In alleged Ponzi scheme, SEC adds 3 to list of accused
Federal regulators have filed a new lawsuit in an existing case, alleging that three additional people were involved in an investment fraud targeting members of The Church of Jesus Christ of Latter-day Saints.
The Securities and Exchange Commission has sued the trio in connection with an alleged Ponzi scheme that took in about $16 million by promising returns as high as 200 percent.
In a civil complaint in U.S. District Court for Utah, the SEC named Eric R. Nelson, 36, Layton; Kevin J. Wilcox, 30, Vacaville, Calif.; and Jennifer E. Thoennes, 36, Saugus, Mass. A previous SEC lawsuit had targeted Nelson's brother, Joseph A. Nelson, formerly of Layton, and his companies, JCN, JCN Capital and JCN International, all of Clearfield.
According to the new lawsuit filed Thursday, the three promised investors rates of return of up to 200 percent if they invested in the credit card debt owed to merchants.
Many of the investors who poured at least $16 million into the operation were "fellow members of The Church of Jesus Christ of Latter-day Saints" who had been "targeted through church connections and during church functions."
About $7 million of investor money was returned to investors as purported payments from the investments, creating the illusion the companies involved were profitable, in what is known as a Ponzi scheme, according to the lawsuit.
Eric Nelson, Wilcox, and Thoennes used false documents to deceive investors, the lawsuit says.
Nelson's attorney, Mary Corporon, declined comment Friday. Wilcox and Thoennes could not be reached.
In the original June 2010 lawsuit, the SEC had not named the three as defendants, but this week said it did so because of evidence uncovered in its investigation.
Also named in the original complaint were Anthony C. Zufelt of Roosevelt, David M. Decker of Provo and his brother, Cache D. Decker, 32, of Leesburg, Va. Other companies allegedly involved were Zufelt Business Services, of Syracuse, and Silver Leaf Investments, of Clearfield.
Joseph Nelson was a high counselor in his stake who contacted LDS members through church connections and church functions, the SEC said.
Besides making Ponzi payments, Joseph Nelson also used investor monies 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 new lawsuit said.
So-called affinity fraud, in which members of a group sharing interests and beliefs are targeted by scammers, is a particular problem in Utah, where the LDS community is tightly knit with a high degree of trust between members.