Holy cow! That’s quite an indictment
August 14, 2014
• Granite Bay man charged with wire fraud and money laundering
• Government says fraud scheme involved a product called Holy Cow
A federal grand jury in Sacramento has indicted Brent Lee Newbold, 57, of Granite Bay, charging him wire fraud and money laundering, says U.S. Attorney Benjamin Wagner.
As a result of the crime, the government says, a company went bankrupt and investors lost more than $3 million. Before that, the Rocklin-based company, Holy Cow Inc., was flying high, even using Dick Clark as a cable TV pitchman.
According to court documents, Mr. Newbold engaged in a fraud scheme centered on a business called Holy Cow, which produced a “green” cleaning product, marketed to stores such as WalMart, Ace Hardware, and Bed, Bath & Beyond. Mr. Newbold was the former chief executive officer of Holy Cow.
The indictment alleges that to raise money from investors, Mr. Newbold made a variety of misrepresentations about the financial health of the company, including misrepresentations about the company’s debt levels and how invested funds would be used.
Contrary to what he told others, says the grand jury, Mr. Newbold regularly used investor funds to pay himself, his wife, his mortgage, and previous investors.
Ultimately, he enticed one corporate investor, Spence Enterprises, and at least 14 other individual investors to give him money in connection with Holy Cow, says the government. In December 2007, based on the misrepresentations and false promises, Spence Enterprises bought Holy Cow, the indictment claims. Spence Enterprises believed it was buying a financially stable company when, in fact, it was not.
The indictment further alleges that after Spence Enterprises began funding Holy Cow to promote its growth, Mr. Newbold, without authorization, diverted approximately $1,000,000 of money from Holy Cow corporate accounts to himself, his wife, his mortgage company, and his previous lenders and investors.
After he was confronted by Spence Enterprises about improperly diverting company money, Mr. Newbold opened a secret account at American River Bank, the grand jury says. The American River Bank Account was held in the name of Holy Cow Inc., but Mr. Newbold was the sole signatory on the account, and the account statements were sent to his personal residence, says the indictment.
Mr. Newbold used the American River Bank Account to receive funds from undisclosed individual investors in Holy Cow, the indictment claims.
Finally, the indictment alleges that between July 2008 and January 2010, Mr. Newbold solicited approximately 14 individual investors, telling them that:
• He was authorized to act on behalf of Holy Cow;
• He owned Holy Cow;
• He owned the majority of Holy Cow stock;
• Holy Cow was financially sound, stable and profitable;
• That he could bind and obligate Holy Cow; and/or that investor money would be used for business purposes, such as working capital, fulfilling an order, or buying new product.
That wasn’t even close, says the government.
Contrary to his representations, Holy Cow was not financially stable and had high debt levels as a result of Mr. Newbold’s investment fraud scheme and was not profitable. Also, says the indictment, Mr. Newbold had no authority to bind or obligate Holy Cow, did not own the company, and did not use all investor money for business purposes.
In some cases, Mr. Newbold provided individual investors with false Holy Cow stock certificates, false Holy Cow purchase order reports, and/or corporate promissory notes that falsely purported to bind Holy Cow and identified Mr. Newbold as an “Authorized Agent” of Holy Cow, the grand jury contends.
By December 2009, Spence Enterprises put Holy Cow into bankruptcy as a result of the unauthorized and undisclosed debt Mr. Newbold was taking on in connection with Holy Cow, says the grand jury.
The gross loss amount in this case exceeds $3 million.