An unregistered investment advisor who admitted to swindling 24 investors out of more than $471,000 will spend the next few years in a New Jersey state prison.
Scott Nicholson, 54, has been sentenced to three years for a scheme that saw him recruit investors to pour money into an unregulated commodities trading group he founded called Think Big Institute.
As the losses started piling up, Nicholson began to misappropriate investor funds by withdrawing cash and pulling in new targets to cover personal expenses like credit card debt, household utility bills and his mortgage. Court documents said between January 2013 and February 2018, Nicholson took $644,952 in investor funds.
Nicholson transferred $373,823 of the stolen funds to his own checking account, while using $271,129 to pay his expenses directly from the group's account.
The victims lost a total of $471,602 in the deception with the total impact of the theft offset by dividends they received while working with Nicholson, officials said.
The North Haledon, New Jersey man pleaded guilty to second-degree theft by unlawful taking in September 2021. As part of his plea agreement, Nicholson is required to make full restitution and consent to the dissolution of Think Big.
“Protecting New Jerseyans from investment fraud and other scams is a priority for our office,” Acting Attorney General Andrew J. Bruck said in a statement. “This case demonstrates our willingness to use all the tools at our disposal — civil and criminal — to protect residents from financial exploitation.”
Court documents said Nicholson managed to hide the substantial investment losses by Think Big by creating fraudulent investment statements showing false positive returns. The fictitious account statements were “cut-and-paste” facsimiles from real statements.
But Nicholson was unable to keep the deception going. In December 2017 and January 2018, he admitted to the Think Big investors that their money was gone and their investment was worthless, according to court documents.
In March 2018, Nicholson signed a promissory note agreeing to pay restitution to all of the investors within 36 months.
In the court filing, Nicholson stated that he had a “desire to repay this group and right the wrong I have committed.” As of April 2021, Nicholson had only paid back about $12,000.
His failure to make repayment led to civil lawsuits from investors and the start of the New Jersey Bureau of Securities investigation.
“In both matters, he was deposed and readily admitted misappropriating monies for his own personal benefit,” court documents said.
Nicholson had been registered with the New Jersey Bureau of Securities as an agent or investment advisor representative since 1991, according to court documents. Most recently, he was registered as an agent of Cambridge Investment Research from January 2007 through April 2009.
Nicholson has not been registered with the state bureau in any capacity since 2009. According to FINRA BrokerCheck, he was affiliated with seven different firms between 1991 and 2009.
Think Big got its official start in 2008 when Nicholson organized a pooled investment with five friends, raising an initial investment of $25,000, according to court documents. But Nicholson was the only person permitted to make investment and trading decisions.
Nicholson was initially under investigation by the New Jersey Bureau of Securities, which referred the case to the Division of Criminal Justice Financial & Cyber Crimes Bureau.
His attorneys did not respond to requests for comment.
“The bureau is committed to doing everything in its power to protect investors from unscrupulous financial professionals,” Amy Kopleton, acting chief of the New Jersey Bureau of Securities, said in a statement. “The Bureau’s ability to refer this matter to the Division of Criminal Justice was key to obtaining justice with a criminal conviction and restitution for the investors whose money he stole.”
