christensen for the District of Utah, Special Agent in Charge Mary Rook of the FBI’s Salt Lake City Field Office and Special Agent in Charge John Collins of the Internal Revenue Service-Criminal Investigation (IRS-CI) Las Vegas Field Office made the announcement.
Robert L. Holloway, 55, was found guilty after a 7-day trial by a federal jury in the District of Utah of four counts of wire fraud and one count of making and subscribing a false income tax return.
Evidence presented at trial established that Holloway operated an investment entity called U.S. Ventures LC, which was founded in 1999. Holloway served as the chief executive officer and managing partner of U.S. Ventures. From October 2005 until at least April 2007, Holloway recruited investors for U.S. Ventures by making false representations about the company, including that U.S. Ventures used proprietary trading software that was consistently profitable, U.S. Ventures generated returns of 0.8 percent per trading day and U.S. Ventures would retain a 30 percent share of investors’ profits as a management fee.
Additionally, during the course of U.S. Ventures’ existence, Holloway generated and distributed reports to investors showing false daily returns on their investments. The evidence introduced at trial showed that between October 2005 and April 2007, contrary to the returns shown on the reports Holloway distributed, U.S. Ventures in fact lost more than $10 million in trading and the “profit” figures on the investor reports were entirely fabricated. Holloway and U.S. Ventures also made “profit distributions” to investors that consisted of funds solicited from new investors, not actual profits. U.S. Ventures raised more than $33 million from investors for its trading activities.
Evidence at trial also showed that Holloway misappropriated investors’ funds for a variety of personal expenses, including supporting his then-wife’s eBay business and purchasing hundreds of thousands of dollars of jewelry. During 2006 alone, Holloway diverted more than $1.2 million in investor funds to a “business” account that Holloway used for as a personal account, despite the fact that he falsely claimed a gross income of only $27,500 on his personal tax return for 2006.
U.S. District Court Judge Robert J. Shelby, who presided over the trial, set sentencing for October 20, 2014.
The case was investigated by the FBI’s Salt Lake City Field Office and the IRS-CI’s Las Vegas Field Office. This case was prosecuted by Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Jason R. Burt and Mark Y. Hirata for the District of Utah. The department thanks the Commodity Futures Trading Commission and the Securities and Exchange Commission for their assistance.