A former Abbotsford woman who operated payday loan businesses that bilked investors out of millions of dollars has been ordered to pay $37 million to the B.C. Securities Commission (BCSC).
The BCSC panel announced on Friday (Feb. 19) that it has fined Doris Elizabeth Nelson $18.5 million – the difference between the money deposited by investors and the money paid out to them – and an administrative penalty of $18.5 million.
As well, the panel permanently banned Nelson from the province’s capital markets for fraud, illegally distributing securities and lying to a commission investigator.
Nelson operated a payday loan business through a group of companies – represented and promoted collectively as the Little Loan Shoppe – that was, in actuality, a Ponzi scheme.
Her first Little Loan Shoppe opened on South Fraser Way in Abbotsford in 1997, followed by one on First Avenue in Mission, and stores in Maple Ridge and Chilliwack in 1999.
She eventually expanded to other locations in the Lower Mainland and Washington State. Nelson moved with her new husband to the U.S. in 2001.
The Little Loan Shoppes closed in the early 2000s, but by then, Nelson had begun taking telephone loan applications. In 2006, she expanded to the internet.
The scheme fell apart in 2008, and the next year the Little Loan Shoppe declared bankruptcy.
The BCSC panel found that Nelson perpetrated fraud on at least 121 British Columbia investors, who invested at least $19 million in multiple transactions.
The panel also found that Nelson distributed promissory notes in contravention of securities laws to 47 investors who invested a total of almost $3.1 million in Canadian funds and $73,000 in U.S. funds.
Nelson financed the growth of her business by raising money from investors in B.C. and the U.S., and using existing investors to recruit new investors, paying these recruiters on a commission basis.
In return for investors’ money, she had her companies issue promissory notes.
Nelson was also found to have made false statements to the commission by producing a false affidavit in response to an order to provide information and records on one of her company’s investors.
Nelson is currently serving a nine-year prison sentence in the U.S. for more than 100 counts of mail and wire fraud related to the Little Loan Shoppe. She pleaded guilty to the charges in 2014.
A year ago, a U.S. federal judge issued an order that she repay $44.8 million to her American victims when she is released from prison.
– with files from Tyler Olsen