Earlier this year, a Seattle woman accused of defrauding investors out of nearly $100 million in a massive Ponzi scheme made headlines when she rejected a plea agreement and instead decided to plead guilty to all 110 criminal charges she was facing - a decision that essentially guaranteed a severe sentence. However, weeks before her sentencing, Doris Nelson asked the court to allow her to withdraw her guilty plea on several grounds, including her discovery that she could retain private counsel and her newfound access to a certain computer hard drive. U.S. District Judge Robert H. Whatley recently issued an order denying Nelson's request, questioning her credibility and finding that her proferred reasons were less than persuasive. Nelson is now scheduled to learn her fate on November 3, 2014.
Nelson was indicted in late 2011 and charged with 71 counts of wire fraud, 22 counts of mail fraud and 17 counts of international money laundering. Nelson was accused of operating a payday/short-term lending business called the Little Loan Shoppe ("LLS") in which she began soliciting investors in mid-2000 with the promise of large profits on short-term investments. These purported returns ranged from 40% to 60% annually, and were often paid via post-dated interest checks provided at the time of investment. LLS moved its operations from British Colombia to Spokane, Washington in or around 2001, and shortly thereafter ceased retail operations and conducted business solely over the internet. When the operation began faltering in late 2008, Nelson tried to offer reduced interest rates to investors but the scheme later collapsed.
According to authorities, LLC was a massive Ponzi scheme that used investor funds to pay fictitious returns and sustain Nelson's lavish lifestyle. Nelson alone received over $3 million in funds diverted from investor funds, which were used to purchase, among other things, a motor home, a Chevrolet Corvette, and a Mercedes Benz S550. Additionally, Nelson used investor funds to gamble at Las Vegas casinos, losing nearly $500,000 between 2005 and 2008. Nelson also paid commissions to several investors in return for directing further investment to Nelson's operation.
Little Loan Shoppe filed for bankruptcy in 2009, and the trustee appointed to oversee the liquidation process has filed clawback lawsuits against LLS investors who received interest payments in excess of their original investment. In addition to the criminal charges, Nelson was also charged by the Securities and Exchange Commission, and later faced charges by Canadian securities regulators.
The Guilty Plea and Withdrawal Attempt
In April, Nelson appeared before Judge Whatley to reject a proposed plea agreement and instead plead guilty to each of the 110 charges she faced. Several months later, and on the eve of her sentencing, Nelson filed her Motion to Withdraw Plea of Guilty (the "Motion"), claiming that her guilty plea warranted withdrawal on (1) her ability to retain counsel, (2) assistance from her former counsel, and (3) access to a computer hard drive.
After determining that Nelson's plea colloquy was adequate and clearly contained an acknowledgement by Nelson of her guilt, Judge Whatley addressed each of Nelson's bases for withdrawal. First, Judge Whatley deemed Nelson's discovery that she could retain private counsel - rather than utilize her court-appointed lawyer - "ingenuous," noting that Nelson had previously retained private counsel. Next, Nelson's claim that she had access to a former attorney that specialized in securities law after her plea was also dismissed by the Court, noting the lack of evidence that Nelson did not have access to that attorney prior to her plea. Finally, Judge Whatley noted that Nelson had access to the computer hard drive prior to her sentencing, and her insinuation that she discovered new evidence that was previously inaccessible was not believable.
The government recently filed papers indicating it seeks to forfeit a myriad of real and personal property previously seized from Nelson, including real estate, cash, cars, boats, and an extensive jewelry collection. Nelson was advised by Judge Whatley to be prepared to enter custody at her November sentencing.
Nelson's Motion and the Court's Order is below: