April 4, 2014 in City

Online lender charged with 110 counts of fraud, lying to investors

By The Spokesman-Review
 

The leader of a major Ponzi scheme involving payday lender Little Loan Shoppe pleaded guilty Thursday to 110 charges of fraud and money laundering.

Doris “Dee” Nelson, the 55-year-old Canadian who turned a fledgling payday loan store near Vancouver, B.C., into a sprawling Spokane-based enterprise making online loans in two countries and multiple states, faces a possible prison term of decades and fines in the millions of dollars.

Her voice soft and sometimes cracking, Nelson rejected a plea agreement from federal prosecutors and instead handled the outcome of the case her own way in U.S. District Court, admitting guilt to each of the 110 counts of lying to investors about the profit potential of her Little Loan Shoppe.

The Ponzi scheme she orchestrated involved 650 people who invested $137 million.

While some early investors recouped their money and profits, dozens of others lost about $44 million, according to Assistant U.S. Attorney Jill Bolton.

A plea deal offered by prosecutors remained on the table until recently, Bolton said in court. She declined to disclose the details.

Nelson now faces a July sentencing on 71 counts of wire fraud, 22 counts of mail fraud and 17 counts of international money laundering. She acknowledged to U.S. District Judge Robert Whalen that she understood her conviction also could result in deportation to her native Canada.

Her husband, Dennis Nelson, called the case a miscarriage of justice and said he planned to broadcast his misgivings about how the case was handled during the sentencing hearing.

“For one thing, the lawyers haven’t even looked at everything involved,” he said, accusing the government of pressuring witnesses who would have offered favorable testimony for Nelson.

Her trial had been set for Monday.

Nelson told the judge she quit her schooling in the 10th grade. In 1997 she began operating the payday loan business, and it grew quickly as she used a professional demeanor to persuade investors they were investing in a solid business, not a troubled company.

Prosecutors said she solicited money to keep the business growing, and soon the promises of up to 75 percent annual returns to investors caught up with her. So she turned to using new investments to repay earlier investors until the entire business imploded and went into bankruptcy.

Former employees were prepared to testify that Nelson was controlling and intimidating, traits that prevented them from questioning her business decisions and practice of moving money around between bank accounts, according to court records.

During the height of the scheme, Nelson is accused of paying herself millions of dollars and raiding the business treasury to fund gambling trips and expensive cars and jewelry.

Her downfall created a legal tangle of financial claims, business dealings among her 150 different business entities in the United States and Canada, and a complex bankruptcy.

Federal prosecutors are pursuing a forfeiture action to seize Nelson’s belongings to repay fraud victims, and the U.S. Securities and Exchange Commission continues to press a broad civil action against her.


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