A former New Jersey advisor was sentenced to three years in prison for recruiting investors into an unregulated commodities trading group he founded and duping them out of more than $471,000, according to the New Jersey Attorney General’s Office.
Scott Nicholson, 54, of North Haledon founded the Think Big Institute LLC in 2005, while he was with Commonwealth Financial Network, according to the complaint from New Jersey Bureau of Securities. He moved to Cambridge Investment Research in January 2007 and left in 2009.
Superior Court Judge Sohail Mohammed in Passaic County, who sentenced Nicholson on Thursday, said he is required to make full restitution and consent to the dissolution of Think Big.
He pleaded guilty to second-degree theft by unlawful taking in September 2021.
The complaint said that in around 2008, while an advisor at Cambridge, he organized a pooled investment with five friends and began to invest and trade the money from investors through Think Big. Nicholson and Think Big initially raised about $25,000. Between 2008 and 2017, the complaint said, at least 24 N.J. clients invested about $559,000 with Nicholson and Think Big.
In April 2021, the Bureau of Securities issued a cease-and-desist order against Nicholson and Think Big for operating a fraud against investors.
The complaint said Nicholson was the only person who made investment and trading decisions, and he verbally agreed with investors that he would receive 10% of the profits from his trading as a commission. Nicholson and Think Big, which was never registered with the bureau, were successfully trading and generating profits for the investors until about 2011, when it started to lose money trading, the complaint said.
Nicholson then began to provide fictitious account statements to investors to cover the trading losses. “The fictitious account statements were ‘cut and paste’ facsimiles from real statements and showed positive returns (and no loss in value) even though at some point all investment assets had been lost in the market or … misappropriated,” the complaint said.
Investors continued to receive the false and misleading account statements from 2011 to 2017. The complaint said Nicholson, through Think Big, was using the investors’ money at least from 2017 for personal use, including to pay credit card debt, household utility bills, and a mortgage.