Sentencing for Robert Boston of Zloop was scheduled for Monday
In December, Robert Boston was convicted for fraud in trial court. He was suppose to be sentenced on Monday September 17th. However, due to the recent Hurricane and severe flooding some 50+ court houses in the state of North Carolina alone were closed.
The December trail lasted four days. It took the 12 member jury two hours for to declare him guilty of defrauding investors. The sum of the fraud totaled $25 million of the $33-million brought into the company.
Of the four charges: Conspiracy to commit wire fraud, wire fraud, securities fraud and money laundering… Boston was declared guilty on every one of them.
Boston tricked investors into dumping large sums into his computer recycling startup company that went by the name Zloop. Instead of that money going into the company it went to private islands, luxury cars, a jet plane, a suite at an NFL stadium and the funding of a short-lived NASCAR career.
The defendant always claimed that it was just a failed startup business, not a scam. The attorney detailed that it was ‘defective machinery’ that caused the business to fail.
However, Robert Boston spent over $6-million of the marketing budget on his son’s racing career alone. A bulk of those funds went to Kyle Busch Motorsports, Joe Gibbs Racing as well Venturini Motorsports in the form of sponsorship payments.
Justin Boston, son of the startup’s co-founder was selected as the driver. He piloted machines in the ARCA Racing Series, NASCAR Camping World Truck Series and the NASCAR Xfinity Series.
“I spend $5 million a year so he can play race car driver,” Boston stated.
The startup company brought in revenue of $4 million following the $33 million inherited from investors and loans. The company spent $2 million more on race car related advertising than the revenue they actually brought into the company in terms of sales and franchises.
“[They] spent more on their marketing than they did over their entire operational revenue,” federal prosecutor Taylor Phillips said in his closing argument during the trial of Boston.
The other co-founder, Robert LaBarge pleaded guilty last year. However, during the December 2017 trial of his business partner, he stated that he took a back seat to the decisions made by Boston. He claimed he advised against the marketing budget to no avail.
The company purchased a $800,000 private jet. Beyond that, they also purchased a $79,808 suite for the Carolina Panthers NFL games. That just scratches the surface of the outrageous purchases which included everything from the above mentioned jet plane to luxury watches.
A large portion of the December trial included arguments of whether or not ARCA and NASCAR were valid forms of advertising for a started company. It might not have looked so bad if the sponsor placed anyone outside of the family in the racing seat.
Yet, the race related marketing was more than just the sponsorship of race cars. The company also sponsored ARCA race events and various race tracks on the NASCAR circuits.
Justin Boston was released from his ride at Kyle Busch Motorsports in 2015. Zloop failed to produce sponsorship payments. They were due to pay KBM $3.2 million per year.
KBM sued Justin and Robert Boston for $650,000. In October 2017, the courts ordered Boston to pay $450,000 to Kyle Busch Motorsports. KBM initially returned that money when Zloop declared bankruptcy.
After Zloop filed for bankruptcy, they came into a line of credit for another $14-million. That’s when they bought the jet plane.
Both Robert Boston and his partner Robert LaBarge were declared guilty. The sentencing could net up to 70 years in prison. Justin Boston, the driver of the various NASCAR race cars was never brought on charges.
Due to weather, the sentencing hearing for Robert Boston is now due to be rescheduled.
Between 2014-15, Justin Boston ran ten NASCAR Camping World Truck Series events. He netted an average finished of 15th and his career best came at Kansas Speedway where he finished 7th.
Beyond the NCWTS, Boston ran two races in the NASCAR Xfinity Series for Joe Gibbs Racing is 2014. He finished 9th at Kentucky Speedway and 12th at Dover International Speedway.
Boston never picked up a win in his 14 NASCAR sanctioned races. However, in 2013-14, he ran two full seasons with the ARCA Racing Series. He collected 16 top-5’s and two race wins. Those wins came at Toledo Speedway and Madison International Speedway in 2014. His best championship effort came in 2013 where he finished 3rd as Frank Kimmel claimed the ARCA Racing Series championship.
More
Related: What does it cost to rent a ride for the NASCAR Truck Series?
