A Granite Bay man was sentenced Thursday to four years and three months in federal prison for defrauding investors in a “green” cleaning product company.
U.S. District Judge Morrison C. England Jr. also ordered Brent Lee Newbold, 58, to pay more than $2.9 million in restitution for defrauding 13 individuals and a corporate investor, according to a U.S. attorney’s office news release.
Newbold was the chief executive officer of Holy Cow, a Rocklin-based business that produced a “green” cleaning product marketed to stores such as Wal-Mart, ACE Hardware, and Bed, Bath & Beyond. He pleaded guilty in September to a scheme to defraud investors that ran from October 2007 to January 2010.
According to court documents, Newbold made a variety of misrepresentations to investors about the company’s financial health, including the firm’s debt levels and how invested funds would be used. Based on Newbold’s claims, a corporate investor, Spence Enterprises, invested $2 million in Holy Cow.
Never miss a local story.
Between July 2008 and January 2010, Newbold solicited 13 individual investors who were not disclosed to Spence Enterprises. Authorities said Newbold falsely claimed that he was authorized to act on behalf of Holy Cow, that he owned the company and the majority of Holy Cow stock and that Holy Cow was financially sound, stable and profitable. In some cases, Newbold provided individual investors with false Holy Cow stock certificates, false Holy Cow purchase reports and corporate promissory notes.
The company bore a significant amount of debt, and Newbold continued to take on additional debt related to Holy Cow. Authorities said Newbold used investor funds for nonbusiness purposes, diverting them to himself and his wife, paying his mortgage and paying previous investors.
By December 2009, Spence Enterprises put Holy Cow into bankruptcy protection as a result of the unauthorized and undisclosed debt. The loss amounted to more than $2.9 million.
The case resulted from an investigation by the FBI and Internal Revenue Service criminal investigators.