The BC Securities Commission (BCSC) has launched proceedings against Doris Nelson, alleging that she operated a payday loan business that was a Ponzi scheme that raised $135.4 million from at least 800 investors in Canada and the U.S.
In a notice of hearing filed January 21 against Nelson, the regulator alleges that the scheme raised more than $69 million from at least 355 B.C. investors.
The BCSC has alleged that Nelson perpetrated a fraud and made false statements to the commission. According to the regulator, Nelson is currently under house arrest in Colbert, Washington.
The BCSC notice claims that Nelson ran her business through a group of companies that she directed and controlled, and which she represented and promoted collectively as the Little Loan Shoppe. The regulator alleges that Nelson financed her business' growth by raising funds from B.C. and U.S. investors, inducing existing investors to recruit investors for a commission. The BCSC claims that she issued promissory notes in return for investors' money.
"Nelson represented to investors, both directly and through her recruiters, that because her business was so profitable, she could afford promissory notes paying annual interest rates of 40% to 60%," the BCSC said. The regulator further alleges that Nelson promoted the investment as being "risk-free." The BCSC states that the business was not profitable due to a high rate of customer loan defaults.
The regulator alleges that when the BCSC alerted one of Nelson's companies, 0738126 B.C. Ltd., that it was under investigation, Nelson emailed investors that she planned to make false statements to the commission and coached them on giving information if contacted by the BCSC.
The regulator alleges that, since 2009, two of Nelson's companies have entered bankruptcy proceedings and that she's the subject of civil proceedings launched by the Washington State Department of Financial Institutions and the U.S. Securities and Exchange Commission. According to the BCSC, Nelson is also awaiting trial in U.S. federal criminal court in Spokane, Washington, on 71 counts of wire fraud, 22 counts of mail fraud and 17 counts of international money laundering.
These allegations have not been proven.
