Newport man sentenced to prison in sports drink fraud

A Newport Beach man who tricked victims into investing millions of dollars into his sports drink company by severely inflating sales figures was sentenced Wednesday to 4 1/2 years in federal prison.

Randy Olshen, 52, was a founder and president of the Utah-based company called Innovative Health Solutions that made and sold drinks like “H2O Overdrive” intended to boost stamina and energy, according to a federal indictment.

Olshen pleaded guilty in May to fraud and money laundering.

In court papers, Olshen admitted that between 2009 and 2011 he told prospective investors that Innovative Health Solutions’ sales were in the millions, when they were in fact nowhere close.

For instance, he said projected sales for 2012 were $28 million when they were actually less than $600,000 according to court documents.

Olshen also falsely told victims that major companies like Costco, CVS and Rite Aid had large agreements to sell the drinks.

To back up his claims, Olshen fabricated paperwork and kept a second set of books consistent with his misrepresentations, according to the indictment.

Olshen used this scam to coax more than 50 people to invest at least $7 million, according to federal prosecutors.

Olshen, who filed for bankruptcy in 2011, also admitted to using company money on personal expenses.

As part of a plea agreement, prosecutors dropped dozens of related fraud and money laundering charges.

In a Utah courtroom Wednesday, U.S. District Judge Dale A. Kimball ordered Olshen to pay more then $7 million in restitution to his victims as part of the sentence.

Olshen must also submit to supervision by federal authorities for three years after his release from prison.