The Securities and Exchange Commission has begun administrative proceedings against Kent Nelson, a former San Diego-based investment adviser who pleaded guilty last year to a federal charge of mail fraud in connection with kickbacks he sent to two New Mexico state treasurers.
A hearing will be scheduled before an administrative law judge and Nelson could be barred from the securities industry, said Donald Hoerl, acting regional director of the SEC's Denver office. A California regulator has already barred him from working as an adviser in that state.
Nelson, who is currently serving a 36-month sentence in a California federal prison, also pleaded guilty in May to one count of racketeering in a settlement of separate criminal charges with state prosecutors.
A state judge suspended a nine-year prison sentence in lieu of three years probation, partly because Nelson cooperated with federal authorities in their investigation of former state treasurers Michael Montoya and Robert Vigil. The pair are both serving federal prison sentences for their roles in the pay-to-play scheme.
During a federal trial last year, Nelson admitted that from December 1999 through March 2005, he paid substantial amounts of money to influence Montoya and Vigil, and used the U.S. Postal Service to pay them kickbacks once he received state business, according to the SEC's administrative order.