SALT LAKE CITY — A father and son who federal regulators accused of running a Ponzi scheme nearly four years ago now face criminal charges in state court.
The Utah Attorney General's Office charged Wendell A. Jacobson, 61, and Allen R. Jacobson, 36, with 15 counts of securities fraud and one count of pattern of unlawful activity in 3rd District Court this week.
Wendell Jacobson owned a real estate investment firm in Fountain Green called Management Solutions, and his son managed investor relations.
Prosecutors allege the Jacobsons, through a complex web of more than 200 corporate entities, raised more than $200 million from 400 investors with "material and pervasive misrepresentations" starting in 2008.
The Jacobsons used their membership in The Church of Jesus Christ of Latter-day Saints to find and gain the trust of prospective investors, according to a probable cause statement.
The father and son told investors they would buy apartment complexes with low occupancy rates at discounted prices, then renovate and sell them within five years.
They failed to disclose that they diverted the money to operate numerous entities and pay promised returns to earlier investors, according to the statement. They also almost always failed to invest 50 percent of their own money in each project as promised and falsely said their apartment complexes had never lost money.
Wendell Jacobson managed more than 8,000 apartments in at least eight states, the statement says.
The Securities and Exchange Commission filed a civil complaint against the Jacobsons in December 2011 in what federal authorities described as a $220 million Ponzi scheme. The SEC alleged that father and son used their LDS Church affiliation to attract investors. Wendell Jacobson was the bishop of a Snow College student ward at the time.
U.S. District Judge Bruce Jenkins froze the Jacobsons' assets, and they reached an undisclosed settlement with the SEC in 2012.
Jenkins earlier this year approved a plan to pay back investors. The court-appointed receiver has paid out $100 million to date and held back about $30 million for claims still in litigation.
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