VANCOUVER, Jan. 21, 2013 /CNW/ - The executive director of the British Columbia Securities Commission has issued a notice of hearing alleging that a Canadian citizen who currently resides and is under house arrest in Colbert, Washington, perpetrated a fraud and made false statements to the commission. The notice alleges that Doris Elizabeth Nelson operated a payday loan business that was, in actuality, a Ponzi scheme that raised $135.4 million from at least 800 investors in Canada and the United States. The notice states that over $69 million was raised from at least 355 B.C. investors. 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. She financed the growth of her business by raising funds from investors in B.C. and the U.S., and used 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 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%. She also said that the investment was risk-free. In reality, her business was not profitable due to its high rate of customer loan defaults. One of the companies that Nelson controlled and used to issue promissory notes was 0738126 B.C. Ltd. On July 11, 2008, commission investigators notified Nelson that 0738126's capital raising activities in B.C. were under investigation. The notice alleges that Nelson reacted by emailing investors, telling them that she planned to make false statements to the commission and coaching them to hide relevant information if contacted by the commission. The commission ordered 0738126 to provide information and records regarding its investors. In response, Nelson produced a false affidavit in which she misrepresented the number of Canadian investors and attached false evidence purporting to establish exemptions for those distributions that 0738126 had already made. Nelson also stated, correctly, that 0738126 had ceased distributing securities.