SEC Names 3 Defendants In Alleged $16 Million Credit-Card ‘Merchant Portfolio’ Ponzi Scheme Targeted At Mormons; Records Show Schemes Within Schemes Dating Back Years

EDITOR’S NOTE: If you’re keeping a Bubba Blue notebook on how to have a Ponzi scheme as opposed to shrimp, here is an entry: an alleged “merchant portfolio” Ponzi scheme.

Ponzi and fraud schemes often use impressive-sounding terminology to separate people from their money. Schemes typically mushroom to consume millions of dollars when investors — who sometimes become commission-based promoters and effectively act as unregistered brokers and dealers — accept a firm’s extraordinary claims at face value, ignore red flags such as outsized returns or engage in willful blindness because choosing to see is bad for profits.

In June 2010, the SEC charged Joseph A. Nelson, Anthony C. Zufelt, David Decker, Cache Decker and five companies “in connection with three related Ponzi schemes largely targeting the Mormon community.” The complaint was filed in Utah and alleges schemes within schemes dating back at least to 2005.

As 2011 came to a close, the SEC named three additional defendants in a separate, Nelson-related complaint also filed in Utah. Named in the year-end complaint were Kevin J. Wilcox, Jennifer E. Thoennes and Eric R. Nelson.

Eric Nelson is Joseph Nelson’s brother. He is accused of deceiving investors by creating “fictitious bank account statements reflecting balances in his brother’s accounts that were far in excess of the actual amounts in those accounts.”

Wilcox and Thoennes are accused of solicitation fraud

Joseph Nelson, Wilcox and Thoennes told investors “that Joseph Nelson and his companies were engaged in the business of purchasing ‘merchant portfolios’ of credit card processing accounts, holding them for a certain period of time, and then selling them for a profit to financial institutions, such as banks.”

“Many” of the investors were “fellow members of the Church of Jesus Christ of Latter Day Saints” whom Joseph Nelson “identified and targeted through church connections and during church functions,” the SEC charged.

But “Joseph Nelson and his companies never purchased or sold a single merchant portfolio,” the SEC charged.

“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 charged.

Affinity fraud is a major problem in Utah. In June 2010, the FBI said thousands of people in the state had been victimized by Ponzi schemes and cases of investment fraud that caused Utah residents to lose an estimated $1.4 billion.

SEC Warns About Scams That Use Social-Media Sites To Fleece The Masses

In a separate, unrelated action yesterday, the SEC charged an Illinois-based investment adviser with offering to sell fictitious securities on LinkedIn, a social-media site.

Social media increasingly are being used to sanitize schemes and help them mushroom, a top SEC official said.

“Fraudsters are quick to adapt to new technologies to exploit them for unlawful purposes,” said Robert B. Kaplan, co-chief of the SEC Enforcement Division’s Asset Management Unit.

Charged in an SEC administrative action yesterday was Anthony Fields, 54, of Lyons, Ill.

The agency alleged he “offered more than $500 billion in fictitious securities through various social media websites.”

On LinkedIn, for example, he allegedly used “discussions to promote fictitious ‘bank guarantees’ and ‘medium-term notes.'”

Read the SEC order against Fields, Anthony Fields & Associates and Platinum Securities Brokers. See this SEC Investor Alert on social-media fraud.

Revisit this July 2010 PP Blog story on a FINRA warning about HYIPs and scams that use social media to proliferate. See this Nov. 2, 2011, PP Blog editorial on a threat by AdLandPro — a purported social-media site — to sue, an antifraud forum.

Among other collapsed schemes, the alleged AdSurfDaily and Pathway To Prosperity Ponzi schemes were promoted on AdLandPro. A recent thread at AdLandPro is promoting OneX, which also is being promoted by ASD President Andy Bowdoin while he awaits trial on criminal charges of wire-fraud, securities fraud and selling unregistered securities.

Among the screaming headlines in OneX-related content on AdLandPro is this one:

“Are You in Deep Money Trouble? See Me at Once!”


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One Response to “SEC Names 3 Defendants In Alleged $16 Million Credit-Card ‘Merchant Portfolio’ Ponzi Scheme Targeted At Mormons; Records Show Schemes Within Schemes Dating Back Years”

  1. The Anthony Fields is also reported here:
    SEC: ‘Man tried to sell $500bn investments on LinkedIn’

    SEC has not claimed that the alleged trickster made off with any cash, but said he had received interest from “multiple purported potential buyers”.