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Man arrested, charged in Utah-based investment fraud scheme

SALT LAKE CITY — A San Diego, Calif., investment manager was arrested Thursday for his alleged role in a $25 million investment fraud scheme.

Robert L. Holloway, 54, has been charged with four counts of wire fraud and one count of making and subscribing a false income tax return, according to an indictment unsealed Thursday in the District of Utah.

Holloway was the CEO and managing partner of Utah-based US Ventures, founded in 1999. According to the indictment, he recruited investors from October 2005 to April 2007 by making false representations about the investment firm.

He was arrested Thursday morning in San Diego.

The indictment states that Holloway falsely claimed that US Ventures used proprietary trading software that was consistently profitable; that it had more than $32 million under management and generated returns of 0.8 percent per trading day; and that it would retain a 30 percent share of investors' profits as a management fee.

The indictment states that US Ventures raised more than $25 million from investors for its trading activities.

Holloway allegedly generated and distributed reports to investors containing false daily returns on their investments, when US Ventures actually was steadily losing money, according to the indictment. Between October 2005 and April 2007, the investment firm lost more than $10 million in trading, the indictment states.

Profit figures listed in the reports also were fabricated, according to the indictment. Holloway and US Ventures also made "profit distributions" to investors that consisted of funds solicited from new investors, not actual profits, the indictment states.

The indictment also alleges that Holloway misappropriated investors' funds to support his lavish lifestyle, as well as his then-wife's eBay business.

In 2006, Holloway diverted more than $1.2 million in investor funds to a business account used for his personal use, according to the indictment. Holloway filed a personal tax return for that year claiming a gross income of just $27,500.

The maximum penalty for wire fraud is 20 years in prison and a fine of $250,000 for each count. The maximum penalty for the tax evasion charge is three years in prison and a fine of $100,000.

Holloway is scheduled to appear in Salt Lake City on Dec. 16.