This is an archived article that was published on in 2015, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

After being sued in federal court, a father and son now face criminal charges for their alleged fraud scheme.

Wendell A. Jacobson, 61, and his son Allen R. Jacobson, 36, were both charged Monday in 3rd District Court with a pattern of unlawful activity and 15 counts of securities fraud. All of the offenses are second-degree felonies, which carry a 1 to 15-year prison sentence.

Prosecutors also filed warrants for the Jacbonsons' arrest, with bail set at $100,000. Wendell Jacobson lives in Fountain Green, a town in Sanpete County. His son, according to court records, lives in Alabama.

The duo allegedly used a complex web of more than 200 corporate entities — under the umbrella of Management Solutions, Inc. — to raise over $200 million from more than 400 investors. Last April, a federal judge ruled that they would all get their money back.

The Jacobsons allegedly offered people the chance to invest in limited liability companies that, directly or indirectly, owned more than 8,000 apartments in at least eight states. The father and son also reportedly told investors that they would buy apartment complexes at discounted prices, renovate them, then try to sell them back within a few years.

"The Jacobsons did not disclose to investors that the investor funds were immediately diverted to, and pooled in, one of several large bank accounts," according to the charges. "… After commingling and pooling new investor funds into these accounts, the Jacobsons then redirected the funds to pay operating expenses of the numerous entities and also to pay promised returns to earlier investors."

The Securities and Exchange Commission sued Management Solutions and the Jacobsons in 2011. Last April, U.S. District Judge Bruce Jenkins approved a plan to give investors back 100 percent of the money they poured into the company.

David Broadbent, an attorney for court-appointed receiver Gil Miller, said then that about $100 million was available for a first round of distributions, with another $31 million held back as a contingency to cover claims still under litigation.

Jenkins had previously ruled that Management Solutions was not a Ponzi scheme going back to 1998 as the first receiver in the case had argued.

But Miller, who was appointed to take over as receiver about a year ago, has said that the company was being operated fraudulently since the beginning of 2009.

Broadbent told Jenkins in April that Management Solutions had "many characteristics of a legitimate business" up to Dec. 31, 2008.

"By that date, however, the enterprise was insolvent," Broadbent said then, adding that it "exhibited the characteristics of a Ponzi scheme."

As of Monday afternoon, neither of the Jacobsons had been booked into Salt Lake County jail. Neither have an appearance scheduled yet in district court.

Twitter: @MikeyPanda