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Kevin R. Foster, 43, was sentenced earlier this month after jurors in Columbus, Ohio, last year convicted him of 16 counts -- including wire fraud, money laundering, bankruptcy fraud, tax evasion and filing false tax returns.
The case emerged from the prosecutions of Thomas E. Jackson and Preston J. Harrison, who the government said collected roughly $9 million from investors under false pretenses to start and market the sports beverage “OXYwater” through their company, Imperial Integrative Health Research and Development.
Foster, who was principal of his own management/accounting firm and business manager for Ne-Yo (Shaffer Smith), initially got the singer to sink $2 million into “OXYwater,” said Benjamin C. Glassman, United States Attorney for the Southern District of Ohio.
“Unbeknownst to Smith, Foster 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,” the U.S. attorney added.
Foster then pulled a similar stunt on McKnight “as a way to secure money to help keep Imperial solvent,” Glassman said.
Foster withdrew more money from both singers’ accounts than they’d authorized, then shifted it around to try and keep his company afloat, the government charged.
The money also bankrolled a lavish lifestyle, with luxury cars – including a Rolls-Royce, Bentley, Jaguar, and Mercedes – a personal driver, extravagant suits and jewelry, season tickets to the New York Giants, courtside season tickets to the New York Knicks and Super Bowl tickets, a complaint on file in U.S. District Court in Ohio says.
Foster kept diverting his clients’ money until Imperial went into receivership, Glassman said.
He then filed for bankruptcy relief on behalf of Imperial in order to claim himself as the majority owner, “and made multiple false and misleading statements under oath during his bankruptcy deposition,” the U.S. attorney said.
Foster didn’t report on his 2012 and 2013 tax returns the millions of dollars that he stole from Ne-Yo and McKnight, Glassman said.
“He also claimed millions of dollars in bogus deductions in order to further reduce his tax liability,” the U.S. attorney said.
“Foster deceived his victims into believing they were investing in a profitable sports beverage company -- when, in reality, he was using their money as a personal slush fund for his lavish lifestyle,” Glassman said.
“Not only did Foster betray the trust of his clients who believed he would act in their best interest,” the U.S. attorney said. “[H]e also used his accounting expertise to fraudulently report his income and live a virtually tax-free life.”
Foster’s ordered restitution includes more than $1.4 million to the IRS.
Glassman praised the IRS Criminal Investigation and FBI for their work on the case, handled by Assistant U.S. Attorney Jessica H. Kim.
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