Washington Woman Sentenced in Investment Fraud Scheme

By December 28, 2015Tax Fraud

On Nov. 4, 2014, in Spokane, Washington, Doris E. Nelson, of Colbert, Washington, was sentenced to 108 months in prison and three years of supervised release for committing tax fraud.  Restitution will be determined at a later date. Nelson pleaded guilty in April 2014 to 110 charges related to wire fraud, mail fraud, and international money laundering. According to court documents, Nelson ran a fraud scheme for over eight years and took in approximately $137 million from at least 650 investors worldwide. Nelson operated an unprofitable payday and short-term lending business, known as the Little Loan Shoppe. She solicited hundreds of investors, throughout the United States and in international locations, by leading them to believe, falsely, that her business profits allowed her to pay investors a 40% to 60% (and up to as much as 75%) annual return. Nelson also made numerous false and fraudulent statements about the Little Loan Shoppe in order to induce investors. Rather than paying her investors returns from a profitable business, investors were paid “interest” with their own money or the money of other investors. Investor funds rarely, if ever, were used to fund new customer loans. The scheme collapsed in 2008, when the flow of new funds could no longer support the payments required on the earlier investments and Nelson abruptly announced that all investments would be changed to a 10% interest rate. Nelson ended most payments to investors around this time, and by February 2009 she suspended all payments. Nelson’s scheme resulted in personal withdraws of investor money of approximately $4.3 million. With these proceeds, she funded a lavish lifestyle for herself and her family.