LAYTON -- A Layton man has been named as a defendant in a lawsuit against an alleged multimillion-dollar Ponzi scheme that federal authorities say targeted members of The Church of Jesus Christ of Latter-day Saints.
Eric Nelson, 36, of Layton, was named with Kevin Wilcox, 30, of Vacaville, Calif., and Jennifer Thoennes, 36, of Saugus, Mass., as defendants in a lawsuit filed last week by the U.S. Securities and Exchange Commission. The complaint is part of a larger investigation into a Ponzi scheme that the SEC suspects also involved Nelson's brother, Joseph Nelson.
The SEC filed a separate lawsuit against Joseph Nelson, several other associates and two Utah businesses -- one in Clearfield and another in Syracuse -- last June.
From January 2007 to June 2010, Eric Nelson, Wilcox and Thoennes convinced more than 100 people to invest at least $16 million in Clearfield-based companies JCN, JCN Capital and JCN International -- collectively known as "the Nelson Companies" -- or in Joseph Nelson himself, according to the complaint.
Many of the people the three targeted were members of the LDS Church. They met them at church functions and through church connections.
Joseph Nelson was a member of that community, as "during the period of (Joseph Nelson's) fraud, he served as a 'Mission Leader' for his local Ward ... and as a High Counselor," the complaint against Eric Nelson, Wilcox and Thoennes reads.
They told the victims that Joseph Nelson and the Nelson Companies buy merchant portfolios, hold them and then sell them to financial institutions, such as banks. The three claimed that Joseph Nelson and the Nelson Companies earned "residual income" while holding on to the portfolios, and also when they were sold.
"Investors were promised extraordinary rates of return -- up to 200% -- in a very short amount of time," the complaint reads. They returned $7 million to investors.
But the lawsuit goes on to say these claims were false or misleading. Joseph Nelson never bought or sold a merchant portfolio, and instead used people's money to make monthly payments to other investors, pay his personal expenses and pay his employees and associates, including Wilcox, Thoennes and Eric Nelson.
The lawsuit also accuses Eric Nelson of creating, at his brother's direction, fake documents about his brother and about the Nelson Companies to mislead investors. For example, the complaint claims Eric Nelson altered his brother's bank statements to make it look like he had a lot more money than he actually did.
According to the complaint, Eric Nelson, Wilcox and Thoennes sold fraudulent investments and need to pay for their wrongdoing.
The complaint requests that the three be ordered to disgorge or pay, as the court directs, all ill-gotten gains or benefits they earned from their illegal activity and pay civil monetary penalties.