Long-time readers of Forbes know well our overall take about the business climate in Spokane. Two years ago, we called Washington State's second-largest city the "Scam Capital of America" for its profusion of fraud, despite its relatively small size and remote location. It was the not the first time or even the second time in a decade that we saw fit to write about those financially on the wrong side of the law there. Indeed, way back in 1988 we included the city on a big two-page map we published of "scam hot spots." To us, it seemed like part of the culture going back more than a century.
Sadly, it doesn't appear that much has changed. As the Spokane Spokesman-Review--itself owned by a family no stranger to dubious deals--is reporting, the U.S. Securities & Exchange Commission filed a civil lawsuit today against Doris E. Nelson, the owner of a Spokane payday loan business called Little Loan Shoppe. The feds don't think it was so small. She's charged with running a large Ponzi operation that over a decade raised $135 million from 650 investors around North America. There was no immediate response from her.
Besides claims of lavish personal spending, the complaint, filed in Spokane federal court, contains the usual allegations of extremely stupid investors. According to the SEC, they fell for Nelson's pitch that they could get no-risk, guaranteed annual returns as high as 60% on the money they lent her business. Even Goldman Sachs or can't do that, at least on a honest deal.
LLS America LLC, the parent of Little Loan Shoppe, collapsed into bankruptcy two years ago, and the lawyers have been circling ever since. A little late, Washington State regulators sued in 2010, calling it an example of affinity fraud; many of the investors were Jehovah Witnesses. Now the even-later SEC--which missed the boat on Ponzi king Bernard Madoff and is beset by fresh claims of document shredding and conflicts-of-interest--is adding its two cents.
Texas Gov. Rick Perry has put Ponzi schemes front and center with his claim that Social Security is one. For a tutorial about the old-fashioned kind, he ought to schedule a campaign stop in Spokane.
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