Nicholson sent the following statement to f4wonline.com:
"I was in DSW during the time of the incident between Zack Ryder, Melissa Coates and Drew Hankinson. Nobody involved in the "Naked Jelly Donut Incident" were forced to do it. They volunteered to do it to get out of training that day. Bill had come up with the elaborate game because he wanted them to train and didn't think they'd agree to it. Hankinson was not "nearly naked" he was totally naked, the only thing covering his genital area were his hands. He was in the ring nude for approximately 30 - 45 minutes while Demott walked from one corner to the other holding up approximately 18 jelly donuts for Hankinson to "stink face" on both Zack Ryder and Melissa Coates. Ryder and Coates were cheered on heavily by many of the DSW talent who also did not want to train."
"I had passed a try out and was paying to be there to learn wrestling and attempt to get a WWE contract but went back to wrestling in Puerto Rico shortly after this incident occurred. I doubt Vince McMahon knew that this type of "training" was going on in his territory and I had assumed him finding out was one of the reasons it was shut down and Demott was let go. Although I disagreed with some of his training methods, I had a good relationship with Bill Demott while I was in DSW and valued the wrestling related advice he gave me."
Here's video of Nicholson talking about the incident: