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November 18, 2011 in City
Extravagance alleged in fraud indictment
Nelson
(Full-size photo)
Federal prosecutors filed a 110-count felony indictment Thursday against Doris “Dee” Nelson, architect of an alleged international Ponzi scheme that netted $126 million to prop up payday lender Little Loan Shoppe.
Nelson asked for a federal public defender during an initial appearance in U.S. District Court on Thursday afternoon. U.S. Magistrate Judge Cynthia Imbrogno wanted to review financial disclosures before giving Nelson a taxpayer-funded defense attorney.
Nelson will remain in custody until a Monday bail hearing.
Criminal defense attorney Carl Oreskovich, who has been working on behalf of Nelson and sat in the audience section of the courtroom, declined to comment on the charges.
Nelson faces 71 counts of wire fraud, 22 counts of mail fraud and 17 counts of international money laundering.
Agents with the FBI and the Internal Revenue Service arrested Nelson Thursday morning – an action widely anticipated in the wake of a complicated business bankruptcy, a court-ordered financial examination that uncovered fraud, and a broad civil action brought against Nelson and others in September by the U.S. Securities and Exchange Commission.
Nelson on Wednesday asserted her Fifth Amendment right against self-incrimination in the SEC case.
The grand jury indictment unsealed Thursday accuses Nelson of building a network of 800 investors, many of whom bought promissory notes assuring them a 40 percent to 60 percent annual return.
While most of the money went into the business, Nelson is accused of using millions to fund home improvements, gambling jaunts to Las Vegas, shopping sprees, luxury sports cars and high salaries.
To meet the interest payment promises made to early investors, Nelson borrowed new money.
Nelson and her husband denied running a Ponzi scheme in a brief and tearful interview with The Spokesman-Review two months ago outside their home in Colbert, north of Spokane.
Nelson opened her first payday loan business 14 years ago near Vancouver, B.C. She moved to Spokane in 2001 as the business grew.
Prosecutors allege she lived an extravagant lifestyle with business funds.
The indictment alleges that Nelson paid herself millions of dollars and put personal expenses of $374,000 on company credit cards within two years. She bought a $127,000 motor home, paid $61,000 for a Chevy Corvette and $112,000 for a Mercedes Benz S550.
During a five-year run she spent $220,000 with clothier St. John Knits and another $217,000 at Nordstrom. Nelson also gambled away investor funds, including $400,000 at Las Vegas casinos including the Mirage, New York New York, Monte Carlo, Luxor and the Bellagio, the indictment says. Tens of thousands more were spent on luxury vacations and artwork.
Federal agents already seized an extensive jewelry collection 18 months ago.
Many of her investors, meanwhile, lost everything.
“Their stories are just terrible. Heartbreaking,” said Sandpoint attorney Ford Elsaesser, who represents more than 360 investors. “Some of these folks lost everything and their hardship is real.”
The investors are from across the United States and Canada. Nelson also solicited money from investors in Mexico and Spain.
Many were members of the Jehovah’s Witnesses denomination.
As Nelson defends herself against lawsuits and criminal charges, investors must pin their hopes for any financial recovery on the bankruptcy process.
A trustee is unraveling the finances of Little Loan Shoppe and has even filed claw-back lawsuits against investors – essentially suing them to return payments from Little Loan Shoppe in an effort to make an equitable disbursement.
It may be the best chance at any recovery since the business and its remaining assets are worth little.
Parishes giving $1.5 million toward settling sex cases 
bigchasteve on November 18 at 2:39 a.m.
How can these federal lawyers claim extravagant salaries are improper when the wall street moguls take millions in bonuses from struggling companies. No wonder there are tens of thousands of people demonstrating around the country when there is such inequity in the treatment of citizens based on financial status.
Lewis on November 18 at 3:30 a.m.
when will we see the bastards that started the housing crisis sent to prison, oh i forgot that is ok our government was involved in that one.
meadman on November 18 at 8:10 a.m.
yes send them to prison…. and then send about 2/3 of the Wall Street financial folks to prison with them…. And people wonder why the OWS movement is gaining momentum… incredible!
heybattabatta on November 18 at 12:50 p.m.
you people are clueless. You need a life, a job, or both.
Charly Brown on November 20 at 11:31 a.m.
I hope they keep her in jail Dee and Her children have Dual Canadian and US citizenship I am sure the Canadians are looking for her as well unfortunately the Canadian justice system is much easier on fraudsters like Dee Nelson / “Foster” (her previous Canadian name) as per public defender my Butt , She told some investors she has a overseas bank account which we can use
She drew a $ 16,000 paycheck ever month, her husband Denis Nelson received $ 16,000 rent on a building which was paid for by the investors, his company installed all the office equipments in LLS with another company which was paid for by the investors .He used his experience as a Spokane air-force efficiency expert from AFB to make LLS more efficient he did a hell of a good job by screwing all the investors efficiently . her Son Alex Foster received a monthly paycheck for $ 100,000 for leads his company provided for LLS
His leads company was also paid by the investors and later conveniently separated from LLS in total Dee Nelson started over 24, companies to defer funds, I believe it’s called money laundering
Note the so called investors did not invest money in LLS they loaned money on promissory notes personal guaranteed by Dee Nelson /Foster
money man on November 21 at 11:42 a.m.
We investors are guilty of: Being too gullible to believe that a 30-60% return on investment was legitimate; of buying stock in a company that was exploiting others at an annual interest of over 700%. If we are subject to clawback litigation, we deserve that fate, regardless of what our background or affiliations may be. Admittedly, we ourselves wouldn’t consider borrowing money from a credit card or loan at more than 8 percent. It was greedy on our part to even think we could rightfully and morally invest in a project that exploited the ignorance of those less fortunate.
Charly Brown on November 23 at 10:22 a.m.
First of all no one invested money or purchased Stocks in LLS. Money send to Dee Nelson and LLS were loan’s on personal promissory notes.
2nd show me a credit card that charges 8 % I gladly apply for one, most of the credit cards charge 18 % and Sears charges 28 %
You must be one of the J/W’s who mortgaged their homes send the cash to Dee Nelson and used the interest on the money to live happily ever after in Mexico, instead of paying of the mortgage first, now you cry foul and hope you get some of your loans back from other loan providers who where a little bit more careful providing loans to Dee Nelson.
money man on November 23 at 12:17 p.m.
Oh Charly, what did I write that was so difficult to understand? First of all, whether you call it purchasing stock or bonds, or sending money to someone based on a personal agreement, it is still an investment with the goal of gaining interest on principal. You’re getting a little picky about word choice, and frankly, I don’t know what gives you the basis for coming off so judgmental.
Secondly, many credit cards will offer balance transfers, or loans, based on the available credit of the account that can go far lower than 8%, at least for a temporary period, such as 12-24 months. When your temporary period expires, you accept another low offer from another credit card. You’d keep paying interest of course, but not the ridiculous amount you suggested. You’d know that if your credit was good, because such offers are only made to people with a very good credit history, and fortunately for me, I have that experience.
Let me say, lastly, that to make accusatory assumptions about me or any other group, as you say “J/W’s”, is unfair. Whether people invest out of their own savings or other investment(s) in something that turns out to wreak ,THAT is their own business, and they will have to live with the consequences of their decision. Religious affiliation has nothing to do with people investing what turns out to be a Ponzi scheme. The Jehovah’s Witness’ organization advises their members to be very cautious about business adventures, and to keep from luring other Witnesses into potentially dangerous financial affairs. This type of activity would definitely be looked down on. I unfortunately, did not heed the advice. My actions though, are not typical of an average J/W, so I believe it is unfair to label an entire group based on the actions of a small minority who failed to heed good counsel. If you had read accurately my previous statement, you would have seen that I am not ‘crying foul, hoping to get some of my money back’. If you are going to post something, get your facts clear and straight. I hope you can find a credit card that is better than what you have. 18-28% is just unacceptable.