The SEC filed a civil fraud action against Kevin J. Wilcox, Jennifer E. Thoennes, and Eric R. Nelson last week for their alleged roles in a $16 million Ponzi scheme allegedly operated by Joseph Nelson. According to the SEC, the investment scheme involved the sale of at least $16 million worth of promissory notes offered by Joseph Nelson’s companies to more than 100 investors, most of whom were Mormons affiliated with Joseph Nelson’s church.
The SEC charged Joseph Nelson and a variety of co-defendants on June 25, 2010. The June Complaint alleged that Nelson and co-defendant Anthony C. Zufelt solicited investments from mostly Mormon investors by fraudulently claiming that they ran profitable businesses and by promising returns of over 200 percent. The Complaint further alleged that Nelson, Zufelt, and other co-defendants "each encouraged and convinced potential investors to borrow against their homes in order to invest in these schemes."
The Complaint filed last week alleges that Wilcox and Thoennes helped Joseph Nelson lure investors into the alleged scheme by soliciting millions of dollars in investments, issuing promissory notes to investors, and promising exorbitant returns. The Complaint also accuses Eric Nelson of creating fictitious business and bank documents that were used to mislead investors about the nature and profitability of Joseph Nelson and his companies.
"The SEC alleges that Joseph Nelson and his companies never purchased or sold a single merchant portfolio," wrote the Commission in a litigation release. "The money invested with Joseph Nelson and his companies was instead used by Nelson to make incremental payments to investors in a Ponzi-scheme fashion, to pay his associates, including Wilcox and Thoennes, and to pay his own lavish personal expenses, as well as those of other family members."
The SEC’s case against Joseph Nelson, and his co-defendants, is currently pending in the U.S. District Court of Utah. For more information about the cases, read the SEC’s current litigation release and find links to the June 25, 2010 case here.