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Former Nye County Commissioner Henry Neth was arrested at his Pahrump home Thursday morning by Nevada Secretary of State investigators.

He is charged with five counts of securities fraud and one count of embezzlement in connection with a land sale scheme.

Investigators charged Neth and his partner, Eric Frye, raised $2.4 million from investors, informing them it would be used to purchase 252 acres a few miles northwest of Kingman, Ariz., under the company name of Stockton Jane.

The complaint charges Neth and Frye instead used the investments to purchase the land in their own name and diverted the remaining funds to a separate company, the Eagle View Group.

"This appears to be a case in which investors thought they would be getting an unheard-of return, perhaps because the suspect had held elected office in the community," Nevada Secretary of State Ross Miller said in a prepared statement.

"The prospect of a 123 percent return certainly falls under the category of too good to be true but the fact that it's being offered by a former elected official might add credibility for some investors. It should serve as further warning that dealing with unlicensed brokers or dealers or unregistered securities is virtually always a losing proposition for the investors."

Neth defeated David Cleveland in November 2000 to win election as Nye County District 3 commissioner, 1,923 votes to 1,698. But he lost badly in the September 2004 primary, garnering only 110 votes.

His 2000 opponent, Cleveland, was sentenced to prison last year after pleading guilty to driving under the influence of a controlled substance and driving under the influence causing substantial bodily harm in a Thanksgiving 2007 traffic accident that claimed a life.

Neth is also a managing partner in Provenza-Neth Properties, a Pahrump real estate firm.

The complaint charges that on May 16, 2005, using $570,000 of Stockton Jane funds the defendants paid a deposit on purchasing 252 acres in the name of Neth and Frye. Between June 16, 2005, and June 24, 2006, $1.3 million in Stockton Jane funds were transferred to the account of Eagle View Group Inc. in over 29 separation transactions, the complaint alleges.

On June 24, 2005, the complaint charges $300,000 of Stockton Jane funds were used to pay a commitment fee to Meecorp Capital Markets for services rendered to Eagle View Group Inc. -- services not connected with the Stockton Jane project. Another $261,200 in investor funds were used for purposes unconnected to the Stockton Jane land project.

Colin Haynes, an investigator for the Nevada Secretary of State Securities Division, filed an affidavit stating he began his investigation July 9, 2008, based on a complaint filed by Jonathon Baktari, an investor in Stockton Jane.

Investors were told they could receive annual returns on their investments in excess of 123 percent. They could invest in increments of $5,000, which purchased one membership unit of the corporation.

In 2007 Baktari learned his investment was never placed in the name of Stockton Jane but in the personal names of Neth and Frye, Haynes stated.

Neth told Baktari that Stockton Jane raised $2.4 million, of which $1 million was used to pay for the land purchase, while $1.4 million was diverted to another project involving 113 acres of land Neth and Frye were trying to develop.

Neth responded to a subpoena issued July 25, 2008, providing investor names and minutes of an investor meeting on Sept. 27, 2007, in which he and Frye acknowledged taking $1.4 million of funds to a different project and purchasing the 252-acre parcel under their names.

Joe Ott, the seller of the land, confirmed he sold 252 acres to Neth and Frye and declined to carry a note for the balance of the sales price in the name of a limited liability corporation.

Neth and Frye agreed to pay $750,000 to 14 plaintiffs as part of a confession of judgment in a civil case concluded last summer. That stems from a lawsuit filed Oct. 30, 2007, which claimed Neth and Frye recruited 62 people to invest from $25,000 to $200,000 in Stockton Jane.

The Kingman property was purchased for $23,500 per acre, a total of over $5.9 million, according to documents filed in the civil case. The property was originally master-planned for 957 lots of 6,000 square feet or less.

During the investors meeting in September 2007, Neth is seen on tape admitting he had to divert funds partly to pay for a concrete culvert and other costs on the other 113-acre project.

"I had no idea the market was going to turn and I could have never predicted it. So I made the decision to loan that $1.4 million to the 113 (acres)," Neth said.

Baktari, who together with partner Sassan Kaveh lost $200,000 in the investment, according to the complaint, said the plaintiffs so far haven't recovered any of their judgment against Neth.

"I hope this sends a message out to people that they can't take investors' money and do what they want with it and have no repercussions," Baktari said.