SALT LAKE CITY — Three more people are linked to a California man who apparently used his LDS Church leadership position to attract investors to an alleged multimillion-dollar Ponzi scheme, federal authorities say.
The U.S. Securities and Exchange Commission filed a complaint last week against Eric R. Nelson, 36, of Layton; Kevin J. Wilcox, 30, of Vacaville, Calif.; and Jennifer E. Thoennes, 36, of Saugus, Mass. Last summer, the SEC filed a complaint against Nelson's brother Joseph A. Nelson and three others.
From June 2005 through June 2010, Joseph A. Nelson, 33, of El Dorado Hills, Calif., and his associates solicited at least $16 million from more than 100 people to invest in promissory notes offered by JCN Inc., JCN Capital LLC and JCN International, all of which he owns and controls, according to the complaint in U.S. District Court.
The companies purported to buy merchant portfolios, hold them for a certain period of time and then sell them for a profit to financial institutions such as banks. Investors were promised extraordinary rates of return — up to 200 percent — in a very short amount of time, the complaint says.
The SEC alleges those claims were false or misleading and that Joseph Nelson never bought or sold merchant portfolios. The Nelson companies, the SEC said, created fake documents to mislead investors into believing the portfolio sales earned money.
"(Joseph) Nelson used his position of authority in The Church of Jesus Christ of Latter-day Saints to lull prospective investors," the complaint says. He served as a ward mission leader and a stake high councilor.
"Nelson actively targeted fellow LDS members, reaching out to them through church connections and during church functions, and many if not most of his investors are LDS members."
Joseph Nelson used new investors' money to pay old investors, pay associates, including his brother, and fund a lavish lifestyle, according to the complaint.
The new SEC complaint alleges Eric Nelson created documents that deceived investors about the solvency of his brother and the Nelson companies. He also altered his brother’s bank statements to reflect balances that were far in excess of the amounts actually in the accounts, the complaint says.
The SEC filed a complaint against Joseph A. Nelson; Anthony C. Zufelt, 30, of Roosevelt; David M. Decker Jr., 36, of Provo; Cache D. Decker, 32, of Leesburg, Va.; Zufelt Business Services Inc.; and Silver Leaf Investments Inc., last June.
Zufelt spent a great deal of money on his other businesses, particularly Fantasy Fight Club, including $10,000 to paint the company's logo on his Dodge Viper and tens of thousands of dollars to sponsor mixed martial arts fighters. He also used investor funds to pay for personal and luxury expenses, including numerous trips to Las Vegas for himself, friends and employees, the SEC alleges.
In December, two others were accused of using leadership positions in the LDS Church to further investment fraud.
Wendell Jacobson and his son Allen Jacobson were involved in a $220 million Ponzi scheme through their company Management Solutions based in Sanpete County, according to the SEC. Wendell Jacobson is bishop of a Snow College student ward.
In relation to that the case, LDS Church spokesman Scott Trotter said, "The Church of Jesus Christ of Latter-day Saints encourages its members to be honest in their dealings and conduct themselves with integrity. When someone preys upon the members of a congregation or community in order to get personal gain, it is a reprehensible betrayal of confidence, and its perpetrators are rightfully subject to criminal prosecution."