U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22695 / May 3, 2013
Securities and Exchange Commission v. Kevin J. Wilcox, Jennifer E. Thoennes, and Eric R. Nelson, Civil Action No. Case No. 2:11-cv-01219-DN (December 29, 2011)
The United States Securities and Exchange Commission settled fraud charges against Eric R. Nelson and Kevin J. Wilcox, and obtained a default judgment against Jennifer E. Thoennes, arising from their alleged participation in a Ponzi scheme operated by Joseph Nelson. The relief obtained concludes the litigation in SEC v. Wilcox.
On December 29, 2011, the Commission charged Eric Nelson, Wilcox, and Thoennes with aiding and abetting Joseph Nelson’s Ponzi scheme, which raised at least $16 million from more than 100 people to invest in promissory notes issued by Joseph Nelson’s companies during 2007 through July 2010. Among other conduct, the Complaint alleged that Eric Nelson, Joseph Nelson’s brother, created fictitious documents that were used to mislead investors about the solvency of Joseph Nelson and his companies, including altering his brother’s bank statements to reflect balances that were far in excess of the amounts actually in his brother’s accounts. The Complaint also alleged that Wilcox and Thoennes made false and misleading statements to investors, including that Joseph Nelson and his companies owned merchant credit card portfolios, that investor funds would be used to purchase additional portfolios, and that as part owners of the merchant credit card portfolios, investors would earn a portion of the monthly residual fees generated by the portfolios.
On April 12, 2013, the Court entered a final judgment against Eric Nelson permanently enjoining him from violating Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and finding him liable for disgorgement of $168,000 and prejudgment interest of $55,103, but waiving such amounts based on his financial condition. On February 19, 2013, the Court entered a final judgment against Wilcox permanently enjoining him from violating Sections 5 and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5, and finding him liable for disgorgement of $120,000 and prejudgment interest of $11,433, but waiving all but $23,230 of those amounts based on his financial condition. The Court did not order Nelson or Wilcox to pay a civil penalty based on their respective financial conditions. Eric Nelson and Wilcox agreed to settle the Commission’s charges without admitting or denying the allegations in the Complaint.
On December 20, 2012, the Court entered a final judgment by default against Thoennes. The judgment permanently enjoins Thoennes from violating Sections 5 and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5, orders her to pay disgorgement of $45,000 and prejudgment interest of $4,791, and orders her pay a civil penalty of $45,000.
The Commission’s related civil injunctive action against Joseph Nelson and others in SEC v. Zufelt, et al., 2:10-cv-00574 (DB) (D. Utah, June 23, 2010), is still pending. In addition, the Commission instituted administrative proceedings against Thoennes pursuant to Section 15(b) of the Exchange Act, based on the entry of the injunction against her in SEC v. Wilcox. See Administrative Proceeding File No. 3-15294 (April 19, 2013).