Doris E. Nelson, Ponzi Scheme, Washington 2014

Spokane Woman Pleads Guilty to 110-Count Indictment in Ponzi Scheme

In a stunning turn of events, Doris E. Nelson, a 55-year-old resident of Colbert, Washington, pleaded guilty to a 110-count indictment related to a massive Ponzi scheme that spanned over eight years and bilked investors out of approximately $137 million.

According to court documents, Nelson operated an unprofitable payday and short-term lending business, known as the Little Loan Shoppe, which she began in British Columbia, Canada in approximately 1997 and continued in Spokane, Washington beginning in approximately 2001.

Nelson solicited hundreds of investors, promising them astronomical returns of up to 75% annual interest, which she claimed would be paid from the profits of the Little Loan Shoppe. However, rather than using investor funds to fund new customer loans, as she had promised, Nelson used the money to pay earlier investors with their own money or the money of other investors.

As the scheme grew, Nelson's track record of making 'lulling payments' to investors became the single most persuasive factor for additional investors, who were drawn in by the promise of high returns. However, when the flow of new funds could no longer support the payments required on earlier investments, the scheme collapsed in 2008.

Nelson admitted to taking in approximately $4.3 million from investors, which she used to fund a lavish lifestyle, including spending $223,000 at St. John Knits stores, $217,000 at Nordstrom, and $58,000 on art work while on a cruise in 2006. She also incurred substantial gambling losses, totaling approximately $432,000 in 2008 and $960,000 in 2007.

Nelson's scheme resulted in the loss of approximately $137 million for her investors, who were forced to file for bankruptcy in the summer of 2009. An investigation by the IRS-CI, the FBI, and the United States Attorney's office was launched in 2010, and Nelson was charged with a 110-count indictment in December 2013.

Nelson pleaded guilty to the charges on the eve of her jury trial, and sentencing is scheduled for July 7, 2014.

Source: https://www.justice.gov/usao-edwa/pr/spokane-ponzi-scheme-operator-pleads-guilty-110-count-indictment-eve-jury-trial