An entrepreneur from New York pleaded guilty in federal court to one count of wire fraud for a scheme related to CrossFit affiliate gyms.
Joshua Newman admitted executing a more than two-year scheme in which he defrauded multiple victims who believed they were investing in the gyms, according to a media release from the U.S. Attorney's Office in the District of New Jersey. The information filed on March 23 alleges Newman defrauded approximately 30 victims of approximately $3.1 million.
The wire fraud count that Newman pleaded guilty to carries a maximum potential sentence of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for July 19.
Newman, 36, was arrested by the FBI in May 2015. The man once profiled by the Wall Street Journal as a dorm room venture capitalist at Yale was charged with two counts of wire fraud at the time, which alleged $2 million in losses from his ventures.
In 2011 and 2012, Newman was faced with mounting legal and financial troubles as a result of judgments and liens filed against him and his film production company, according to the U.S. Attorney's office. That film production company, Cyan Pictures, failed to produce and distribute a film about the New York Yankees called "Keeper of the Pinstripes."
Beginning in 2012, Newman made material misrepresentations to solicit investments and loans purportedly for various CrossFit-related ventures he was working on. During that time, his intent was to use the money for his own purposes, including repaying others who had invested in one of his prior projects, according to the U.S. Attorney's Office.
Newman supplied his victims with doctored or bogus documentation in order to obtain the investment capital and loans. He tricked his victims into believing their investments were safe by making additional representations and supplying additional phony documents. Those documents in doctored operating agreements, false statements of ownership percentages held by various individuals and bogus Schedule K-1s purported to show the amount of annual partnership gains or losses reported to the IRS.