When federal prosecutors accused Robert Boston of fraudulently luring investors so, in part, he could fund his son Justin's racing career, the four-day trial included arguments over whether racing is a viable marketing opportunity and how much should be spent by a startup company.
Robert Boston was found guilty Friday by a 12-member jury on all four charges: conspiracy to commit wire fraud, wire fraud, securities fraud and money laundering. Sentencing will come at a later date with a possible maximum sentence of 80 years.
Federal prosecutors argued Boston conned investors to pour money into the computer recycling center Zloop. They claimed that he and Zloop co-founder Robert LaBarge spent on a lavish lifestyle as well as more than $6 million for Boston's son, Justin, to race.
Justin Boston was not involved in the scheme other than as being Robert's son and driving the Zloop-sponsored race car. Boston won two ARCA races and had four top-10s in nine NASCAR Camping World Truck Series races. He has not raced in NASCAR since Zloop went bankrupt in 2015.
Robert Boston did not testify in his defense. Tate argued that the racing was always part of the marketing plan, and it was obvious to investors. Zloop, according to testimony during the trial, paid $4.9 million directly to race teams (Kyle Busch Motorsports, Joe Gibbs Racing and Venturini Motorsports) and more than $6 million total when including seats and other items.
Venturini Motorsports sponsor reports filed into evidence indicated that the Zloop name earned approximately $3.8 million worth of television exposure in its name alone and more than $9 million when including things such as its website, the Zloop 150 ARCA race it sponsored and other Zloop-related programs. In 2013, the name "Zloop" or logo appeared or was mentioned for 3 hours, 22 minutes during ARCA telecasts.
Federal prosecutors argued that Justin racing was among the motives to commit crimes -- that no start-up company would spend more than $6 million in marketing when it has taken in $33 million from investors and less than $4 million from third-party transactions.
"[They] spent more on their marketing than they did over their entire operational revenue," federal prosecutor Taylor Phillips said in his closing argument.
In addition to Justin Boston's racing, Zloop purchased suites and/or had sponsorship deals with the NFL's Carolina Panthers as well as Bristol Motor Speedway, Kentucky Speedway and Pocono Raceway.
Many of them filed claims as part of the Zloop bankruptcy. Kyle Busch Motorsports released Boston nine races into the 2015 truck season after he stopped paying for the ride (the original two-year contract that had Boston/Zloop paying $3.2 million a year for Justin to drive a KBM truck) and just finished civil litigation in October. KBM had to return $462,500 to investors as part of the Zloop bankruptcy proceedings and then landed a judgment of $442,561 against Justin Boston.
--- ESPN ---